Pitfall Avoidance: Daily Deals

It's no secret that many businesses hate using Groupon. In  2010, researcher Utpal Dholakia found that approximately 1/3 of companies lost money on their Groupon offers. Groupon customers also tend to write lower product reviews through online venues such as Yelp, meaning that company losses (though hard to measure) could be even greater if potential new customers are scared off by bad reviews.

Intel social media strategist Ekaterina Walter recently published suggestions for daily deal alternatives at http://mashable.com/2012/07/16/alternatives-daily-deals-sites/ . Similar to strategies we have discussed in class, she suggests targeting smaller groups to find "good" new customers rather than the group I'd call coupon leeches (the I-want-a-great-deal-and-I-wont-come-back-without-a-50%-minimum-discount-but-will-still-expect-stellar-service customer) or spam-weary couponers (the I-bought-a-restaurant-coupon-once-and-now-I-cant-stop-getting-hit-with-daily-laser-treatment-discount-emails group). Of course, when honest with myself I tend to follow coupon leech behavior with Groupons - I don't think I've actually gone back to any of them. And I'm sick of emails hawking laser hair removal.


One of Walter's ideas is to drill down via targeted daily deal sites, such as AppSumo, which hosts daily deals specificially for digitally distributed goods and services. She also argues that loyalty offers - like giving freebies for foursquare checkins - offer a higher ROI than daily deals.


Groupon, of course, is fighting back by trying to prompt its users to enter more detailed specifications to improve their individualized deal targeting: the bottom of every Groupon email now reads:

Don't See Any Deals You Like?
Take a few seconds to tell us what you like, and we'll pick the right deals for you.

Do you think the best way to develop a daily deal approach in digital marketing is to ignore the channel altogether and focus instead on loyalty? Any thoughts on how to best minimize potential losses on a Groupon offering if you choose to use a Groupon/LivingSocial deal?