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In the month since Groupon‘s S-1 filing, there has been a lot of criticism directed at the nascent daily deals industry. Some say that the deals model is unsustainable, while others claim that running a deal can cripple a small business. But before jumping on that bandwagon, it’s important to remember that online deals are still in their infancy. The basis of the daily deals model is a revolutionary new step in local ecommerce, and will certainly live on, even while current practices mature and evolve.
It’s clear that consumers benefit from daily deals — they get large-scale discounts for goods and services in their area. But it remains unclear whether the local businesses offering these deals are really getting the customer acquisition that companies like Groupon and LivingSocial are promising them. Having hordes of consumers come by for major one-time discounts can seem like success for merchants, but true success in the deals game is in connecting with the right potential customers.
As a result, I believe that niche plays will become more and more important in the deals space. By focusing specific niches, deal sites can offer merchant partners a much better sample of highly targeted — and highly motivated — customers. My company, Crowd Seats, offers daily deals for sports tickets; when a user signs up on our site, they’re doing so with the clear intention of buying sports tickets. When a user signs up for Groupon, they may be doing so for a cup of coffee or an afternoon of skydiving — pretty much anything in their local area. Instead of catch-all lists that target anyone with an email address, niche sites have the inherent advantage of being banks of qualified leads. This is what provides serious value to merchant partners. Last week’s Street Fight article “Making Deals More Relevant” described this phenomenon perfectly: “Getting the right audience to sign up for a specific deal is the key to achieving the repeat business and customer loyalty that make such deep one-time discounts worthwhile.”
Other complaints regarding the daily deal model touch on a lack of long-term value for the merchant partner. Deals sites don’t will share their redemption contact lists with merchant partners — and for good reason. That list is a valuable asset, and sharing user info with merchants creates privacy issues. But there are other ways that deals companies can pass along long-term value to merchant partners, including simple customer tracking and referrals (such as sending traffic from the deal page/email to the merchant’s social media page, or running post-event surveys that can provide them with valuable customer insight).
Deal companies can take this a step further by providing tips for merchants about on how to retain these new customers at point of deal redemption. We recommend that our merchant partners (sports teams) interact with the new customers we send them as much as possible; make it easy to capture email addresses at point of redemption; include season-ticket package materials with deal tickets; staff a table in the arena with ticket sales reps; welcome Crowd Seats users on the Jumbotron, and more.
Perhaps the greatest advantage niche daily deal sites have is the ability to tailor the services they offer to meet the needs of their niche. All businesses are unique; it is up to deal sites to find out what their merchant partners’ needs are and provide a service to meet and exceed those needs.
Justin Cener is the founder of Crowd Seats, the first daily deals site built exclusively for sports tickets.