The Deteriorating Spiral of Irrelevance

I used to get delirious in the deal deluge. Flittering from $5 falafels to fruit infused drinks for free, I rode the Groupon and Living Social wave for years. I persevered through irrelevant and just plain weird offers with a deep faith that, like Pandora, the deals would get better over time as my tastes became known.

Then banks like AmEx, Chase, and CapitalOne, came out with deals linked to card. Wow! Now the deals are going to be excellent! I mean, who but your spouse or partner knows as much about you as your creditcard company? Address, age, income, credit limit, and the kicker - how much you spend by category (grocery, entertainment, travel, restaurant,...). Welcome to the world of super targeted, one-to-one marketing! From coffee to cocktail, offers will anticipate and answer my needs like an advocate, assistant, and stylist all in one. Its like a dream come true.

I'm still waiting for this dillusional deal dream to be delivered. Instead the offers I get run between the mundane to the ridiculous. I'll admit to having a brow wax once but I paid in cash. So how come I keep getting offers for a bikini wax? My bank should know better. Where are my offers for a surf trip to Costa Rica?

The problem is a chicken and the egg issue of supply and demand. Deal variety and availability are critical for the program to deliver relevance and value to customers. But companies are rushing in without enough deals to attract customers. Without the right offers, customers don't respond. Faced with indifference, companies feel compelled to send whatever deal they have. Customers quickly get fatigued with dud deals and the program falls to the spam folder. And without active customers deal programs struggle attract new deals to offer.

Welcome to a Deteriorating Spiral of Irrelevance.

Groupon and Living Social have both suffered in this spiral and are fighting for their very existence. The question is: will the banks be able to leverage their customer data to offer deals that create value for both customers and merchants? If not, the hopes that merchant funded deals could one day replace more expensive to offer miles and points rewards will remain just a hope. And hope is not a strategy.

Photo Credit: Serve, Photostock

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