Study: Daily Deal Sites Bring in New Business
Daily deal sites attract new customers and inspire loyalty, according to new research from customer experience analytics firm ForeSee. Groupon leads the way with the largest share of the market.
While there has been some argument about the impact of daily deal offers on new business, according to the ForeSee report, daily deal offers do increase business awareness, purchases and repeat purchases. Of daily deal purchasers, 55 percent were new or infrequent customers of the business. Twelve percent of subscribers had never heard of the business prior to buying the deal. More than 90 percent of online shoppers reported they had already made another transaction with a merchant company since taking advantage of an offer or plan to do so in the future.
"No one really knew what to expect when daily deal sites first came on the scene, but our research shows that these sites are no passing fad," said Larry Freed, president and CEO of the Ann Arbor, Mich.-based ForeSee. "Businesses that use these sites effectively are growing their customer base and customers are getting a deal, which results in a win for everyone. The challenge is for businesses to use this tool in smart ways and to work with daily deal sites who can deliver a good experience to users and merchants alike."
The clear front runner of all daily deal sites is Groupon. Groupon has more subscribers and more purchases than any other daily deal site including LivingSocial and Woot. According to the report, more than half of customers surveyed use Groupon (52 percent) and 30 percent use LivingSocial. Despite these large percentages, there is some overlap in the subscriber base, and 40 percent of survey respondents do not subscribe to any daily deal services. Groupon also has the largest share of subscribers to their service alone with 44 percent of Groupon customers reporting that they only subscribe to Groupon, while only 12 percent of LivingSocial users subscribe only to LivingSocial.
The research included in this report is based on surveys conducted in November and December 2011 as part of the ForeSee Holiday E-Retail Satisfaction Index, which included responses from almost 10,000 visitors to the top 40 retail websites as determined by Internet Retailer's 2011 Top 500 Guide.