A daily deal start-up headed toward a summer launch aims to combine online discounts with consumer reviews of local merchants. LocFree Network LLC could start offering deals via LocFree.com in New York City in early summer, says Timothy Peterson, company co-founder and chief marketing officer.
What will make this local deal provider different from competitors, he says, is the review requirement: Consumers who receive deals must provide e-mail addresses, and those consumers must review their merchant experiences after using the deals. “Say you get first entrée for free,” he explains. “Then you must write a review, negative or positive, for the LocFree site.”
LocFree will not allow consumers to take advantage of future deals until those consumers review merchants who offered the previous deals, he adds. Merchants can contact consumers via e-mail to offer other deals, too.
LocFree hopes to launch in New York City with at least 90 days worth of deals ready to go, he says. The deals will involve not only restaurants, but also museums, retailers—including, perhaps, local outlets of national chains—and entertainment providers. Offers might come to consumers via text messages, too. “We are looking at social,” Peterson says.
He says LocFree will occupy a relatively lonely space. “A lot of companies are in the review space and deal space,” he says, “but none really do both.”
Peterson will speak at the Internet Retailer Conference & Exhibition 2012 in Chicago in a session entitled “Attracting and retaining talent in a competitive market.”
What does the future hold for digital couponing? This article takes a look at the growth of coupons in the past decade, touching on daily deal sites, mobile couponing and social sharing.
Couponing had seen unprecedented growth in the past decade due to a combination of factors — one of which was the economic recession in the U.S., combined with an increased consumer interest in mobile technology and devices.
Because of this, marketers began to heavily fund digital platforms. The coupon industry, specifically, saw record growth within the digital realm, and by 2010, SavingStar estimated that “49 million people used printable or digital coupons.”
The benefits digital interactions offer coupon companies are vast. For starters, online couponing allows for great promotion and wider distribution for brands. It also provides companies with better reach and the ability to track consumer preferences and patterns. Data from Leo J. Shapiro and Associates determined that the digital coupon consumer base was primarily comprised of young married couples with disposable income. Groupon has targeted this demographic, lending digital couponing a social reputation.
Daily deal couponing continues to be a popular tool among consumers and marketers, and many major companies have implemented their own version of the trend.
What Business Owners Need to Know About Daily Deal Couponing
Although intriguing for consumers, daily deal platforms like Groupon have not always been beneficial for business owners, who often see a spike in business but little customer retention.
A Rice University study found that 66% of the 150 businesses surveyed reported that Groupon promotions were profitable. However, more than 40% of the organizations said that they wouldn’t run a Groupon offer again.
Daily deal platforms have revealed the social nature of contemporary couponing. For example, Cornell University reported that many Groupon users see themselves as “marketing mavens,” and “on the front edge of market trends and price information.”
Additionally, users claimed in the survey that they would not have tried a restaurant or store without a coupon offer. Contemporary couponing has highly influenced social branding, greatly increasing the popularity of daily deals.
1. Social Leads to Social Sharing
The social, daily deal strategies made popular by sites such as Groupon and Living Social have certainly spawned many copycat initiatives within the digital couponing realm.
One such example is SocialTwist, a platform that states it “allows users to share in order to receive a better bargain.” Basically, consumers can turn a $1 coupon into a $4 coupon simply by sharing it with four other people.
This method will likely continue to increase in popularity in 2012 — we already saw evidence late November 2011, when Foursquare announced it would incorporate a new “social sharing” button on its site.
2. Getting Mobile-Ready
Given these newer strategies, companies are mobilizing their virtual and physical platforms to better reach and retain these social, mobile customers. Most companies are aware that their mobile presences have to be dynamic and user friendly. With roughly 91% of the population using mobile devices and 26.3% accessing the Internet, it is important to have a mobile site for on-the-go reading and utilization.
Additionally Google reported that 95% of smartphone users have searched for local information, proving that location-based, deal searching is vital to digital couponing.
The same study found 38% would use a mobile device to find a store location, 34% to compare prices, 28% to research deals and coupons, and 27% to find a product review.
3. Resolving Mobile Couponing’s Redemption Pitfalls
Mobile couponing, an obvious extension and result of digital distribution, has been popular despite its “mechanical” issues. With the rise of digital coupons, there was also a surge in consumers who used their mobile devices to reference coupons visually on their smartphones. Unprepared for this development, the redemption process, such as the scanning of digital coupons on mobile devices, has proven difficult until recently.
“Mobile coupon redemption has always struggled with ensuring a seamless experience at the point of sale,” says reporter Steve Smith. So, business giants like Walgreens are “retraining salespeople to handle the process and equipping stores with hardware that can recognize 2D codes on LCD displays.” This nationwide initiative was just launched and underwent testing during the 2011 holiday season.
Walgreens released an app for iOS, BlackBerry and Android, which includes a new coupons section that issues up two to three new exclusive weekly deals for customers using the mobile apps.
Rich Lesperance, head of digital marketing and merging media for Walgreens, told Media Post that “the program is the largest deployment of in-store mobile coupon scanning of which he is aware.”
Looking Ahead to the SoLoMo Strategy
In short, the “social-local-mobile” trend is the next cutting edge move for digital businesses, and a necessary consideration for coupon brands. SoLoMo gets specific when it comes to targeting your ideal market and allows your ideal consumer to find you. The combination is a win for both parties, as well as the logical next step for consumer activity based on current digital engagement.
A report from eMarketer found that the popularity of mobile coupons is still rising, indicating that one in ten mobile users redeem coupons via their mobile device.
Data from eMarketer estimates that nearly 20 million US adults will redeem a mobile coupon this year, including coupons or codes received via SMS, applications and mobile Web browsers; quick response codes for redemption online or offline; and group buying coupons purchased via mobile. By 2013, the number using such coupons will nearly double, and 16.5% of all US adult mobile phone users will redeem a coupon that year.
The popularity in mobile coupons extends from the popularity in Online coupons experienced during the recession, eMarketer speculates, and is a trend that isn’t going anywhere soon. “Even as the sputtering economy attempts its recovery, the popularity of couponing has continued, spurred in part by the burgeoning daily deals space,” said Noah Elkin, eMarketer principal analyst and author of the new report, Mobile Coupons: Offers and Deals Light Up the Last Mile. “Mobile coupons will play a central role in broadening the appeal and acceptance of digital coupons among shoppers.”
Not surprising, mobile coupon usage is much higher among smartphone users, where nearly one in five users ages 18 and older will redeem a mobile coupon, representing growth of 117.6%. Triple-digit uptake rates will be short-lived, according to the research, but by 2013 almost one-third of smartphone users will be redeeming discounts on the go.