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Over the last couple of years the ‘daily deals’ phenomenon has gone from to strength to strength and for now there doesn’t seem to be an end in sight to this booming business.
Most people are by now familiar with the concept of daily deals but for those that aren’t, here’s a snapshot;
The daily deals / deal of the day website everyday promotes a deal offering large discounts on things like restaurant meals, spa’s, beauty treatments through to sky diving and holidays. The deal typically gets activated when a number of customers sign up for the daily deal, this ‘deal tipping’ concept is called group buying and means that by ensuring a high volume of customers the business can offer the large discounts.
From a business perspective the concept also works well.
Businesses need customers and are often required to spend massive amounts of money out of their marketing budget on attracting those customers. A ‘daily deal’ can be a great solution for cost effective marketing as the business doesn’t actually need to spend anything. Instead they work with the daily deals company to create a deal / offer that can be emailed out to the daily deals database of customers. These customers then sign up the daily deal getting a substantial discount on the regular services of the business.
The business gets free promotion to all of the daily deal websites customer base which can in the case of some of the deals sites be around 100,000 people or more (national exposure deals get sent to even more).
Some of these then buy and become customers of the business and then hopefully enjoy the experience and return as a full price paying customer and / or tell their friends about the great experience.
For example ‘Sensational Sushi Restaurant’ in Surry Hills wants to generate new customers to their restaurant, they work with the deals site and decide on the following deal, 60% discount on a 2 course meal and a bottle of wine. This deal is sent to all of the deal websites customer base in Sydney’s Inner West, 150 people buy, then over the next 6 months (depending on the timeframe the deal is created for) they redeem their deal at the restaurant.
From the customers perspective, they get a great
This group buying business model was created by Groupon in the US in November 2008, they currently have daily deals websites all over the world and are estimated to be worth between 15-25 Billion USD.
Despite these staggering numbers there are many people that feel that the deal-of-the-day style model that Groupon created is starting to show cracks. The growing number of deals sites, competition within the industry and sheer amount of money being made has led to some sites over selling the deals, over whelming the businesses with far more customers than they can comfortably cope with.
This over selling of deals has led to the customers not being able to book their activity for example the meal at the restaurant for weeks or months, when they finally do manage to make a reservation they are then treated as second class citizens as they are presenting the deals voucher. The whole experience can be off putting and leads to the customers never returning but also telling their friends and relatives which further damages the business.
One daily deals company that recently launched intends to take advantage of the gap in the market. www.DeluxeDailyDeals.com.aubased in Sydney, Australia is the brain child of two entrepreneurs, Gary Klungreseth & Dan Goode, their objective is to ensure that the both the customer and the business owner have a good experience, ensuring that the customer will return and spread the word through their social network. The business therefore generates the exposure and new business they need.
Gary Klungreseth states “We aim to work closely with the business when creating the deal so that the deal numbers sold on our site are not more than the business can cope with. This capping of the deal numbers limits sales to a viable amount making sure that when the voucher holder redeems their deal, they are treated as a VIP”.
“Deluxe Daily Deals is about ensuring satisfaction to both the user AND the vendor. Our focus is on a better quality experience for the customer, better margins for you and an increase in Repeat Business!”
An interesting concept that could help the daily deals model to be sustainable as everyone loves to buy a bargain! Especially if it means that everyone involved is benefitting!
Deluxe Daily Deals
deals@deluxedailydeals.com.au
http://www.deluxedailydeals.com.au/