The Danger and Promise of Daily Deal Sites

Summary

Daily deal sites like Groupon and LivingSocial have emerged as a tempting channel for companies to capture new customers and drive repeat purchases. While the past year brought heavy consolidation among these sites, the surviving companies have maintained strong momentum with consumers: 50% of those surveyed by L.E.K. Consulting are registered Groupon members and 28% subscribe to LivingSocial. Yet despite the lure of new customers, daily deal sites can be a dangerous proposition for companies. L.E.K.’s new report outlines the opportunities and drawbacks that companies face as they evaluate using daily deal sites as another distribution channel.