Why discount / deal sites promote brand disloyalty?


My colleague recently availed an offer on a discount site for a full body massage at a Spa. He was very happy with the treatment received and so he recommended the same to me. Surprisingly he could not recollect the name of the Spa. He remembered that it was somewhere in Koramangala in Bangalore but not the name. He asked me then to check the discount site which had a similar offer running but this was for a Spa in Indira Nagar in Bangalore. Though my friend wanted to refer me to the Spa he had visited the site was sending me to another Spa. Brand loyalty was being compromised as only the offer mattered not the facility delivering the service.

brand disloyalty

So had the discount site just promoted brand disloyalty?

When the site ‘Groupon’ hit upon the novel idea of group buying and passing on the savings to the consumers through social media, the world cheered. Finally there was system that was a win –win for all. The consumers got cheaper prices, the businesses got bulk deals and the peer review system meant that the standards had to be kept up. In true classical economics the open markets had won.

In India ‘Snapdeal’ became an overnight celebrity enticing everyone including the ‘Yamraj’ the Indian mythological god of death according to its commercials. A visit to the site is like a child visiting the candy store with discounts and offers on all services including dining, spas, massages, beauty treatments, apparel, accessories and the list is endless.

But are brands really winning in this system?

I tried to find answers to this and soon realized that there was no clear answer. The challenge is that most discount sites attract bargain hunters, and the bargain hunters don’t care about brand loyalty as they are driven by just one feature and that is price.

In a recent report brought on the retail industry by IBM called “Winning over the empowered customer” it is discussed how; consumers seek and accept shopping advice from peers, family, friends and even strangers. They bring attitudes and expectations that are shaped by experiences across a broad spectrum of industries to every interaction with retailers. And through this lens of connectivity and collaboration, they know almost everything about every product and every brand and ultimately decide which retailers have earned their trust.

But if the discount site decides which offers I can take without paying any attention to the establishment serving me it is creating an environment of brand disloyalty.

In other words there is only one true winner in the group buying model and that is the discount site that becomes the channel to access all these goodies. The consumer wins but only in the short term and that too only on price. It has no reflection on the quality of the service or the trust that a retailer develops with the consumer.

But as always there are a few things that the retailer can do to improve the situation despite being registered on a group discount site:

1. Get to know the customer– I mean seriously know your customer, and it has to go beyond just filling a feedback form at the end of the meal. Connect with customers on social media – and understand their preferences and the value they seek.

2. Invest in good customer relationship management systems- Having a SAP or Oracle system is not enough. The staff for example has to be trained on customer engagement and relationship management.

3. Invest in Analytics– Collecting data is not enough, the data has to be put to use. Putting a good analytics system in place would help retailers run campaigns which better serve the customer.

4. Never compromise on the values- Like some chains in the hospitality would never compromise on the quality of the services. A good example is the Oberoi group.

But at the end of the day I think this is a question of individual choice. If price is the value you seek then probably it is a game that few retailers can play for long and win. After all focusing on price or product would note help the service provider survive for long. In the end it is relationships that count and Trust matters.

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  1. Vinod Ram says

    You are absolutely right Vikram. Every business needs to be aware of the importance of business. And incase of small businesses, there are numerous cost-effective ways to ensure effective branding. Another wonderful article I recently read was http://smallbusinessindia.intuit.in/marketing/branding-business-%e2%80%93/. These sure help see the need for branding in a new light

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