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

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  • Hanna Krasnova
  • Natasha Veltri
  • Klaus Spengler
  • Oliver Günther

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. Copyright Springer Fachmedien Wiesbaden 2013

Suggested Citation

  • Hanna Krasnova & Natasha Veltri & Klaus Spengler & Oliver Günther, 2013. "“Deal of the Day” Platforms: What Drives Consumer Loyalty?," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 5(3), pages 165-177, June.
    • Handle: RePEc:spr:binfse:v:5:y:2013:i:3:p:165-177
    DOI: 10.1007/s12599-013-0268-2
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    References listed on IDEAS

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    2. Zhang, Mingyang & Zhang, Juliang & Cheng, T.C.E. & Hua, Guowei, 2018. "Why and how do branders sell new products on flash sale platforms?," European Journal of Operational Research, Elsevier, vol. 270(1), pages 337-351.

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