A week after Groupon filed paperwork for its IPO, a Rice University professor said his latest research shows that while such daily deal sites are very successful at attracting new customers, those customers rarely buy more than the heavily discounted deal or become regular, full-price customers.
Management Professor Utpal Dholakia found that while close to 80 percent of consumers buying daily deal coupons had never made a purchase from the advertising business, only 35.9% ended up purchasing more than the discounted item or service and only 19.9 percent returned to the business to make a full-price purchase. In other words, a high proportion of daily deal users are jumping from offer to offer and exhibit little brand loyalty.
The findings are based on a survey of 324 businesses that conducted a daily deal promotion between August 2009 and March 2011. Almost 56 percent of businesses reported making money, 26.6 percent lost money and 17.9 percent broke even on their promotions. Even so, 48.1 percent of businesses indicated they would run another daily deal promotion, 19.8 percent said they would not, and 32.1 percent said they were uncertain.
Less than half of the businesses surveyed indicated enthusiasm about running another daily deal in the future, fully 72.8 percent indicated openness to considering a different daily deal site, and only 35.9 percent of restaurants/ bars and 41.5 percent of salons and spas that had run a daily deal asserted they would run another such promotion in the future.
