Coupon sites: walk, don't run!

Penny Dryden, commercial director, Valassis UK: Why are deal-of-the-day hyper-portals like Groupon losing their allure for marketers?

Penny Dryden, commercial director, Valassis UK: Why are deal-of-the-day hyper-portals like Groupon losing their allure for marketers?
With consumer spending still in the doldrums, it’s hardly surprising that retailers have been tempted by deal-of-the-day sites like Groupon, promising to transform footfall.
But why are such hyper-portals suddenly falling out of favour with marketers?
Groupon et al have certainly been making the headlines recently, but increasingly for less than positive reasons. This is a shame, as such mass coupon portals are providing a glimpse into the future, with the promise of time-sensitive and geographically-specific offers being pushed to consumers’ mobile phones.
Digital coupons, though, are not a panacea for sluggish sales in a difficult economy – however hyped-up they might be.
Used over-zealously and indiscriminately, they can create more problems than they solve, attracting unprofitable one-off sales and fickle, deal-hungry customers whose longer-term purchasing habits are unlikely to change once a promotion has expired.
It is this realisation that has caused use of mass market deal sites to fall off in recent months.
Some retailers have been overwhelmed by excessive take-up of offers which have actually failed to deliver profits because the ‘giveaways’ have been too generous and the customers too flighty to hold onto.
New digital coupon technologies are certainly exciting and compelling propositions; but the risks need to be understood and managed.
What’s more, there is absolutely no justification for consumers to be exposed to questionable terms and conditions, for merchant offers to be cynically limited to minute volumes or for misleading headline prices to be allowed.
It’s now time for this new sector of the industry to catch its breath. The UK market still boasts some of the most sophisticated and successful coupon and voucher programmes (paper-based, online and mobile) in the world.
But these kinds of promotions depend upon trust between the consumer, who can be confident the offer will be honoured; the merchant, who can be certain that they will recover the discount; and the coupon issuer, who expects to pay only for coupons that have been redeemed.
This trust is underpinned by intermediary agents, who ensure the system works for the benefit of all parties. These agents play a vital role in the success of the paper-based voucher system and their experience and expertise is also essential in the digital coupon environment.
Online voucher and coupon sites add an exciting spin to an established and much valued marketing mechanism. It would be a great pity if deal-of-the-day sites created a bad reputation for all coupons, just when digital coupons were about to come into their own.