Very good point. I haven't tried the concept in the context of a deal site, but it absolutely works for a regular business.

I learned early on with my company that when people say things like "give me a deal - I promise I'm going to be your #1 customer if you give me a discount for my first purchase" that the best (for me) possible response is: "How about your pay full price now and the next time you come back I'll give you that 20% off you're asking for." Those that bite actually become loyal customers and appreciate it. Those that don't probably wouldn't have come back anyway.

And, btw, I learned the hard way that 99% of those "future #1 customers" never came back - even when I caved and gave a discount. Hence the revised model.

CVS, El Pollo Loco to name 2 that I've interacted with lately. When you buy something there, they give you coupons at the register for next time that are pretty deep. I'm guessing this is a proven effective marketing technique judging by the big companies using it.

So for a restaurant for example the coupon can be customized based on the age, gender, how many in the party and what they already ordered. The value of the coupons could be even computed in realtime, based on supply and demand + some safety rules built in. Everyone at a different times could get a different coupon for a different value.

Most of the supermarkets round here do it, whether in tokens (40% off your next milk purchase!) or points-based loyalty cards which can be exchanged for gifts when you've collected enough.

The coupons that you're talking about are for specific products. The idea being that you come in to get that price on one thing, and wind up picking up others at full price.

Some stores offer coupons for your next purchase. For example, Gap gave me coupon for 20% off any one item if I complete their online survey. That's a pretty big discount, so that survey information must be pretty valuable.

I think that they don't expect you to come back for just 1 item. So I would guess that they value the engagement and increased chance of a trip to a store.

I don't know their margins, but I doubt a 20% discount has them losing much on that item.

CVS gives me on my receipt "$5 off next purchase".

This is not (initially) a retention issue. This is a pricing, inventory and product issue. The retention issue can be solved (I'll explain)

Daily deal sites that offer a discount coupon at a price to the consumer which they have already negotiated a steeper discount for themselves, while cheaper for the discount site, is too cheap for comfort for the vendor.

This is a negative incentive for the vendor to keep going with with discounts, thus reducing inventory. further, the discounts are typically on ephemeral things that people dont NEED but just want.

The model should be flipped a bit: offer progressive discounts on repeat business. i.e.: 20% off on first visit, 30% on second, 50% on third - etc.

Incentivise repeat business.

And we've just re-invented loyalty schemes.

(I know at the budget conscious end of the cafe/coffee business, the "buy $n, get the $n+1th coffee free" cards do pretty well around here. Not so much in specialty coffee places though, most of them do a good job of giving free coffee to their regulars pretty often. I rarely pay for espresso shots at any of my regular cafés if I buy them at the same time as a latté/piccolo/cappuccino…)

Or how about a free product once you buy 9 of similar value?

Punch cards are the original loyalty program, but I'm not sure how well they work for new customer acquisition.

Or unless you have an airline cost structure, with near-zero marginal cost. Haircuts, lawncare, beauty services, hotel stays, etc. are their bread and butter.