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“Deal of the Day” Platforms: What Drives Consumer Loyalty?

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Abstract

“Deal of the Day” (DoD) platforms have quickly become popular by offering savings on local services, products and vacations. For merchants, these platforms represent a new marketing channel to advertise their products and services and attract new customers. DoD platform providers, however, struggle to maintaining a stable market share and profitability, because entry and switching costs are low. To sustain a competitive market position, DoD providers are looking for ways to build a loyal customer base. However, research examining the determinants of user loyalty in this novel context is scarce. To fill this gap, this study employs Grounded Theory methodology to develop a conceptual model of customer loyalty to a DoD provider. In the next step, qualitative insights are enriched and validated using quantitative data from a survey of 202 DoD users. The authors find that customer loyalty is in large part driven by monetary incentives, but can be eroded if impressions from merchant encounters are below expectations. In addition, enhancing the share of deals relevant for consumers, i.e. signal-to-noise ratio, and mitigating perceived risks of a transaction emerge as challenges. Beyond theoretical value, the results offer practical insights into how customer loyalty to a DoD provider can be promoted.

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Notes

  1. The following scheme is used to present the logic of axial coding: [Category: Sub-category: dimension].

  2. Some quotations were edited for style to improve readability.

  3. We would like to thank an anonymous reviewer for this valuable suggestion.

  4. All construct scales except perceived risk and scales used in the robustness checks (reported in Sect.  6 ) were part of the pre-test.

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Acknowledgement

We would like to thank Tobias Friedrich, Tom Göthling, Lucrezia Maria Santarelli, Georgia Fragkogianni and three anonymous reviewers for their valuable help and feedback.

Author information

Authors and Affiliations

  1. Institute of Information Systems, Humboldt-Universität zu Berlin, Spandauer Straße 1, 10178, Berlin, Germany

    Hanna Krasnova

  2. Information and Technology Management, The University of Tampa, 401 W. Kennedy Blvd., Tampa, FL, 33606, USA

    Natasha F. Veltri

  3. BearingPoint GmbH, Berlin, Germany

    Klaus Spengler

  4. Universität Potsdam, Am Neuen Palais 10, Haus 09, 14469, Potsdam, Germany

    Oliver Günther

Authors
  1. Hanna Krasnova
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  2. Natasha F. Veltri
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  3. Klaus Spengler
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  4. Oliver Günther
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Corresponding author

Correspondence to Hanna Krasnova.

Additional information

Accepted after two revisions by Prof. Dr. Spann.

This article is also available in German in print and via http://www.wirtschaftsinformatik.de: Krasnova H, Veltri NF, Spengler K, Günther O (2013) „Deal of the Day“-Plattformen. Was treibt die Kundenloyalität? WIRTSCHAFTSINFORMATIK. doi: 10.1007/s11576-013-0366-2.

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Krasnova, H., Veltri, N.F., Spengler, K. et al. “Deal of the Day” Platforms: What Drives Consumer Loyalty?. Bus Inf Syst Eng 5, 165–177 (2013). https://doi.org/10.1007/s12599-013-0268-2

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