A new study of why consumers use daily deals paints a pleasant picture for local merchants looking to get new customers in the door — but it remains to be seen if they can get those customers to keep coming back.
The study, conducted by digital SMB marketer Constant Contact and research firm Chadwick Martin Bailey, concludes that more than one-third of consumers are more eager to buy deals from local, small-to-medium sized business as opposed to big, national brands. But for 58 percent of the study’s 1,433 respondents, even a positive deals experience does not automatically equate to customer loyalty.
“The true value of running a deal for a small business is bringing in new, repeat customers, not one-time deal seekers,” said Dave Gilbertson, general manager of Constant Contact’s local deals platform SaveLocal, in a press release, citing some deals vendors’ unwillingness to distribute subscriber contact information to merchants as a reason for few return customers. “Without the tools to follow up, unfortunately, that’s what many of them become.”
Otherwise, the study’s findings, though not overly surprising, should be taken positively for daily deal providers. Almost 80 percent of the deal subscribers polled said they’ve purchased at least one deal in the past six months, with 27 percent of that chunk buying five or more. And 92 percent of deal users said they think daily deals, at least locally, are here to stay.
Consumers, the study finds, are also willing to share deals, with word-of-mouth among family and friends being the top reason — 50 percent — why locals buy deals from an unfamiliar business.
From a consumer perspective, a Groupon or LivingSocial deal voucher generally fetches at least 50 percent off any purchase. Merchants, though, have the leverage to decide whether to run deals, and appeasing one-time, coupon-hungry consumers at around 25 percent normal value is not a sustainable, long-term business model.
Other conclusions from the study include:
- Consumers, especially women (35 percent), are more likely to buy a deal if it’s recommended by someone they know.
- Customers will share deals if they’re “great” (54 percent), regardless if they’re a current customer of merchant.
- More than twice as many consumers (55 percent) share deals via email than social networks.
- Deals for restaurants (65 percent) and entertainment (48 percent) are the most commonly shared.
- A clear majority of consumers think deals help attract new customers to local businesses.
Patrick Duprey is an intern at Street Fight.