By now, you have likely heard some of the horror stories about businesses that have destroyed their bottom-lines, or worse, with daily deals or coupon offers. There are those like the LivingSocial deal offered by Scripa Massage & Wellness that allowed customers to save more than 88% on an enjoyable spa experience. However, the shop sold so many deals that it would have taken Scripa Massage & Wellness from three to five years to complete them all. A bad case of overselling.
80% of Merchants are Willing to Run Subsequent Deals
LivingSocial’s CEO, Tim O’Shaughnessy, shared with Business Insiders CEO Henry Blodget, that around 80 percent of businesses that run a LivingSocial daily deal, will agree to run another deal if offered. O’Shaughnessy’s response came on the heels of the questions and horror stories shared by merchants at the Social Commerce Summit in New York on February 7th.
Although O’Shaughnessy admits that they do not nail it every single time, he also insists that on the whole, it does work in just the manner the merchants advertise it. He shares that the most vital element to a daily deal such as through LivingSocial, is that the merchants upsell their products and services if they want return visitors.
The Whole Picture
Although Amazon reported that LivingSocial showed a loss of around $558 million just last year, O’Shaughnessy reiterates that those numbers do not show an accurate view of any profit or loss margins for LivingSocial. Although the biggest part of the sum was in the beginning of the year, the gap definitely narrowed towards the end of the year.
“There’s one small chart that Amazon filed that doesn’t really give a particularly illuminative view of the business. There are certain things from an accounting perspective that you can’t see with that limited of a view. It’s fun to see little snippets and extrapolate them out without the big picture.”
With around 60 million users, O’Shaughnessy also shared that aside from Groupon, LivingSocial has virtually no serious competitors currently, and that is company is doing extremely well. He also insist that as they grow, they are also learning how to more efficiently market to their consumers. If a consumer has never opened an email about for a discount on a local sports event, they probably shouldn’t be sending the emails to them anymore. LivingSocial has been working on a better way to engage those who do look for and desire their specific service offers.
Author:
@BasilPuglisi is the Executive Director and Publisher for Digital Brand Marketing Education (dbmei.com). Basil C. Puglisi is also the President of Puglisi Consulting Group, Inc. A Digital Brand Marketing Consultancy that manages professional and personal branding for Fortune 500 CEOs, Hedge Fund Managers and Small Business Owners.
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Most businesses lose money doing those deals even though they drive customers to the biz. Discounts are too steep & revenue sharing with the daily deal sites add to the woes. Funny how Groupon & Living Social are both pretty deep in the red! Creative accounting?? There are thousands of competitors that have popped up that are hurting the big boys bottom lines. There is also serious legislation on the horizon that will forbid expiration dates on the daily deals because consumers purchase the certificates. Good bye daily deal sites.
P.S.-Great event yesterday at the Roger Smith Hotel!