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How to make a success of the daily deals model

How to make a success of the daily deals model

By Kara Trivunovic, senior director of Strategic Services, StrongMail

The one thing that is constant for an online marketer is change, or better said – evolution. The industry is always looking for new ways to drive revenue effectively and efficiently. While group buying and flash sale sites have been cropping up for years, the concept has finally taken hold with significant consumer adoption. In the UK alone, the top six group buying sites generated a combined revenue in excess of  £26 million in August 2011.
What is driving this boom?

This phenomenon could be tied to an increased sense of comfort by many to purchase online, our renewed sense for frugality in an unstable economy, or the certain thrill in getting a last-minute deal. Whatever the reason, more consumers than ever before are taking advantage of the daily deals model. But how are marketers spreading the word, acquiring customers and driving that adoption? While there is some offline marketing and branding happening, the ultimate workhorse for all of these daily deal companies is: email.

Email is the backbone for group buying sites and it’s the mechanism used to deliver relevant and timely offers to consumers. But with little barrier to entry and growing competition, how can marketers get the most out of the email channel and really stand out in the inbox?

Group buying

This industry must serve two masters in order to maintain success and viability – the consumer and the businesses that advertise. If the consumer is not receiving relevant, timely offers, they may disengage in the long run. Similarly, if the businesses are not seeing a positive ROI, they will vanish as well, there is a delicate balance between quality and quantity.

While the practice of group buying sites can be traced back to the late 1990’s, it really emerged as a viable business model around 2004 with the introduction of Woot. But the momentum and mass adoption had been slow – until the emergence of Groupon when the marketplace erupted.

In Action

Groupon shot out of the gate quickly and is the model that most group buying organisations are looking to emulate. Having laid the groundwork for this form of daily deals, it has also been quick to identify opportunities for differentiation, including the introduction of its Rewards programme, “Groupon Rewards”. They also include a managed preference centre where users can specify their favourite types of deals and provide other demographic details to create a more customised and relevant experience for each subscriber.

Being first to market successfully has its advantages – and having great copywriting and a witty brand doesn’t hurt either. But the best thing that Groupon has going for it right now is its welcome message. Not only does it welcome the new subscriber, they also provide the ability to take three mutually beneficial actions: 1) tell your friends 2) provide preference information for the deals you want to see most and 3) the ability to request who you would like to see deals from. There is also a mechanism within the email for customers to have a voice, which makes it a two-way communication. Instead of talking “at” the new subscribers, they are establishing rapport and conversation.

Tactical advice: What works

Unfortunately, many daily deal organisations have become comfortable with a rudimentary batch-and-blast approach to get the offers into market, fast. It’s best to offer a preference centre allowing subscribers to provide details around content they would like.

Relevance is more than providing limited time offers – it is about getting the right offer to the right person at the right time. Allow the customer to dictate how the content should be delivered. Give them the option to receive multiple, individual communications or an all-inclusive message. It’s a personal choice, and one you should give your customers for maximum effect. All are equally important; otherwise you may find yourself with high levels of disengagement.

Make sure that your messages are arriving within the same 10 - 15 minute window every day in order to create a sense of immediacy and urgency amongst your subscriber base. This will dramatically increase open rates, clicks and ultimately revenue.

Keep it simple. Recipients don’t read email – they scan it. You have about 3 to 7 seconds to convey your message in its totality before the reader is on to the next message or task. It’s important to drive ongoing engagement with your audience through creative subject lines and relevant content.

Compose subject lines like you would write for a billboard on the motorway. They need to be catchy and to the point to drive interest and engagement. Layout is equally important, be sure to use good spacing, headlines and bullets otherwise your message may be lost – no matter how relevant it was.

Consumer participation in group buying and flash sale sites continues to grow quickly with email as a core driver. However, competition for consumer wallet share is growing fiercer by the day as new sites try to capitalise on the daily deals phenomenon. As such, it is necessary to leverage email marketing as effectively as possible to drive business and build loyalty with consumers. Deal or no deal – if the experience falls short, it could drastically impact the likelihood of future engagement.

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