Groupon offers consumers discounts on local services and splits the money with the merchant. Despite second quarter 2012 earnings rising 45 per cent on the same period in 2011, Groupon’s billings were down five per cent on the previous quarter, which appears to have affected investor confidence.
So what should daily deal sites do to wake dormant subscribers and get them out shopping again? NMK caught up with Zak Shah, CEO of WishFree.com, an online game that allows people to win brand new products and services for free, to learn how interactive gaming could help.
No room for complacency
According to Shah, daily deal sites need to guard against complacency when it comes to retaining customer interest.
"Some of the problems Groupon and other daily deals sites are going through, in terms of declining numbers of active subscribers and consequent falls in share prices, are due to the fact that they are complacent in thinking that a large subscriber base automatically translates into profits,” he told NMK. “If the subscribers are not encouraged to re-engage, then essentially all you have is a large list of emails with no intrinsic value."
Reinvigorate your audience
Shah says that the initial surge of uptake for daily deals tails off after a few weeks, and there is little attempt to reconnect with customers on a long term basis, other than to offer them more of the same thing.
He believes that daily deal sites such as Groupon and Living Social need to embrace social media gaming in order to reengage with their dormant subscribers.
“Some daily deal sites are sitting on an estimated 10 million subscribers in the UK, but the figures are worthless if no-one actually buys anything,” he warned. “Tales of poor fulfilment figures and poor value for money only add to the disinterest amongst subscribers and this could prove damaging for the entire daily deals industry.”
Play the game
Shah believes that daily deal providers need to embrace new techniques that set them apart from their competitors, which includes gaming and is the key driver behind WishFree.com.
The new interactive gaming site combines online daily deals with a click-to-win competition, allowing players to win brand-new products and services at no cost. It allows players to compete with others, both on the site itself and through social networks, and companies can sponsor any game to increase customer engagement and brand awareness.
“Forging a partnership with a gaming site not only gets people on board, but it also enhances user engagement by attracting new customers that take part in the game, then go on to purchase something via a link to the daily deals web page,” Shah concluded. “This type of joint venture is mutually beneficial and provides an avenue for daily deal providers to reach their subscribers on a more personal level.”