Three years ago, we had no daily deal sites. The idea of a service that convinces merchants to offer steep discounts to online customers hadn’t punctured the cultural consciousness.
Today, between Groupon, Gilt City, LivingSocial, LifeBooker, PureWow, Bloomspot, and oodles of others (estimates say they’re in the hundreds) you can’t go a day without hearing about SOME sort of daily deal site. At this point, the flood of deals in our inboxes has gotten us used to the idea that, well, basically anything can be bought at a deep discount at any time.
While the business world has been freaking out over the potential profits — Groupon’s upcoming IPO may hit over $20 billion — all the hype, not to mention the general saturation (not to mention the fact that they’ve still only been around for a couple of years), have even inspired a daily deal backlash.
But while the debate rages over whether these services are just middlemen, and whether they offer any worth to advertisers, a key point that gets overlooked is the actual user experience: how does it feel to use these deals? Sure, we all like a bargain – but do people like using Groupon when it comes time to actually pay the bill? What does the man on the street think when it comes to whipping out, say, a half-off voucher at a three-star restaurant? Do people feel differently about a nice haircut after pulling out a discount printout when they’re settling up? (And perhaps even more importantly, does the stylist treat you differently because he/she knows you’re using Groupon?)
To find out, we asked some of the most seasoned experts on daily deals: New Yorkers. What we discovered was that while everyone does indeed love the discounts, the actual user experience is, well, a mixed bag.
First, there were the picky shoppers that were turned off of restaurant daily deals after a bad experience. One New York PR director cited a single incident as being enough to put her off the whole concept: “I went with a friend who bought a Groupon for a fancy restaurant in Manhattan. It was a little uncomfortable. The waiter didn’t know what to do with [the voucher] and looked irritated, which was embarrassing.”
The uncomfortable encounter made her question the value of daily deals overall: “Unless I know the restaurant, I’m not really inclined to do it. The one time we did buy the Groupon, we had just read a review [of the restaurant] and it sounded good. But was the meal good? It was actually not my favorite, and it was overpriced even with the voucher.” Since then, the PR director has purchased only one Groupon offer, for a pair of movie tickets.
Of course, a bar or restaurant’s value has more than one side — besides the food and drinks, there’s the experience. It’s the latter that prevents Tom O’Reilly, a thirty-something former attorney, from using daily deals to dine out. He draws a comparison to the experience of Restaurant Week (a twice-annual period in which pricier restaurants offer discounted prix fixe menus). “I do think I’d be embarrassed to use [a voucher] at a nice restaurant – it’s the same reason I’ve never felt comfortable taking advantage of restaurant week. I did that once and got the impression that patrons looking for the restaurant week prix fixe were treated like second-class citizens.” Granted, he admits that “for bigger items, like a suit or a gym membership, I wouldn’t be embarrassed at all.”
Meanwhile, Justine Benith, a 27 year old who works in non-profit arts management, says she doesn’t “go out searching for deals,” but she didn’t think she’d feel embarrassed using a discount somewhere upscale, on the basic assumption that “the restaurants and salons need the business or they wouldn’t be advertising on these discount sites.”
For others, this precise reasoning keeps them away from Groupon and its ilk. Cieran Rockwell, the CMS Coordinator for the Barbarian Group, pointed out that much of his reluctance to use Groupon at a service-oriented venue stems from the feeling that “when I have so many choices for the same thing, I want to spend my money on something that seems successful and has integrity — and those businesses don’t go on sale.” For Rockwell, avoiding daily deals isn’t a matter of embarrassment, but value: “I don’t think there is much of a difference between using a Groupon/Gilt City [coupon] at a nice place or a crappy place, but I do think anywhere that uses it seems desperate for the business, no matter how fancy.”
And what about servers? What do they think of the sudden and ceaseless line of customers bearing coupons? One waiter we spoke to, who works at a popular Brooklyn restaurant that offered a recent deal, pointed out that as long as you tip well, the waitstaff isn’t looking to judge: “I don’t know how much of an impact the online deal has on the overall business of the restaurant,” but “what matters to servers [and stylists, etc.] is being treated well and tipped properly — not the business’s bottom line.”
On the customers that used the deal, he had plenty of positive stories: “They were usually easy-going, happy guests. And they generally tipped well – a solid majority tip 20% of the bill before the discount. So I basically never notice the difference. I definitely didn’t feel any negativity or annoyance when serving them.” In fact, seeing all the deals come through the restaurant led him to check them out himself, “often for things I wouldn’t be able to afford otherwise. So I guess I’m a daily deals fan.”
Ultimately, when it comes to using a daily deal, customers don’t want to feel awkward or judged, and they want to make sure they’re actually getting something of value. O’Reilly had one solution to the potential-embarrassment problem: “If [the businesses] could come up with a way to automate the discount – say if you preregister your credit card with the restaurant – that might be less awkward.” Maybe to buck the backlash, that’s where Groupon and company need to focus next — on mitigating user experience so it’s more about customers having a great experience (and staying customers) and less about the macroeconomics of daily deals. After all, what good is Groupon’s monster IPO if everyone stops using it?