A new study conducted by Constant Contact and Chadwick Martin Bailey has revealed that word-of-mouth is crucial for the success of small retailers using daily deals. The study has thrown light on consumer behavior in relationship to daily deals. Here at Daily Deal Builder, we have continually been huge proponents of User Generated Recommendations. User generated recommendations and word of mouth advertising is the most powerful from of advertising that any company can utilize.
Take a look at the most visited sites on the net… Nearly all of them use user generated recommendations and user generated content.
The study shows that more than a third of consumers are more likely to purchase a daily deal from a local retailer than a national chain. Consumers are also willing to share great deals even if they are not currently a customer of the business.
“Two of the more important findings in this research were that word-of-mouth is key for the success of a deal and that personal endorsements drive deal purchases. This falls right in line with what we heard from merchants when we were developing SaveLocal: they wanted a tool that brought in new customers through word-of-mouth,” said Dave Gilbertson, the general manager of SaveLocal. “Half of the survey respondents said they are more likely to purchase a deal if it is recommended to them by friends or family – and that’s why merchants are more than happy to reward people who recommend them and share their deals on social networks or through email. In fact, with SaveLocal we’ve seen that merchants who include sharing incentives in their deals increase their audience reach by 138 percent over those that did not use the feature.”
The study also revealed that consumers signing up to obtain information on daily deals use the information to obtain deals. Moreover, consumers are more likely to purchase a deal from an unfamiliar business if it is recommended by friends. Personal recommendations help increase purchases of deals, especially among women. The most shared deals relate to restaurants and entertainment. Customers prefer to share deals using e-mail rather than social media.
However, there is bad news for small businesses as well. More than 60 percent of customers who have a great deal experience do not automatically become loyal customers. This can be worrying for small businesses especially as the study shows that consumers believe that small local businesses benefit from the daily deals and expect the daily deals trend to continue. Creating a Win – Win – Win situation is vital.
If you are thinking about running a product or service on a daily deal site, remember to pay special attention to your pricing.
Make moves today,
Marc D. Horne
Daily Deal Builder