2.0 Daily Deals

NEW YORK — If FinovateFall 2011 taught me one main lesson, it’s this: daily deal companies are getting crushed from competition and/or flawed business models and fintech startups believe they can offer consumers, retailers, and sometimes banks, a much better — and profitable — version of the payment method.

Core to overhauling the prevalent daily deals model means ridding irrelevant offers to consumers’ inboxes. Not everyone has purchasing fantasies of 50% off helicopter lessons after all. With that in mind, a major revamped reward notion carries three major principles: targeting deals to particular shoppers based on their purchasing histories; making printed vouchers a relic of the past by tying rewards to consumers’ cards; and finally closing the metrics loop for retailers. In other words, vendors want retailers to know how many return shoppers they gained from their offers, for example.

Beyond the theme percolating during the Finovate demos, this idea came up when I had a chance to sit down last week with one of the demo-ers, Cartera Commerce Inc., a company that chooses to work with the banks to deploy its rewards model.

“There’s a trusted relationship [with banks],” Marc Caltabiano, vice president of marketing and products at Cartera, tells Bank Innovation. “They aren’t daily deal sites that will disappear.”

The rewards overhaul revival also came up when I met up with Offermatic. Though the company doesn’t use banks as an intermediary, the startup does rely on consumers transactions as a way to decide who should receive what discount.

“The daily deal model isn’t working for bigger brands,” Faisal Qureshi, founder and chief executive of Offermatic, tells Bank Innovation. “There are some key issues with the model.” Why? Existing models fail to target consumers with relevant offers, and retailers lack analytics on how many new customers they got from deploying the marketing strategy, he said. In other words, a one-size-fits-all model won’t cut it in the marketing space.

Certainly, this sector will be interesting to follow, and we expect some fall out from the ever-growing myriad of companies that play roles in the ecosystem — especially as the daily deal titans finesse their approaches. In fact, TechCrunch reported today on how Groupon is closing the redemption loop to inspire better customer loyalty. But to find the “winners” of the space will take time. As Caltabiano told us: “The model is relatively in early days.”