While the age of daily deals, led by Groupon, seems to be on the decline, text marketing, also known as SMS marketing, is offering businesses an inexpensive, effective and easy-to-use marketing solution.

Statistics showing a nearly 50% drop-off in Groupon traffic since its peak the second week of June 2011, coupled with the recent elimination of Facebook’s four-month old Deals and scaling back of Yelp’s year-old daily deals product, suggest it’s time to shift focus on to whom and how best to market with specific deals. The Local Deals Survey released in June 2011 by PriceGrabber® showed that while 44% of respondents said they use or search the web for daily deals, 52% of respondents expressed feeling overwhelmed by the number of bargain emails they receive on a daily basis.

Furthermore, Groupon and other daily deal products have not proved to be more valuable as more people use them. While Groupon subscribers increased exponentially from 150,000 to over 83 million in a two-year period ending March 31, 2011, the revenue per subscriber experienced a 64 percent decline, dropping from $21.69 two years ago to $7.76 as of March 31, 2011. Increasingly, questions as to whether the deep discount model is sustainable for businesses are also emerging. Yelp CEO Jeremy Stoppelman conveyed in his blog on August 30, 2011, “We’ve also heard consistently from certain categories of businesses (very popular ones I’m afraid) that daily deals are uneconomic for them, which does raise questions around the sustainability of “50% off” daily deals for these types of businesses.” Just as problematic for these company and their customers, internal research from Groupon shows just 22% of the people buying coupons are making a repeat visit to a business after using the coupon.

Despite these trends, and especially in this economy, couponing is a proven marketing tool. One cannot argue that deals are always appreciated and customers love to save money. So perhaps it’s just that the right deals are not making it to the right consumers at the right time. How can businesses focus on attracting new customers and keep those customers coming back without a Groupon-like service?

Text marketing (SMS marketing) offers a cost-effective, sustainable solution, differentiating itself from the featured, daily deal craze on a number of key elements:

• Text marketing is sustainable. It allows businesses to reach their customers with their desired promotions, without having to negotiate a “50% off deal”. Offering products or services at 25% of retail value is not sustainable long-term.

• Text marketing is branding. It allows business to distinguish themselves from competitors. In an “all things are equal world”, direct contact through mobile marketing can create top of mind awareness for your business and/or product. Rather than simply offering a one-time deal, text marketing allows businesses to create a consistent presence in the minds of their customers.

• Text marketing is flexible. It allows businesses to reach their customers at their desired frequency, without having to wait to be “chosen” by a third-party. Text marketing campaigns that meet a company’s objective can be created within minutes and scheduled daily, weekly or monthly.

• Text marketing is targeted. It allows businesses to communicate directly with consumers who have expressed interest in their brand by opting into the text marketing experience rather than blasting offers to bargain hunters who are interested only in one-time, random deals.

• Text marketing is good for the business owner. With a text marketing strategy, the business builds and manages its own customer database. Robust text marketing applications allow for detailed analytics on customer subscription and redemption patterns, providing businesses with data not previously available from other couponing methods. These behavior patterns can be used to inform products and promotions, ultimately improve sales.

• Text marketing is good for the consumer. Text is the new preferred method of communication. While email and web-based marketing methods seem to be experiencing customer fatigue, statistics show that text messages have a 90% read rate and that most messages are read within 3 minutes of receipt. Customers can opt-out just as easily as they opt-in. Redemption is made easy because the coupon is on the customer’s mobile device.

As daily deal offerings are not living up to their hype, businesses need to expand their marketing approaches. Text marketing enables businesses to attract new customers, increase customer frequency, reward customer loyalty and boost sales.
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