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What’s the Deal with Daily Deals?
Comments () | Published November 28, 2011

In a sea of plenty, consumer loyalties are being tested, and their decisions—where to eat, get a haircut, or sweat—are being driven by who has the best deal.

“I put a hold on my gym membership because I have enough coupons at other gyms to last me six months,” says Tara Gradoville, a dental hygienist living in DC. “I like to switch things up. I’ll do boxing for a month, yoga for a month. I once bought a coupon for Jazzercise. One of my coworkers said, ‘Isn’t that an exercise from the ’80s?’ ”

Gradoville, 37, subscribes to 40 deal sites and has more than 50 active coupons: “As soon as my alarm goes off, I look at my iPhone.” She figures she slogs through 50 e-mail offers a day. “I’ll skim for brand names and open only the ones that interest me.”

Some of the attention-grabbers include a Dolce & Gabbana suit for $200 (“It was worth $800”); a weekend at By the Side of the Road, a B&B in Harrisonburg, Virginia, for $350 (“One night there costs $400”); and an American Apparel sundress for $10 (“When a $30 dress is only $10, I’ll buy three colors”). Gradoville has bought coupons for massages, acupuncture, chiropractic work, and Botox.

Her passion for a discount overrides any psychic shame attached to the bargain.

“At first I was afraid of looking like I was cheap,” she says, “but then my coworker said, ‘Cheap? You shop even more now. You spend twice as much on coupons!’ ”

She ponders that for a moment: “I guess I don’t really need an $800 D&G suit, but for $200, it’s such a good deal.” Plus, Gradoville figures, she’ll wear it someday.

How did we go from a society in which “coupon queens” were derided as cheapskates to one in which it’s almost more of a black mark to pay full price?

“The first couple of times I used coupons, I felt weird,” says Wes Vermillion, a civilian working for the Navy who keeps track of his purchases on an Excel spreadsheet, “but now it’s so commonplace to use them.”

Shannon Hayes, 24, says she can’t remember the last time she paid retail for anything. “I don’t see the price as really being the price,” she says. “Everything is negotiable.”

22% of daily-deal buyers never redeem the vouchers they've bought.     

Hayes, who works in government affairs, has long been a savvy shopper. When she was ten years old and living in Memphis, she used to help her single mother with the food shopping. “I’d go to Priceline’s grocery section and bid $1 for things like Tide or milk and then take the coupons to the store.”

Today Hayes is a fan of, which helped her save on car services at Jiffy Lube: “It takes a little bit of work, but there’s always a way to find what you want cheaper.”

Says Larry Compeau, a professor of marketing at Clarkson University School of Business: “There is an age-old motivation by consumers to try and get a deal,” he says. “It’s intrinsic to our being.”

Compeau, who earned his PhD at Virginia Tech, is an expert on consumers’ use of and response to pricing. He believes it’s now more socially acceptable to seek out a good deal: “As a result of the economy, consumers are starting to rethink the past 30 years. There is a strong grassroots movement toward frugality. Before, we placed emphasis on more and more and better and better. But in a recession, people are rethinking this.”

People such as Crystal Barney-Harold. In 2006, the mother of three took a severance package from her job in telecommunications. “We had to make adjustments financially,” she says. “But when you have children, you still want them to experience good things.”

She discovered the world of coupons just this year: “I’m really grateful to these sites.”

Barney-Harold, who also likes entering sweepstakes, religiously checks Certifikid. Over the summer, she used the site to buy a coupon package for the Chesapeake Beach Water Park. “When school is out, camps are costly, and my kids want to do something every day,” she says. “These coupons allow me to do things with my kids I wouldn’t be able to do on my own.”

Another motivating factor, according to Compeau, is the group-buying mentality inherent in these deals. There’s a certain safety in numbers and in being associated with like-minded shoppers.

“These Web sites become more compelling because more consumers are involved with social networking,” says Compeau. “They feel they’re part of something bigger.”

And something important. With the way the deals are worded—there’s usually a minimum number of takers an offer has to have before the offer becomes valid; some sites have countdown clocks ticking off the seconds left until the deal expires—consumers are also invested in the outcome. “Your participation is required or things won’t work out well,” says Compeau.

Often, he says, that sense of urgency is self-imposed: “Consumers can’t stand to wait for the gratification that will come when they get their purchase. They think, ‘My life will be better. I deserve this.’ ”

Cecily Hastings says coupons have definitely improved her life—especially her dating life. “I am pretty old-fashioned, and when I go out with a guy, I prefer that he pays,” says Hastings, a 27-year-old congressional-relations manager at a DC think tank. “I find that happens 50 percent of the time. In the past, I would just sort of stew.”

Hastings, who admits to going out more nights than she stays in, has learned that the way to a man’s stomach is through group-buying sites: “When I encounter a guy who won’t pay for a date, I’ve found I can wean him into paying for dates by initially suggesting places that I have gift certificates for and he can cover the difference. Eventually he gets used to it.”

Coupons are serving as de facto tour guides for TaNisha Holmes. A recent transplant from Charleston, South Carolina, the 27-year-old lives in Southwest DC, works as an IT recruiter in Rockville, and has friends in McLean and Bethesda. She has coupons for all those Zip codes. “Coupons helped me learn the city,” says Holmes, who has lived in DC for a year. “My one friend told me I already seem like a real Washingtonian.”

A real organized Washingtonian. Holmes keeps her coupons—she figures that at one point she had as many as 45 active ones—in a binder. She uses tabs to designate categories such as restaurants, fitness, and spas. Holmes has memorized her system: “I know that the third tab back is for manis and pedis.”

She says that the social aspect of coupons—getting her out and getting her seen—is a big part of their appeal, because she’d eventually like to work in arts management. “It’s an opportunity to live the life,” she says. It’s one reason she bought a $239 Groupon for a night’s stay at the Gaylord National hotel. But the Groupon expired before she could use it.

Is there something in it for the businesses?


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Posted at 01:00 PM/ET, 11/28/2011 RSS | Print | Permalink | Comments () | Articles