Innovative Approaches to the Daily Deals Business Model Inspired by Groupon
The daily deals model, popularized by Groupon, has transformed how consumers discover and access local businesses. However, for merchants and the platform to thrive, it is crucial to balance local relevance with broader appeal and constant innovation. Let's explore the nuances of creating business models that not only attract new customers but also retain and grow a loyal customer base.
Understanding the Challenges
From a consumer perspective, more relevant and local deals are undoubtedly desirable.。
However, businesses and platforms must also address the needs of merchants. A deal site that promotes exclusively local and relevant deals might inadvertently harm business growth. For instance, merchants express concerns about the homogeneity of their offerings attracting the same customer base repeatedly. This can lead to limited exposure and a cycle of decreased repeat business.
Counter-Intuitive Insights
Counterintuitively, too much relevance can actually be detrimental to the business model. Here are a few points to consider:
Exposure Issues: Local businesses don't struggle with voucher sales. Groupon and LivingSocial (LS) already generate more than adequate sales. Overly targeted deals may flood the market with similar offers, leading to saturation and dilution of unique value propositions. Passionate Consumers: For highly targeted deals, passionate hobbyists (e.g., gardeners) already know their go-to places. Unless a business is offering something truly unique, they may not attract new customers. Casual interests (e.g., casual gardening enthusiasts) might be more receptive to broader, yet relevant, deals that introduce them to a new experience.Strategic Innovations
Given these insights, here are some strategic innovations that businesses can explore:
1. Expose to Different Niches
Deliver broader, yet relevant deals that cater to casual customers rather than die-hard enthusiasts. By doing so, businesses can attract new customers who might become lifelong patrons. For instance, if a coffee shop is known in the neighborhood, targeting less experienced customers can help them discover new offerings and potentially become loyal regulars.
2. Peer-Driven Deals with a Twist
The traditional peer-driven daily deals model, where friends collaborate to generate interest, can be refined. Instead of starting with a group of friends, businesses can use incentives to drive peer referrals. Offering rewards for successful referrals can motivate customers to share deals even with non-regular shoppers, expanding the customer base.
3. Philanthropic and Community-Oriented Deals
Merg daily deals with social impact by donating portions of revenue to causes or charities. This not only aligns with ethical business practices but also builds brand goodwill and community engagement. Charitable deals can attract socially conscious consumers and create positive brand images.
4. Niche Versus Broader Appeal
While niche deals can be effective, the key is to strike a balance. Overly targeted deals may not be as lucrative as broader, yet relevant offers. Offering deals that are somewhat unique but still relatable can attract a wider audience. For instance, a niche beauty salon could advertise a deal to casual beauty enthusiasts, potentially converting them into regular customers.
Conclusion
Innovating within the daily deals model requires a deep understanding of customer behavior and merchant needs. By focusing on broader appeal, strategic referrals, and community engagement, businesses can enhance their success and sustainability. The key is to provide value that introduces new experiences while still meeting the demands of existing customers.