What’s with all the talk about daily deals losing their appeal among consumers? Our findings show the opposite, but merchants and daily deal providers better change their tactics to make the most of their opportunities while they still have the chance – particularly for the holidays.

eDataSource, a competitive intelligence company providing strategic analytics for email, social media and e-commerce activity for more than 800,000 consumers and 5,000 brands including Groupon and LivingSocial, has found that consumer interest for daily deals remains strong, but merchants and providers need to work harder and smarter to keep the conversions coming. While growth in new customer acquisition for the top-two daily deal sites has leveled off some in Q3 2011 – despite almost continual growth over the 3 quarters prior (see figure 1 below) – surprisingly, email open rates remain very strong (see figure 2) and in fact, are still on an upward trend.

With both Groupon and Living Social having close to or more than 50 million subscribers each in the U.S. and open rates consistently above 13 percent – which is extremely good for companies who mail every day – consumer interest is clearly still there. Then why do we keep hearing about the demise of daily deals? What our email behavior data shows is that consumers are still signing up and still opening their email messages, but the follow-through action must be lacking. Merchants and daily deal companies need to do more to make customers execute on the offers, either by making more personalized promotions based on consumer interests and/or previous purchases, or they need to offer deeper discounts still.

Since the demand for small gifts increases exponentially in Q4, this data gives us hope for healthy daily deal sales during the holiday when consumer appetite for spending is strong. While the novelty may have worn off some, consumers just need a little more incentive to convert. The situation is favorable for some creative wrapping of deals this holiday season.


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