What to Make of the New Capital One Daily Deals Program
Does it seem like the whole daily deal craze is getting a bit out of hand, like we’re on our way to not having time for anything other than checking, parsing, acting on, and deleting the copious amounts of deal-oriented e-mails that currently wear out our inboxes? Or are you of the mind that the more deals available, the better? Interestingly enough, Capital One has something for you regardless of which camp you’re in.
The bank, which is the 5th largest credit card issuer in the United States, recently announced the launch of a new daily deals program that not only targets offers to the individual spending habits of Capital One credit card users, but also does not require any action on the part of the cardholder.
Once your account is added to the program – Capital One is currently in the process of a phased rollout and plans to add the feature to more accounts in the coming months – you’ll begin receiving weekly e-mails with deals targeted to your particular spending habits. All you have to do to redeem them is purchase the advertised product or service and wait for an account credit, which should be posted within 10 days. You don’t have to click on or redeem anything or do anything different at check-out. You don’t even have to know the deals exist.
“That's the beauty of this program,” said Mark Andrews, a Capital One spokesman. “Customers don't have to do anything except use their card and fulfill the conditions in the offer.”
By “conditions,” Andrews is referring to the fact that some deals may only be available online or in-store and may require you to spend a certain minimum amount. However, consumers should have no problem quickly verifying such requirements, even on the go, as the daily deals program has been incorporated into Capital One’s newly revamped mobile banking app, which is available on iPhone and Android smartphones.
Therefore, the only question that really remains is for which merchants can consumers expect to find deals?
“We are working with several vendors who negotiate deals with hundreds of merchants on our behalf. Customers will be presented around 5 deals each week and depending on the details of each offer and timing could have between 10-15 deals available to them,” Andrews said. “This is all about providing relevant offers, ease of use (no clipping, no pre-buy, no remembering coupons), and giving customers a smart way to save using technology to make saving simpler.”
Indeed, Capital One’s new daily deals program does seem to eliminate much of the hassle and potential for overspending that are inherent to the likes of Groupon and Living Social. Consumers are presented with deals on the types of purchases they’d be making anyway, rather than an eclectic array of offers for potentially unnecessary expenses, and they don’t have to concern themselves with buying an offer at one time and using it at another, perhaps weeks or even months down the road. And, since the service is free, there’s really nothing not to like about it from a consumer’s perspective!
But how much can merchants expect to get out of Capital One’s daily deals program? This is important because merchant profitability will dictate how attractive the deals will be. Well, the program seems to have three distinct disadvantages for merchants:
- No deals will be purchased and forgotten about – Such sales obviously have huge profit margins and are a very attractive aspect of traditional daily deals sites for merchants.
- Consumers don’t necessarily have to know about the deals in order to take advantage of them – Merchants will lose money on consumers whose shopping habits are not altered in any way as a result of the deal.
- Merchants will not get any money upfront – Therefore, they cannot increase cash flow for services not yet rendered.
It therefore all comes down to how well Capital One can target specific deals to consumers who have no history shopping with the particular merchants whose offers they’re eligible for. For example, if Capital One can offer a Caribou Coffee deal to someone who usually gets Starbucks, Caribou would obviously be interested in participating and thereby obtaining new business. On the other hand, if Caribou deals are offered primarily to existing Caribou customers, there would be no real reason to offer them in the first place.
Ultimately, it will be interesting to see the reactions from consumers and merchants alike to this interesting new deal delivery system. One thing we can be sure of is the fact that we’ll hear more and more about these types of programs moving forward.
Below is an example of the e-mail you can expect to receive when your credit card account is added to the Capital One daily deals program.