Word of the Week – Daily Deals

Daily deal businesses truly rely on email as their engine for growth. As more and more businesses enter the playing field, the challenge remains on how to stay relevant and to stand out from the others in an ever crowded inbox?

Strongmail released a whitepaper this week on how daily deal sites can use email marketing to grow their business in this competitive landscape. They find that using dynamic content and quickly delivering content before the start of a sale can drive urgency if subscribers can see the limited amount of time and inventory left. To reduce churn caused by subscriber fatigue, successful daily deal sites allow for custom email frequency and message type.

Tal Nathan for Clickz writes that daily deal sites need to adopt the same subscriber personalization and lifecycle marketing that online retailers have done successfully. Nathan notes that Hautelook generates higher response rates by segmenting deals based on gender and site-browsing behavior. Another problem that daily deal sites face are inactive subscribers, those that never have purchased a deal or have never opened or clicked through on an email in 90 days. Nathan suggests sending a win-back campaign to these subscribers to re-engage them, and to disable from them from your file to help keep email deliverability rates high.

Because the competition is so high for daily deal sites, it’s no surprise that many have died out in the past year. The Wall Street Journal reports that almost a third of daily deal sites have vanished in the past year (paid subscription required to access WSJ content). Part of this challenge is the increasing cost to acquire new subscribers. The WSJ also reports that Groupon spent $8 in 2010 to acquire new subscribers, and now are spending at least $23.50 per subscriber. As the cost increases, it will be a bigger challenge for daily deal sites to retain their subscribers and achieve a higher lifetime value.

Are you in the daily deals business? What are your current challenges or successes in using email to grow your business?

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