Bleary-eyed, scrolling through the morning’s daily deal e-mails on my iPhone, one of them catches my eye. It is from “Daily News Reader Offers” the daily deal arm of the New York Daily News. Gone are the days of spreading out the Sunday paper of choice on the kitchen table (carefully avoiding the plates piled high with challah French toast) in order to artfully cut out coupons at the request of your mother. The customer experience has been reduced to treasure hunting in mass e-mails before sunrise and I believe this could be the albatross around the neck of companies like Groupon and LivingSocial.
Few companies have grown faster than the daily deal sites in such a short period of time. But rapid expansion often sheds light on flaws in the shadow of stacks of money. A member of Stifel Nicolaus’s equity research team correctly identifies Groupon’s risky growth strategy in the Wall Street Journal, “Groupon’s ‘get big fast’ strategy to dominate the local-deals business is bold, potentially revolutionary and wrought with organizational challenges.” A stagnant stock price and growing customer fatigue will force Groupon, LivingSocial and competitors like the New York Daily News to retool its customer relations and deliver more than just an e-mail.
As I thought about it more, it became clear that the New York Daily News and other newspaper companies are well-positioned, in comparison to others, to take on Groupon and LivingSocial because they built significant brand equity over years of being the most reliable source of coupons. Creating an experience and customer trust was at the center of coupon insert success. And recreating this interaction with customers online is the most significant piece missing from the daily deal business model. Witty descriptions of each deal is not enough to change the perception that we are all just waiting for our daily deal trough to be refilled, so we can eat.
The daily deal market is crowded and competition to stay out of a customer’s spam folder will only get tougher. Ultimately, to gain on Groupon and LivingSocial, companies like the New York Daily News should abandon their copy-cat strategy and think about what customers wanted in the golden years of couponing. By reminding customers of whom they used to trust and creating a differentiated experience, I think that newspapers can be a formidable competitor.
One idea to get the New York Daily News team started: Instead of blast e-mails, develop a Zynga-like game that allows customers to create a profile online and connect to other social platforms, virtually clip coupons, earn greater awards, unlock badges and actually engage with its daily deal provider. I’m interested to hear about your experience with daily deal sites and what you think they can do to improve. So, what do you think?