Here’s a timely infographic from online market research agency lab42, summarising the state of the group-buy/daily-deal market (US). Basic information, but the last stat caught our eye: 82% of Group-Buy users have returned to a business at least once after purchasing their deal.
- Groupon is #1 platform, LivingSocial is #2
- Majority of people keep up with deals by email
- Top change that would make people more likely to visit a group-buy site – believable guarantee that personal information won’t be shared
- 61% of people have let a purchased deal expire before redeeming it
- Restaurants are the most popular deal with a 4-way tie for second place – spas, sport, hotel and arts/crafts
- 82% have returned to a business at least once after purchasing their deal
If representative, this last data-point is interesting because the recent wave of Groupon bashing as bad for business has focused on the low grade of customer that Groupon attracts; the promo-junkie who simply goes from deal(fix) to deal(fix). And that as a sales promotion tool, Groupon suffers from all the intrinsic limitations of all sales promotions – creating quick and temporary blips in sales but doing nothing to drive sales growth or brand equity. So good for shifting excess inventory or seats already paid for, but bad for business growth, margins, customers and loyalty.
But if 82% are returning to stores post-offer, then something must be working; the door is open for loyalty tool from Groupon.
So enter Groupon Rewards, a new frictionless rewards program which allows Groupon-businesses to offer followup rewards when customers come back for more. What makes this different from traditional loyalty points programs is that the customer doesn’t have to do anything – no cards to swipe, no check-ins to do, no receipts to remember. All customers needs to do is pay with the card that Groupon has on record and they get rewards sent to their screen.
It’s this frictionless aspect of Groupon Rewards that we think gives the initiative a fighting chance of success. But in the same way that sales promotions may not drive sales, so too is there a question over whether loyalty rewards discounts actually create loyalty.