Daily Deal Sites, You're Doing it Wrong

Earlier this year I had the privilege of attending a gamification workshop with Gabe Zichermann. I left the seminar with a new perspective on consumer products and understanding of the human psychology from one simple concept - the SAPS model.

According to Zichermann’s model, people value things in the following order:

Status - e.g. platinum/elite airlines member, number of Twitter followers, VIP bottle service

Access - e.g. early access to deals on Gilt Groupe, in-game items reserved for WOW players that achieve a certain level, backstage concert pass

Power - e.g. forum moderation, DJ'ing on turntable.fm

Stuff - e.g. coupons, free crap

Now this might seem counter-intuitive. We’ve been conditioned to believe that free stuff and discounts are the most valued when in reality, it’s not in most cases. Not convinced? Here are a few examples:

Kickstarter - people often donate to receive “producer” credit or access to a behind the scenes preview. Rarely do they get a discount on the actual product and often they even pay more.

Uber - although it cost twice as much as a taxi, much of Uber’s success is driven by consumers’ desire to roll up to the club in a sleek, black town-car as opposed to a dull, yellow cab. The power to command a car to arrive within a few minutes, anywhere within the city is also nice.

Apple - buyers pay a 50%+ premium to sport a sexy Mac Book at the coffee shop for everyone to see.

Daily deal sites offer “stuff” and continue to receive criticism for their lack in creating long-term customer loyalty. In fact, Groupon recently announced their Rewards program to further encourage businesses to push discounts to their customers.

I’m sick of receiving 50% off deals. I wake up in the morning to a flood of boring discounts. They’re not necessarily boring because the deals are irrelevant (although they really need to stop offering me pedi’s and mani’s), it’s that the “stuff” is just not interesting or satisfying.

It’s time for daily deal sites to move beyond discounts and deliver unique, exciting opportunities. How awesome would it be if Groupon worked with businesses to offer:

“Skip the line” priority service at the club (status)

One week advance copy of Battlefield 3 (access)

Ability to set the music playlist at the bar (power)

Although many businesses will be disrupted through gamification, that’s not really what this is about. It’s about giving users what they really want.