Loopt Turns The Daily Deals Game On Its Head With U-Deals

Mobile social network Loopt is turning on the revenue streams by going after the daily deal space. It already partnered with Groupon to show users nearby Groupon Now deals via notifications, but today it is launching its own twist on daily deals. Loopt is calling them U-Deals.

Instead of going out and getting a large inventory of deals at local merchants, U-Deals lets users request their own deals. And they try to rally their friends and other people to support the deal as well through Facebook, Twitter, email, and whatnot. Once a deal hits a tipping point, then Loopt will contact the business and request the deal. This will require a sales force, but not one as big as a traditional daily deal provider. “One of the things we like about this is that it’s neither self-serve nor a pure sales force model,” says Loopt CEO Sam Altman. “In our beta testings, businesses respond well to a phone call like ‘we have a check for $2000 and 100 new customers for you if you agree to this deal.'”

Loopt is working in partnership with ChompOn, a white-label daily deals platform that launched at TechCrunch Disrupt last year. A New York City-based startup called Ringleadr that is about to launch is also targeting the reverse-deals concept.

In order for this to work, Loopt needs to get enough deals requested and then turned on. “Liquidity is certainly the key issue,” admits Altman. Also, local commerce is a hard nut to crack. U-Deals has the advantage of being an easy sell, as Altman says. Loopt is basically coming these small businesses with pre-qualified sales. But many of them have probably never heard of Loopt. (“Is that like Groupon?”) My guess is he will need a larger salesforce than he expects, and that’s if he’s successful. Are people even looking for deals inside Loopt?

Here is the big issue with this model. The people who say they want a deal at a restaurant or store are probably already customers of that merchant. The appeal of daily deals for local merchants is to get new customers in the door. It’s customer acquisition. Where Loopt can make this work is if the people who initially request the deals can convince other people who aren’t already existing customers to buy in.