Another solution to get customers returning?
In another post I mentioned Bloomspot’s back-end approach to get customers returning to merchants: offer a 20% site-wide discount for each additional dollar spent at the original merchant. This requires a tracking mechanism trickling down to each merchant.
Still another approach to get customers returning is to offer repeat deals for the same merchant, each one better than the previous one. New deal site LevelUp is apparently testing this, though I foresee a couple of issues for merchants:
- Why foster the expectation of cheap products and services? Once you’ve scored that new customer, which is goal #1 in the daily deals game, the next goal is to get them coming back at full price, no?
- If profitability was weak on the first deal, how can it be any better on subsequent, deeper deals? Seems you’re only digging a deeper hole.
I’d like to see this work before drawing conclusions, but my hunch is the “site rewards + tracking” concept will fare better as it helps merchants to grow their baseline business. Also, discount on future deal purchases has the same effect on one’s wallet as bettering the previous deal.
Thoughts? Comment below!
Inspiration for this post: http://www.businessweek.com/ap/financialnews/D9OBMA101.htm
Bloomspot has solved merchants’ biggest problem: profitability!
Plus, it involves nice rewards for customers. So can everyone be happy now?
Bloomspot’s new program, called Bloomspot PRIME, was developed to track customer spending beyond the initial voucher. It also serves a tool to incentivize members to buy more from its merchants. For each additional dollar spent, Bloomspot rewards the customer with 20% in Bloomspot credit. Sweet!
Apparently, this is working quite well as you can see in this anonymized merchant dashboard Bloomspot sent me today:
When customers are rewarded and their purchases are tracked, we would expect more profits for merchants. Okay, so not all merchants are created equal, but it comes back to the point I keep harping on: the key for merchants is to turn new customers into repeat customers by being AWESOME.
On average, Bloomspot members are now spending 2.6 times more than the certificate. For restaurants, that’s about $90 above the certificate, with tips around 20%. For spas and salons, average member spends a whopping $139 above the certificate, tipping around 20%.
Bloomspot’s demographic is reportedly more educated (over 75% hold college degrees, compared with less than 50% for both Groupon and LivingSocial) and more affluent (over twice as many with household income over $100k as Groupon and LivingSocial—source: RapLeaf). Plus the average pricepoint of Bloomspot deals is above $75, over double that of other sites.
With all that in mind, I see good things ahead for Bloomspot. What member doesn’t love rewards? And what business doesn’t love better ROI?
