Does the ‘Debt’ in Daily Deal Transactions Inhibit Loyalty? | Street Fight

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Does the ‘Debt’ in Daily Deal Transactions Inhibit Loyalty?

0 Comments 04 May 2012 by

Earlier this week, Signpost announced that it had closed a $3.4M series A round of funding to fuel its e-commerce marketing solution for merchants — an indication that commerce-based marketing is finding its feet again after a tough last few months. And for the most part, the data supports the investment dollars: local non-advertising revenue is set to account for the lion’s share of local online spend, and offers will undoubtedly play a big part in those products.

Too much time has been spent quibbling over the future of the “daily deal,” largely because Groupon has played the antagonist with such conviction. And even forward-thinkers who speak about “commerce,” or “local commerce,” or even “e-commerce” as the next stage in digital marketing are abstracting too quickly. The industry-sparking innovation here is the use of commerce to drive customer acquisition by bringing the point of sale closer to the moment of impression.

The last part — the ability to transact payments for a product through the marketing tool — is essential to what differentiated the daily deal from the coupons in your local weekly. For the first time, marketing/advertising went from an information game to a commerce business, from “if you buy a $50 dinner, you can get 50% off the meal” to “buy this $50 dinner for 25 bucks.”

Information and commerce lend themselves to very different relationships. You may feel in indebted to a source that gave you good lead, but the debt you feel to a paying sponsor is quite different.

This issue of debt can make commerce-based advertising problematic. In informational advertising (to add more jargon), a customer enters a store on the same footing as the merchant. Though the customer may hold an ad or promotion that promises a bar packed with beautiful women or 40% off house wine, nothing has been exchanged and the promise is merely an obligation for the merchant to uphold. However, commerce-based advertising flips the relationship on its head: the merchant goes from obligated provider to debtor, as he or she has yet to complete the transaction, which the customer initiated by purchasing the voucher.

So why does debt matter? Among the obvious pitfalls associated with debt, anarchist-anthropologist David Greaber hits on something oddly relevant to marketers in his 2006 inquiry, Debt: The First 5000 Years — that the impetus in a debt-based relationship is to complete the transaction and end the relationship. By making the relationship revolve around an unfinished exchange, both parties have an interest in completing the transaction, and in turn, concluding their association.

We hear much about building loyalty into deals, but there is a fundamental question of whether commerce-based marketing inhibits long-term relationships by making the first impression an indebted one. Commerce-based marketing tools need to actively consider how they can convert customers from creditors to patrons without relying on the merchant to provide value on case-by-case basis.

Analytics and tracking do little to change the fundamentals of indebtedness in relationships — the opportunity is in affecting the relationship before the transaction is closed.

Steven Jacobs is an associate editor at Street Fight.

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