Nowhere is this more true than remarketing. For any company that intends to last, remarketing revenue is where the gold is mined. Sure acquisition gets the glamour and big budget but it all comes at a loss and it’s only after the second, third or sometimes even later stage purchases that the ink starts to darken up into a nice shade of black. But despite the value, and our proclamations about being transparent, modern, “connected” companies, most of us still send the same offers… if not the same exact creative… to win customers back that went out in 1996.

Enticing as they may be to bring people back, the real chance to grow [and I mean really grow] comes when you know why they left first.

I’m not talking about sampling or cluster surveying. That’s all wonderful information and research you should do to know where your audience lies as a whole, it says nothing to the average customer to show them that you have even the slightest real interest in them beyond their money. And that’s a problem.

By asking each customer you gain two very valuable opportunities. First you give them a reason to respond… the promise of being heard without the thread of being sold too… and that’s enough to restart a connection. Second, and more obvious, you find out what drove them away, and potentially even what might bring them back.

Think about it… If you’re a cable company that sends a letter a week, you may discover that customer Frank doesn’t want TV and instead target him with high speed web, which they he uses for streaming movies daily. If you’re a gym, you could uncover that Sally is 7 months pregnant and taking a break giving you the chance to offer her a new-mother class with child watching upsell. If you’re a CPG you may learn that your product is being made to last longer, that generics are entering the market in offsetting cycles or one of a million of another insights that doesn’t reflect everyone, but is essential to that one prospect ever returning.

1:1 segmentation will never be the easiest or cheapest but then again, building return business isn’t simple or cheap. But thanks to the “social world”, what was once seen as prying is now the consumer’s expectation… People are willing to talk for nothing, heck, social channels show they talk even without being asked. So start asking them and let them tell you how to earn them back – rebuild their trust — or when to move away and save your funds for a warmer prospect.

Example Offers as Seen on Groupon's San Jose Page

From the analytics I saw floating around last year it would appear that daily deal sites are hovering somewhere in the 10-15% activation rate (10-15% of sign ups have actually bought a deal) and if this is hugely understated and 35% of sign ups have activated (30MM deals sold, 29MM users, 3x deals each =35% of users ), it’s still a huge opportunity (and probably why Groupon is hiring a Director of Customer Activation with double digit growth goals – sweet job too).

Looking at data from the other side, in a recent blog post, Jeff Bussgang, cites a rumored 3-4% CVR for Groupon. As a leader in the field Groupon should have one of the higher conversion rates as they certainly have many of the top offers and a huge core of interested customers (66% read deals daily!). But unlike a traditional eTailer where a 4% conversion rate is accepted because the vast majority of the 96% remaining users are considered potential future customers (they came to your site for a reason), with daily deal sites, there’s a huge issue – relevancy – which is to say that the traffic is all coming for diverse reasons and, without relevant offers, there’s little reason for conversions to take place.

So cutting to the chase, the issue I see, and keep seeing is the range of those offers. Groupon, Living Social, Yelp Deals, Daily Steals, they can all rake in users with the same deal types (follow a few of the sites and you’ll see businesses recycling old offers as they try different audiences, fee structures) but if what they offer back doesn’t relate to the customer, they leave huge dollars on the table every single day.

Living Social Offer I'd Be Signed up for Twice -- No Wonder Why it's Featured on their Site

Take Living Social’s Amazon $20 for $10 offer that generated over a million sales. The next day my offer was for some sort of premium spa service. I just went from something I really wanted to something I had little affinity for (not knocking spa’s, I just don’t buy their services frequently). To me this is like my sister logging into Amazon and having the entire homepage be filled with table saws – not very useful in her completely managed and very new NYC apartment even if she could use one now and then.

If you look at the demographics of either of the leaders what you see is opportunity. Deals tend to be for health & beauty services, fine dining, and the monthly car wash with an occasional outlier which ranges from exotic dance lessons (demotargeted female of course) to flying lessons. Problem is it’s not just one user type: on LivingSocial (probably thanks to the Amazon deal), 40% of the users are male and on Groupon it’s still 26%. Add to the age – users are young (68% of Groupon is under 34, 36% of LivingSocial) and single (49% of Groupon, N/A by LivingSocial).

Combine these all together and what you get is a dilemma – relevancy vs frequency.

Daily Deal sites have made a promise to deliver something every single day which means rain or shine, good or bad, that offer comes and while anyone can go to the spa or eat a nice meal, the overwhelming focus of the deals are to the same demographic – female, couples, older and for the same types of services (I dare a newly dating, 24 yearold guy to pull out a Groupon code when the check comes and then suggest the same restaurant again for next week). The deal sites know this, Mashable even wrote about it last year: Groupon Eyes Further Growth with Personalized Deals; < http://mashable.com/2010/07/29/groupon-personalized-deals/> but knowing and truly solving are very different as my inbox so aptly shows this morning.

So where do we lie – with opportunity of course.

The daily deal site that gets this first stands to win a lot. Sure the offers they have now may appeal to the majority of their core audience but the majority of their core is already being marketed too left and right by competing services; the generic offer is commoditized. So the site that broads up, ropes in more sales from its younger women (Groupon is doing more and more of this as told to me by several female friends in SF), parents, guys, and even their core demographic who is still seeing many off target offers, the more they stand to capitalize on their existing investment – that giant email database each company has.

If I was sitting in a corner office of one of the independent deal sites right now I’d be pretty concerned about how to up relevancy, and not just to a few major demographic groups but real niche relevancy with offers based on interests (some of us like to read, some of us like to get shot at with paintballs) and the ability to rate ads (oil changes are only for people with cars) and some friendly user reviews (better businesses sell more) to create something like the Facebook feed, but in deal form.

After all, there are a couple competitive businesses – namely Google and Facebook who have expressed great interest in the deal category and have business rolodexes so deep it resembles the size of most company’s consumer database… If they figure it out first you can bet it won’t be hard to get a lot, an awful lot, of businesses churning out relevant offers giving consumers a lot more reason to check with them first.

To sum it all up, daily deals are clearly a huge hit and have brought in revenue at a rate that seems to be unmatched, well, ever. But in a field of competition this fierce there’s a lot of value to users in jumping ship, playing the field, and any other ‘cheating’ metaphor you can come up with. While growing the core, picking up more users and delivering to more locations are all clearly going to help these businesses propel, lifetime value is a win that trumps all other and as Amazon has shown so well, LTV comes best from having something everyone wants, and helping them get right to it time again and again and again.

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As a side note, there there’s a flip side to this for businesses outside the core of the daily deal sites – easy opportunity. While I’ve become less and less diligent about reading my daily deal emails (they all get sorted and put in a folder), an offer outside the box is going to catch the attention of a lot of people who haven’t bought recently, if at all. Perhaps that’s why my local rock climbing gym and the nearest paintball fields are such fans.

First I found out that it’s time for me to propose thanks To Robbins Brothers.

Then I found out this special someone works in an office thanks to ProFlowers.

This was news to me but all seemed slightly ok until Victoria’s Secret told me there was a new way for me to love my own body in time for Valentine’s Day, with a bra. I guess only women end up on their mailing list.

Tiffany’s also shot over a confusing one when they offered to help me get a gift for “him” although they were ambiguous about who exactly “he” was.

And of course we can’t forget the anniversary gifts, computer parts and other suggestions sent out by all my other favorite retailers, most of which had much less impactful insights into my world.

Now I’m not suggesting any of these companies should have held back on their campaigns, in fact I’d like to I commend them on trying a diverse set of campaign messages and using some great creative to drive the sale. And these campaigns aren’t much different from what we see on TV, hear about in radio spots and are bombarded with in every other channel possible. What’s different is the opportunity of the internet – with a little interaction, some micro-profiling or even just a fun email offer Robbins Brothers could know my relationship status, Pro Flowers could be sure the name they keep suggesting a gift for is still a part of my life and Victoria’s Secret could become aware of my gender.

Personalization isn’t only about stopping awkward emails; it’s also a conversion steroid. Just think about it – if 1-800-Flowers knew who my mom was (they’ve shipped to her), what the status of my current relationship is, and that I’m more of the random flowers type than the once a year guy they could have slaughtered all their competition with some targeted and really useful gift suggestions instead of 23 different offers over 14 days. Getting accurate consumer data is of course a fine line as you don’t want to scare people off but as the world becomes increasingly digital the opportunity for a little profiling exists, it just needs to be used.

20 of the emails I got from 1800Flowers in just 2 weeks. The shocker: This isn't everything.

Now if you’ll excuse me, I need to update my family on some recent insights.