How Do We Deal with the Daily Deal?

Everybody wants to save a buck. I know I definitely do. After all, that’s why coworker Allison and I swap deals and coupons we hear about. And it’s no surprise that I’m not alone in my nearly overwhelming obsession to snatch up a discount. That’s why daily deal sites have drawn millions of customers since their inception.

An infographic released by Lab42 on Tuesday, September 13^th shed some new light on daily deal trends. There were a few findings reinforcing my opinion that not every business is qualified to withstand a go on heavy hitters like Groupon and LivingSocial.

One of the most notable findings in the infographic was that 60 percent of daily deal subscribers have purchased a deal from a company which they’re familiar. Only 13 percent of subscribers have purchased a deal from a company without doing any research. And now the research aspect brings me to my main argument.

Customers want that fuzzy comfort when purchasing a product or service. I fall perfectly into this statistic. Odds are, unfortunately, I’m not going to buy from a company I know little to nothing about. And if I’m the slightest bit interested in an unknown, I’m going to do my research. I’m going check reviews on Yelp, ask on Facebook and Twitter and check out their site – hoping they have one. I need them to gain my trust. I need to know that the $5, $15, $30 I’m spending is worth it. Is it worth to other people who have tried them before?

Take the recent Whole Foods LivingSocial deal. Spend $10, get $20. They capped the number of available coupons to one million and you better believe they met their mark. (And you better believe I scooped mine up.) Reports indicate the coupons we’re going 30-80 per minute. Why is that? Trust. Confidence. Brand loyalty.

I find it affirming that the success of companies who provide deals like above is because they know they’ll have buyers. They’ve already captured their customer base. Lesser known companies who are trying to ‘get on the map’ just may struggle because they haven’t gained that whole-hearted following. They’re attempting to build their brand by giving consumers something super cheap. Are they cheapening themselves just to get some business? Will the customer return after using their discount? That’s questionable.

Closing that trust gap for these companies is the key to gaining a consistent customer base. I say it’s better to build your brand, work towards gaining loyal followers and then reward them with the discount. Now don’t get me wrong, I’m not saying lesser known companies can’t gain a swift following by tossing out a deal, but you have to wonder – is it that the way they want to position themselves for a consistent customer base?

I say we grow grassroots, you know, go “old-school”. It’s been done before. Coca Cola, Apple, Trader Joes and Target are all doing great – and I sure don’t remember seeing a buy one get one in my inbox.

Weighing the Value of Brand History

I've seen two changes for well-known brands taking place in recent weeks -- one local, one global -- that have made me think about the good/bad in changing your brand. I believe one brand came through the change in a positive manner. I'm afraid, however, the other brand may have made a move they'll regret.

Overstock.com is changing and/or co-mingling their brand to be known as O.co. As an online company, their domain name is crucial to their brand (duh). I think this will work, however, because the updated brand is shorter, catchier, easier to remember and is supported by their branding history.

How so? You may recall their series of television ads in recent years promoting "The Big O." These ads often featured an attractive woman and succeeded (with intended sexual overtones) in associating the Overstock.com brand with the letter O. Overstock.com's recent branding efforts have also included specific branding/logo references to O. As a result, it appears to me that they've made a well-planned change and transition.

On the other hand, St. John's Mercy Medical Center in St. Louis, Mo., is changing its name to Mercy Hospital St. Louis. This is a branding change I do not understand. St. John's is a well-respected institution with decades of invested brand history. Why throw that away?

The hospital is a baby factory -- both of my kids were born there -- and they will have generations of St. Louisans still referring to their (or their children's) place of birth as St. John's. The name isn't going to go away for many, many years. In addition, the hospital has the area's most respected burn treatment unit. If you hear of someone being seriously burned, you assume they'll be treated at St. John's because that's how it has been for decades.

Those are just two examples of the hospital's strong brand recognition. So why make the change? Is it to avoid confusion with other hospitals also named St. John's? If that's the case, changing the brand to Mercy Hospital isn't a novel solution in my mind. You can't swing a stick in the medical community without encountering the word Mercy. It also causes additional confusion with the myriad of health care networks in St. Louis that seemingly have the word Mercy in their name.

In short, I still like the hospital but don't like their change. They've spent years building their brand and have nothing to show for what had been a worthwhile investment. What do you think?