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The daily deals business model is in trouble and many people are claiming that their doomsday predictions of 1 or 2 years ago are now coming true. Last week Groupon reported another quarter of disappointing earnings and while the other daily deal companies are not disclosing anything, my assumption is that they are dealing with some significant issues as well. Deal and particularly email fatigue could be settling into their subscriber/customer base and along with the increasing pressures of merchants not wanting to strangle margins might be coming back to bite the daily deals/local commerce space.
I left Groupon over 2 years ago and have been silently following the marketplace as it has evolved, especially around how companies are “doing” email. By in large, most daily deals/local commerce sites are still relying on the promotional push at 5 am to sustain their business while I see no attempts to re-engage me or get me excited about their brand via email. I have also witnessed that most of these companies have neglected to jumpstart their on-boarding programs to woo subscribers, increase brand affinity, educate and create loyalty. In my opinion, the creative has stayed the same (even Groupon’s) and it seems companies would rather invest in sales people than their lifeline, better known as their email program to try and optimize revenue.
When daily deal companies began to explode, that was a good thing for email marketing. It showed that email once again can sustain and prove its worth across the digitalsphere and in some cases was the ultimate conduit for these companies becoming and staying successful. The surge of these companies propelled the email is dead/dying crowd to either write more about how much it sucks or in the case for most, the realization that email was not going away and that it can create one of the fastest growing companies of all time.
Email marketing is thriving everywhere and I still believe that it is the most powerful and profitable digital channel out there, but companies like Groupon and its competitors need to re-consider the real role of how email plays into their overall success. This fading that everyone is talking about here and many other places does have an effect on email marketing for the organization, but then again email maketing does not live in a vaccuum. These local commerce companies need to figure out how to optimize what they have in their subscriber base and create a sustainable strategy leveraging email, mobile and social to truly surprise and delight their audience not just in the beginning but as the subscriber/customer journey matures. Local commerce companies need to have propensity models tied to inactivity and fatigue and take a proactive stance using email and other means to reach their audience. They need a comprehensive strategy for acquisition that moves beyond just capturing an email address.
Is all that I am saying easy? Heck no…in fact it’s hard, really hard. Their will need to be a sizable investment in time, resources and even money to figure this out. Best practices don’t apply here and there is no simple solution. As companies evolve, so must their models and investment into the email channel. The effects of email and this fade will not be felt by many organizations as long as they choose to innovate and optimize.
It’s go time. Who is with me?