Consumers love daily deals for the discounts on restaurants, spas, and other products and services. Merchants, on the other hand, use daily deals in order to draw in new customers—people that the business hopes will turn into repeat, full-paying customers. But what if the folks drawn in by cheap deals don’t come back when the prices aren’t so cheap? A new rewards program from Groupon aims to increase the likelihood that flash-in-the-pan daily deal customers become long-term customers.
If daily deals amount to “one-hit wonders,” in which loads of new customers are attracted by a deal, only to completely disappear once the deal is gone, there isn’t much of a daily deal business model. In a survey published earlier this year, more than half of businesses that had offered daily deals in the past said they had no plans to run such deals anytime soon, and surely many of them were hesitant to go to the daily deal well out of concerns the proposition won’t pay off in the long run.
From the consumer standpoint, there’s an obvious reward for purchasing a daily deal from a site such as Groupon of LivingSocial: discounts often amounting to 50% off. But what’s the reward for returning after the deal has already been used? For that, the customer is awarded nothing but the privilege of paying full price. It’s almost as if there’s a penalty attached to returning post-daily deal.
To entice customers to return, while at the same time weaning them off of the idea they’ll always be paying daily deal-type prices, the idea of daily deal rewards programs have been circulating nearly as long as daily deals have been around. Last fall, Groupon announced it was testing a new rewards program in select markets. And now, the daily deal giant says that Groupon Rewards is going national.
As spelled out in the Chicago Tribune, Groupon Rewards doesn’t involve the swiping of a special card like loyalty programs at supermarkets and drugstores. Instead, customers opt in to a business’s Groupon Rewards program simply by paying with the same credit or debit card they have on file with Groupon. Participating merchants set a specific spending goal that must be met, and once the threshold is reached, the customer is rewarded with a Groupon voucher valid at the business at hand.
How much must a customer spend in order to get the voucher? And how much will the voucher be worth? Each will be determined on a case by case basis. Hypothetically, after spending $100 at a restaurant, you might be rewarded with a $20 voucher good for future purchases at the restaurant. Or, after dropping $50 at a salon, the reward could be a free bottle of conditioner.
Groupon Rewards has launched nationally as of Thursday, May 10, but merchants must sign up to participate, and because the program is so new, many haven’t had time to look through the specifics and decide whether they want to do so. We’ll find out how many opt in, and how good the rewards really are, soon enough.