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Living Social’s Amazon Deal Was A Huge Failure

Living Social raised $175 million from Amazon at the tail-end of 2010 and we saw thist week the benefit that could reap: A 50% off Amazon gift card offer sold more than 1.3 million copies, netting hundreds of thousands of new customers to Living Social and raising the profile of this Groupon competitor higher than it has ever been.

If you Groupon, you probably shop Amazon. The conversion rate for this deal must have been sky high. It was tweeted a ton. I saw it all over Facebook. Awesome deal, everyone bought it.

Even I bought it – my first daily deal purchase ever. Now I was on Living Social’s list and the next day I received my next offer: 50% off a pizza somewhere in the Penn Quarter of DC.



You just added hundreds of thousands of new emails to your database and your first communication with them is a weak follow-up offer.

Here were a few of the other offers the day after Amazon:

  • 15 weeks of kids dance classes
  • Bikram Yoga classes
  • A coupon to buy some mussels

They needed a big deal to follow it up. Something mass market that had broad appeal. Instead, probably half the subscribers immediately unsubscribed because this looked like a once in a lifetime deal.

A great deal drives retention, they just lost a lot of the benefit of adding new participants. Why treat this like strictly one-time PR? This could have turned into real long-term customers.

Or maybe those deals sound great to you.

4 Responses to “Living Social’s Amazon Deal Was A Huge Failure”

  1. Myles Younger Says:

    I didn’t participate in this deal, nor do I really know anything about Living Social, but I did buy something via Groupon once (great deal…tix to 4 plays at SF’s A.C.T.). As soon as I signed up, they bagan spamming me every day with insanely stupid deals that I have zero interest in. I used to do email marketing for a living and was quite successful at it. It was B2B, but the same principles apply: when you over-saturate your list with irrelevant messages (on a daily basis in Groupn’s case…a big no-no in email marketing), you’re going to burn them out very fast (in my case it was instantaneous). Then the marketing team gets desperate and things go downhill fast (make up your own analogy to a meth addict). This is one risk I see to Groupon’s whole business model…they’re burning through their subscriber base faster than those subscribers are a.) signing up or b.) buying Groupons. If this isn’t happening already, it will eventually. That kind of aggressive marketing just doesn’t work over the long (or even medium) term.

  2. AJ Says:

    Deals on pizza places, seafood restaurants, and dance classes are exactly the typical offers from livingsocial. It’s a site for people who live in cities and like to eat out a lot and participate in classes. Anyone not interested in such deals, such as yourself, would not be in the target audience for Livinsocial and thus not “retained” as a customer. If they offered a 50% off Target and 50% off Best Buy deal (or some broad appeal deal) the next 2 days, they would’ve at some point at to go back to their core deals of local restaurants. So I don’t see the difference between going back to their regular offers the next day or say 3 days later – a customer like you would have the same reaction to their typical deals either way.

  3. brent Says:

    Maybe I am just whining, but they offered me a deal an hour away.

    If the deal they offered people in Manhattan was a deal on pizza in Long Island, it would not have mattered how urban their audience was.

    I drop mad cash at local restaurants. They could have offered me a more targeted deal. To the extent that they don’t have better targeted deals, they needed to go mass market. Why not try and take a shot at selling me on the value of being on their mailing list?

  4. Derrick Says:

    I agree with both AJ and brent. There’s clearly a target audience for Groupon and Living social. If you’re not someone that regularly eats out or likes to try various classes or workshops, you’re never going to be happy with them. At the same time though, they can both do a much better job of giving targeted deals.

    I end up deleted the vast majority of deals i get, either because I’m just not interested or they’re for things in the next town over (an hour away). I stay on though, because for the cost of having to spend a minute or two deleting an email everyday, I get a pretty nice deal to a restaurant I like about once every 2-3 weeks. Seems like a fair trade to me.