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Email Drives Daily Deal Websites

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Daily deal sites love social media, but they live and die by email.

Those that want to live in an intensely competitive market are going to have to get better at delivering tailored, relevant messages to their audiences, email service provider StrongMail argues in a report released this week.

"Email and social really complement each other. In reality, email was the first social media, the original one-to-many medium," said Greg Bettinelli, senior vice president for marketing and product at HauteLook, a division of Nordstrom. Sure, HauteLook would love for recipients to forward the message or post something about it on Facebook or Twitter, but it all starts with "seeding of that message to a lot of people at a specific time."

The timing is particularly important to HauteLook, which operates on a "flash sale" model of limited time offers. Every day at 8 a.m. Pacific time, HauteLook blasts out offers to everyone on its list within a 5-minute window, so that they will all have the same opportunity to act on that offer. HauteLook also wants to get customers in the habit of looking for messages at the same time every day. HauteLook is a StrongMail customer and relies on the service for rapid personalization and high-volume email delivery.

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"We've had a number of daily deal sites coming to us looking for a solution to their needs," Kara Trivunovic, senior director of strategic services at StrongMail. StrongMail's daily deal report is based partly on its experience working with those customers, as well as research on how others in this market are using email.

The report is divided into discussions of the two broad categories of daily deal sites: group buying operations, exemplified by Groupon and LivingSocial, and flash sale sites such as ideeli and HauteLook. While each of these businesses has its own twists on the model, essentially group buying sites are built around the concept of giving consumers access to a deep discount, provided that enough people sign up for the offer--incentivizing members to spread the word in order to pump up the volume. Flash sale sites also offer a deep discount, but here the key parameter is the limited time offer.

"What we found was that some of these sites are doing really great things with their email program to deliver relevant communications in a timely manner, and others aren't," Trivunovic said.

The report concludes that group offer sites could be doing a lot better. Groupon is the leader of the pack, the company that famously, passed on Google's acquisition offer late last year in order to move ahead with plans for an initial public offering. However, Groupon reportedly is delaying the stock offering, partly because of the state of the stock market. Many observers of the industry also see the daily deals market as an overcrowded one that will produce only a handful of survivors.

StrongMail gives Groupon highest marks for the welcome message it sends when someone first signs up. "Not only does Groupon welcome the new subscriber, they also provide the ability to take three mutually beneficial actions: 1) tell your friends about Groupon, 2) provide preference information for the deals you want to see most and 3) the ability to tell Groupon who you would like to see deals from. Including a mechanism within the email for Groupon customers to have a voice makes it a two-way communication. Instead of talking 'at' subscribers, they are establishing rapport and conversation," the report states.

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