What is happening with Daily Deal Sites? Like we did not see this coming…

This week, Facebook Closed down their daily deal site and services, the Chicago Tribune closed down their daily deal site. Living Social and Groupon saw limited visits to their sites. Groupon stated that they will cut their marketing expenditure to $0.00 to get to profitability in 3 year??? Really cutting your sales and marketing expense to nothing is going to get you to profitability.  Are daily deal sites a passing fad. Were they ever really a business model

Now don’t get me wrong, I think some of the deals were great for the customers, and probably a great way for cash infusion for cash strapped small business. But the downstream consequences of these deals needed to be thought through. What was our acquisition cost per customer. What was the long-term position of this to our business and our brand. Will we keep the customer that we acquire, if so what percentage is acceptably for me to make money.

For the business that were started what is the long-term strategy? What is our competitive distinction and differention? How will we make money in this competitive environment? How will acquire new customer and build our consumer database?

At the end of the day, the daily deal site was a great idea but the question is for who. And was it ever really more than a lead generation model or sampling for the year 2011.

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