Deal of the Day

In the article, 10 Things Daily Deal Sites Won’t Say, Kelli Grant exposes some of the practices that can have an effect on postconsumption behavior:

1. "50% off? Not really." - People may not get the steep discounts they expected once they factor in taxes, tip and any un-covered portion of the bill. If enough people don’t sign up for the offer, the offer is gone. There is also evidence of price manipulation , like paying $10 for a $20 FTD voucher before Valentine’s Day, when the prices at the special voucher-redemention page was $5 to $10 more expensive than what other visitors to the site saw (Groupon says this was a mistake and gave customer refunds).

2. "Good luck cashing in." – When consumers wait to cash in their vouchers, the item they want may no longer be available. This results in an unhappy customer experience. Sometimes Groupon will sell more vouchers than a store can handle and the retailer will have to turn them away.

3. "We're above the law." – Is the deal a coupon, voucher or gift card? It’s unclear and that leaves the legal status of the transaction unclear as well. For example, if it is a gift card, federal law requires that it can’t expire for at least five years. But if it’s a voucher, the same rules don’t apply. There are two class-action lawsuits against Groupon that allege the company’s policies don’t comply with federal and state gift card laws. When customers can’t cash in a voucher, they may defect, complain or switch users.

4. "We'll be out of business by Christmas." - Competition in the group buying sites has intensified and there are now over 600 sites and counting. Many sites don’t survive. When this happens, it’s up to the business to honor the voucher.

5. "You won't use this coupon." - Businesses say about 40% of vouchers purchased don't get redeemed. Buyer’s remorse is a key factor in the failure to redeem coupons. Sometimes it’s just a bad gift idea. Other times people just forget.

6. "The 'deals' are dwindling." - As more group deal companies get started and the daily deal model gets stale for business providing deals, consumers will see more limits on the number of vouchers that can be purchased. Businesses will start to offer vouchers to pull in business during slow times, further limiting customer access.

7. "You're a cheapskate..." - The price-sensitive consumer is more likely to buy a one-day trial. They are more difficult to deal with because they want special deals and don’t want to play by the rules. The customers are often the complainers. The price-sensitive customer is more likely to defect, with retention rates at 12%.

8. "... but you're still overspending." – The deals on sites like Groupon seem irresistible. Consequently many people end up with purchases made on impulse that they don’t need. Single deals with an expiration date force customers to assess whether they want to buy and for some the deal seems too good to resist.

9. "Limited-time offer? Not really." – Consumers can find similar discounts as those found on group discount sites if they really search for them.

10. "We can't vouch for that local shop." – Sometimes unscrupulous retailers will offer vouchers through Groupon that take advantage of the customer. According to Groupon they put business through a thorough check and turn about seven for every one accepted. Nevertheless, a bad experience can harm the relationship and cause the customer to complain or defect.


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