Originally posted on TIME on March 2, 2012.
The daily deal concept itself was once considered an “outside the box” business model, so it seems natural that daily deal sites such as Groupon and LivingSocial have a long history of taking chances and trying unusual things. The list of experiments includes daily deals for college tuition, $10,000 coupons for luxury hotel packages, “VIP” membershipsfor special access to deals, and a creepy virtual wheel subscribers spin for extra discounts. Now, we have the first daily deal-branded credit card.
LivingSocial, the second-biggest company in the daily deal space (behind Groupon), is pairing up with Chase to introduce its own line of credit cards, reports Reuters. The idea isn’t as offbeat as it might first sound. Tons of hotels, airlines, and retailers offer their own branded credit cards as a means to build customer loyalty. Why not daily deal sites?
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LivingSocial cardholders can expect to earn 10 “Deal Bucks,” which can be used for daily deals and other LivingSocial offers, for every 10 purchases they make with the card. What with hundreds of daily deal sites in the marketplace, it’s understandable that relatively few shoppers exhibit much loyalty to any one site. LivingSocial’s new card, which will be available with no annual fee to all subscribers sometime in the next few months, is being launched with the hope that it’ll help boost brand loyalty, as well as repeat business.
Along these lines, LivingSocial has already undertaken another strategy, introducing LivingSocial Plus last fall. In exchange for the Plus fee of $20 per month, members get a $25 credit each month, which can be applied to any LivingSocial daily deal. Like the new credit card, the point of Plus is (duh) to get subscribers to get in the habit of buying more LivingSocial deals.
A daily deal-branded credit card doesn’t come as a complete surprise. In fact, the daily deal aggregator and research site Yipit predicted this would happen back in January—January of 2011. That was when a Yipit post speculated the following:
Expect Groupon to release a branded card, and major Credit Card to dip their toes into the space as well. In fact, MasterCard and Citi are already working on the periphery.
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That’s not exactly how things worked out. Nonetheless, the gist of the prediction—that we’d see daily deal-branded cards—has finally come true. It’s just that the deal site involved is LivingSocial rather than Groupon, the bank is Chase rather than Citi, and the card will be a Visa, not MasterCard.
A lot of research has been conducted about the chances of consumers wanting a credit card affiliated with a major daily deal site as well. Last fall, the results of a survey were released, indicating that 27% of LivingSocial customers and 34% of Groupon shoppers would be interested in a daily deal-branded credit card.
Just as the daily deal industry has a long history of experimentation, it also has a long history of sites being copycats—so it wouldn’t be surprising if more such cards hit the market.
Read more: http://moneyland.time.com/2012/03/02/what-will-daily-deals-sites-think-of-next-introducing-the-branded-credit-card/#ixzz1o7JO2Ssd