Seemingly contradicting what I ruminated about Groupon’s value the other day, this research came out of Rice University, but I think it actually diminishes the positive in how it is written below. Upon further study, it actually supports my argument about these daily deals being solid marketing outlets. I do believe it is missing half of the information pertaining to what type of services were provided and what that experience was like. I would love to know which types did garner repeat service and which types did drive consumers to spend more than their coupon. That’s where true learnings and growth would come from…
A new Rice Universitystudy of how businesses fare when entering into agreements with daily deals sites found that between August ’09 and March ’11, 55.5% of businesses reported making money, 26.6% lost money and 17.9% broke even on their promotions. (A goodly few have gone on record in the press claiming it was the worst business decision they’ve every made.) The study found that some 80% of deal users were new customers, but that significantly fewer users spent beyond the deal’s value (35.9%) or returned to the venue the purchase an item at full price (19.9%.) Red Flags the industry should be aware of include:
- less than half of the businesses indicated enthusiasm about running another daily deal in the future
- fully 72.8% indicated openness to considering a different daily deal site
- only 35.9% of restaurants/ bars and 41.5% of salons and spas that had run a daily deal asserted they would run another such promotion in the future
Interesting how less than half were enthusiastic about running another deal in the future with only around 18% breaking even , but 73% would be open to considering a different daily deal site. With 55% making money, what are the reasons for less than 50% of respondents being enthusiastic about running another deal in the future? With 55% of businesses making money, Daily Deals could be considered a major winner from a marketing perspective.
Balanced argument. Interesting read.