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If you are considering posting a deal online, whether on your own website or using one of the deal sites including SlickDeals, Fatwallet, Groupon or Living Social, you MUST consider the “Vulture Effect”. The vulture effect is a term I use when a deal goes bad for the merchant. And it seems like the Vulture Effect is getting worse and worse over the past year or so.
What’s the “Vulture Effect“? It’s where a deal is posted without strict rules enforcement and so deal hunters will take advantage of the deal over and over and over until there is nothing left…just like a vulture does to a carcass. While this may not seem like a big deal for large companies (it is), it most certainly is for a small business. One deal gone wrong and it could mean not just some unhappy deal hunters, but negative reviews, negative social media press, etc.
We’ve seen the Vulture Effect a lot lately including big time with the Living Social deal with Amazon. The good news for merchants is that the big deal sites are getting smarter with how to deal with the Vulture Effect – a good example was Living Social’s deal with Whole Foods — they had much more strict requirements than with the Amazon deal. With the Amazon deal, the Vulture Effect came from deal hunters creating tons of email addresses and then using the deal-referrer scheme to get free deals and then pay for other deals. Some report walking away with over 100 deals but Living Social did work to remove a lot of the purchases that should not have been accepted.
This weekend I saw an amazing amount of Vulture Effect activity with a deal at Casual Male/Rochester Male. This deal was by far the worst level of Vulture Effect activity I have seen this year. On Thursday, someone posted a coupon for $75 off a $100 purchase at Casual Male and/or Rochester Male (same parent company) on SlickDeals. From what I could tell by looking at the coupon itself and the link, the coupon was apparently intended to be sent to some email subscribers as an incentive to get them to come back and shop at the store. I could be wrong but I am quite sure that the coupon was NOT intended to be released for public consumption. But because CM/RM didn’t consider the Vulture Effect, the coupon moved around the deal circuit very fast. You can see some of the deal sites that this coupon spread to in a Google search.
People on the deal boards were redeeming this coupon multiple times, both online and in-store (I used it only once). Eventually Casual Male turned the coupon off and began calling customers who ordered more than once and canceled some of the extra orders. Some deal hunters wondered which VP would be fired over this vulture effect.
How to prevent the Vulture Effect
Preventing the vulture effect on your deal takes time and effort. You need to make sure that the terms of the deal are strict enough that they alone will prevent mass redemption. In the case of the Casual Male deal, they gave out a 75% coupon on any goods which meant not only could their target of large and tall men use the coupon, but practically anyone could redeem for shoes. Had CM offered 50% off, their redemption level would have been more reasonable. Or a deal offering “spend $100, get $50 gift card in December” would have also limited redemptions but still provided excellent value.
If you plan to use a deal service like Groupon or Living Social, make sure you put pressure on your sales reps to provide ways to limit any excessive use on your deal. Both Groupon and LS can track deal purchases back to users which can help eliminate some of the excessive purchases.
At the end of the deal, there will always be vultures out there – your goal as a merchant is to make sure you limit the Vulture Effect while still offering a sexy deal that provides the return you are looking for.
If you are a deal hunter, you already know about Fatwallet. I love Fatwallet because they share their affiliate commissions with you. For example, I just completed a hotel stay and received $25 back from FW for the hotel stay. Sadly, the one big merchant Fatwallet doesn’t have a rev share deal with is Amazon.
Groupon/Fatwallet is offering 5% cash back on any Groupon purchased by a new customer. For existing Groupon customers, the cash back percentage is 1%. So far it seems like a mixed bag of reactions by Fatwallet users. Most of the users want to see a percentage higher than 1% since most Groupon deals are at a very low cost. I’d change it to 5% for all users or offer a dollar-value coupon for new users on top of the 5% for all users.
It’s good to see Groupon reaching out to the deal hunter community. I can only imagine that we will see more deal sites working with Groupon in the near future.
When Microsoft first launched their cashback search, I called it a copy of Fatwallet. Good Internet dealhunters know all about Fatwallet and how they share the affiliate commissions they earn with you. I’ve earned hundreds of dollars using Fatwallet over the years. For example, if you fly with Jetblue, start your purchase with Fatwallet and earn 2% back on the ticket.
Dealhunters have loved Bing Cashback – there have been events where people have earned upwards of 35% back on eBay purchases. I’ve earned a few hundred dollars and overall the process was very easy.
Sadly today, Bing has announced that they will be terminating the Bing Cashback program effective July 30. Bing SVP Yusuf Mehdi noted in the post that they never saw the broad adoption that they were looking for. It will be interesting to see if Bing search takes a hit once cashback is removed. I know many dealhunters who would perform hundreds of searches to find the best cashback percentages.
Mehdi notes, “In lots of ways, this was a great feature – we had over a thousand merchant partners delivering great offers to customers and seeing great ROI on their campaigns, and we were taking some of the advertising revenue and giving it back to customers. But after a couple of years of trying, we did not see the broad adoption that we had hoped for.”
Looks like we are back to using Fatwallet and eBates for cashback going forward.
Slickdeals members have posted their earnings – here are a couple of the top earners:
- nafaught – $2800
- kimcheefondue $2373.59
- TheEdge $1286.11
- chuckd (and mom)- $6828.32
Leave a comment if you used BCB and how much you saved.
Here’s a great stocking stuffer for office gifts. Found via Fatwallet, Amazon is offering a free $3 credit towards their MP3 store.
Just add the code MP34FREE to your account and you can grab $3 in free MP3 music.
Here are the terms of the offer:
- Promotional offer valid for a limited time only and subject to change. Promotional offer is valid from November 23, 2009 12:00 AM PST through November 30, 2009 11:59 PM PST. You must redeem the code by November 30, 2009 11:59 PM PST.
- If you’ve previously entered a promotional code, clicking the “Enter Your Code” button above will show your remaining balance.
- After your purchase, you can confirm the dollar amount of the code was applied by checking your order confirmation, which will be sent to you by e-mail.
The popular songs list shows most songs at $0.99 so you could grab 3 tracks although some are priced at $1.29. If you redeem the code, leave a comment with the songs you picked up!
Update Wednesday 5:45pm – the deal is back – if you want 35% off on eBay, read below.
Back in May, Microsoft launched their "live search cashback" which basically helps you earn rewards (paid via PayPal) for items you buy when you enter the merchant’s site via Microsoft. While most believed that it would help Microsoft gain important search market share and also get people to convert from Google to Microsoft for general searching. I believed that while it might help with the market share, the bottom line is that deal hunters would be the only ones to really take advantage of the service and that it would generate more of a financial loss overall.
You see, us deal hunters are a special bunch. We will pick at that chicken bone until there’s nothing left, then sell the bone using a discount code. Over the years I’ve joked with friends about my "deal hunter levels" and have promoted friends to different levels depending on the deals they find. Not all of us can afford to pay market prices.
So what’s happened with Live Search Cashback recently? Well, the deal hunters have found a way to get 35% rewards on purchases on eBay. By doing certain searches on the Live Cashback search engine, there are links in the sponsored area for 35% off purchases at eBay. There’s even a step-by-step walkthrough of how to get the 35%. It gets even more interesting because now people are setting up auctions for cash, selling for over the face value of the cash, just to get the maximum 35% cashback.
The thread on Fatwallet has nearly 2,000 replies in the last 24 hours and SlickDeals’ thread has almost 3,000 replies and 250,000 pageviews.
The net result is I can pretty much guarantee the search numbers for June for Microsoft will be massive. Alone, I’ve completed over 150 searches over the past 24 hours alone looking for the goodies. Let’s see how Microsoft spins this boost in searches when the industry reports surface.
Here’s where it gets tricky – many of the forum posts are related to the terms and conditions related to the cashback search. I sure hope that Microsoft makes good on all of these rebates through this eBay deal. Trust me, you don’t want to piss off the deal hunters.
The big story over the past 24 hours is the launch of the Microsoft Live Search Cashback search. If you haven’t seen it already, you search for a product, see a variety of merchants with said product, order from one and receive some cashback percentage depending on the merchant. Barry Schwartz has an in-depth walk-through of how the system works.
Henry Blodget suggests that Microsoft is not making anything from the merchant transactions. If you are a deal shopper like I am, you already knew that. Some of the merchants are paying out 13+%, no way they will give MS a percentage on top of that.
This is basically a complete ripoff of FatWallet. FatWallet allows you to share with them in the affiliate commissions they receive from sales that start on FatWallet. I’ve been a member for nearly a decade and they have sent me hundreds of dollars over the years. Except for Amazon, I don’t know of any other purchases I’ve made in the last year without going through FatWallet.
In the hundred or so posts I’ve read today discussing the new Live Search Cashback application, most seem to think it won’t work. I totally disagree – if you are are an online deal person, you will be all over this. Why? Because FatWallet (and the other programs like eBates, etc.), share the affiliate commission. Microsoft is paying you (apparently) the FULL commission.
The community of FatWallet will keep their users because there is still some loyalty but I can see people switching quickly to this Live Search Cashback system.
If Microsoft was smart, they would buy out ALL OF THE ADS on every coupon site out there – whether they use Google AdSense, Yahoo Publisher Network or a banner ad network. If Microsoft wants this to work, they have to strike very fast and very hard.
It’s also important to remember that just because someone uses Microsoft for the cashback search, DOES NOT mean they will use Microsoft for the normal Web search. In fact, I’d bet most will think of Microsoft’s cashback search as another product, not a Google replacement.