When it comes to advertising, word-of-mouth is still the key to success.
This is especially true when it comes to the daily deal industry, at least according to a new study from Constant Contact and Chadwick Martin Bailey. The study not only reveals that word-of-mouth is a key factor in running successful daily deals for small businesses, but also found that more than one third of consumers are likely to buy a deal from a local small business rather than a national chain.
However, one of the most surprising statistics from the study shows that a good deal experience doesn’t automatically result in loyalty for nearly 60 percent of consumers, even though most consumers think that deals are a good strategy for local businesses to attract new customers.
“It’s very clear that proximity matters, and that local merchants have an advantage over big brands. More than a third of consumers are more likely to buy deals from local businesses,” says Dave Gilbertson, general manager, SaveLocal. “However, for nearly 60 percent of deal buyers, a good experience does not automatically translate into loyalty. It’s absolutely critical that merchants stay in touch after the deal. Amazingly, many deal vendors sabotage this effort by refusing to give merchants the contact information of their buyers. The true value of running a deal for a small business is bringing in new, repeat customers, not one-time deal seekers. Without the tools to follow up, unfortunately, that’s what many of them become.”
Other findings show that more than twice as many consumers share deals via email compared to social networks, while deals for restaurants and entertainment are the most common types to be shared. The study also found that recommendations from friends make half of consumers more likely to purchase a deal from an unfamiliar small business, and that personal endorsements drive deal purchases, especially for women.
“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,” says Gilbertson. “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.”