Lara Albert

Lara Albert: This year there have been a lot of players getting in (and out, and in again) of the daily deal phenomenon. Facebook -- in and out. Bing -- in. Google -- in and out and now backing Groupon. Amazon -- in and backing LivingSocial. AT&T – in (twice) and out? Et cetera.

You’re probably familiar with the concept for online services like Groupon and LivingSocial: merchants -- mostly small and medium local businesses -- contract to offer time-sensitive, deep discounts to a specified number of people on a given day. The audience is local and has opted in by subscribing for deal-of-the-day emails. The scenario is simple: targeting based on subscription and location and the small business is hoping to gains new, repeat customers.

Although there’s been a lot of hype and activity around this concept, many believe the trend for daily deals is on the down slope. The New York Times recently ran an article citing complaints from the merchants who made offers via daily deal sites. It seems that most daily deal users are not returning as full-price customers and consumers are being trained to never pay full price for anything.

So what’s preventing this model from delivering on its promise of building long-term, loyal customers?

It’s the use of data -- or lack thereof. At the Mobile Future Forward conference in Seattle this year, Brian Mistele of Inrix nailed it on the head, “In order for it to be interesting, it has to know something about me and my preferences and be able to target me.” The majority of daily-deal offers are based on simple demographics, such as city, gender and email address. Is this really enough to target an offer that’s deemed valuable by the customer? And to determine which customers are most valuable to the small business?

As we move into a world where consumers expect to receive personalized communications and offers -- especially when it comes to the mobile device --one has to wonder if mobile operators wouldn’t have been a better source for the daily deals model. After all, they already have existing relationships with the two key parties: businesses looking to promote offers to acquire new customers and consumers looking for great deals. They also have a wealth of customer and contextual intelligence. Acting as a filter for the best deals, the operator could have rapidly established a viable market that connects consumers and merchants in relevant ways. The numbers alone make it more viable: Groupon boasts 50 million subscribers and LivingSocial claims 24 million, while established top-tier operators like Verizon and AT&T each have upwards of 75 million subscribers.

At last year’s Gartner Wireless Summit, Nick Jones, one of the firm’s analysts, discussed “the third age of mobility.” The first generation was basic presence, followed by where we are today with location, identity, bar codes and the start of contextual advertising. The third generation -- delivering what a customer needs at a particular moment -- is the customer-centric approach that consumers are starting to demand.

To meet this demand the mobile operators must leverage one of their most valuable assets -- their customer data -- to deliver to consumers what they want, when and where they want it. The amount of data available to the mobile channel far surpasses that of any other and with proper analytics, mobile operators are moving beyond broad swath campaigns to personalized communications based on a customer’s unique needs and preferences. What does this mean for the consumer? It means we get offers that are relevant because they are delivered at the right time and place based on our individual behavioral patterns. Instead of simply using demographics, mobile operators are using unique preferences, behaviors, relative location, availability, profile characteristics, social network intelligence and propensity to buy, leading to significantly higher take rates and associated revenues.

Determining the right message for each customer is the first step. What is the optimal incentive for driving uptake? Is a “buy one, get one free” offer better than a “$20 off” discount? What offers are actually too rich and attract the wrong type of customer? How effective are certain types of messages? It’s important to determine customer sensitivity to offer messages because not all messages drive the same response. The next step is delivering that offer in the right context. What if you knew that an introductory trial offer targeted to those highly connected to social influencers who have completed a transaction in the past 72 hours drives 25 percent higher click thrus? Or that the probability of driving a sale increases by 40 percent when a ‘deal of the day’ is delivered to someone who lives near a particular retail location versus someone who is just visiting for the day?

With the mobile ad market taking off, there will be a lot of room for marketers to get it right, and of course, a lot of missteps along the way. An important learning from the daily deals phenomenon is that consumers will opt-in to advertising when they feel they can benefit. But if you don’t continue to deliver value, you risk not only impacting revenues, but losing the customer due to a bad experience. By applying analytics to the rich universe of data at their fingertips, mobile operators can uncover the right time and place to deliver offers to the right customer -- turning a daily deal into a relevant deal.

Lara Albert is senior director of global marketing for Globys, a Seattle-based company that works with wireless carriers to analyze user data and market to their customers.