Utpal Dholakia of Rice University has been studying the deals market for some time and a few days ago released a new study, How Businesses Fare with Daily Deals: A Multi-Site Analysis of Groupon, Livingsocial, Opentable, Travelzoo, and Buywithme Promotions. In the study Doctor Dholakia examined the performance of daily deals run through the five major companies listed above in 23 US markets.
While I have not had a chance to read the full study yet ClickZ has a great overview of the findings:
- 20 percent of deal users are returning for full-price purchases at restaurants, bars, salons, and other retailers
- 36 percent of deals users spend more than the voucher value when visiting a merchant
- 22 percent of them never redeem the vouchers they've paid for
- 55 percent of businesses reported making money on their promotions, 27 percent lost money, and 18 percent broke even
- 48 percent of businesses planned to run another daily deal promotion, 20 percent indicated they would not, and 32 percent didn't know for sure
- 70 percent of marketers in special events, health, and services made money on their promotion.
- 44 percent of the restaurants surveyed financially profited from the promotion, and only 36 percent of them intend to run another daily deal
The was been a lot of chatter about how there is no way a business can make money with a discounted deal. This study shows what I have been hearing from merchants, properly structured deals work. With 73 percent making money or breaking even on their promotions deals are an online marketing method that works.