The deals culture is shifting from customer acquisition to customer loyalty by necessity. Why? Deals have begun losing high income women. That’s the view of Next Jump CEO Charlie Kim, a featured speaker at ILM East in Boston March 26-28.

“Daily deals had an initial surge then quickly lost flavor on a key customer segment – higher income women with jobs,” says Kim in an email exchange with us. “This segment is the most profitable to most merchants. Acquiring them as a loyal repeat customer is worth quite a bit over any other customer segment.”

Are deals really losing these women? Kim says that the explosion of daily deals have lead directly to lower conversion rates. “Daily emailing of 50 percent discount offers quickly turned from value to fatigue users,” he says. “Email response rates and all conversion rates had a downward climb across almost every vertical. That’s echoed by all the e-commerce merchants we have talked to.”

Loyalty programs such as those run by Next Jump, however, have begun to reverse the downward course “Towards the second half of 2011, we managed to climb conversion back up. This was not done via targeting, but through loyalty. The growth of loyal repeat visitors increased conversion rates at every level 50-150 percent higher, category by category.”

Kim says that loyalty is mostly measured as a by-product of points and rewards. “From 2010 to 2011, as the points platform got stronger, we saw metrics increase as follows: 100 percent increase in first-time visitors converting into a transactor. 300 percent increase in single-transactor converting into a repeat loyal transactor.

Kim adds that the big trend on the horizon will be ease of purchase — convenience. “Make it easy for me to find and buy what I need,” says Kim. “Earn my trust as a consumer, and even at good prices (not best), you will have my wallet share. This is how you earn loyal customers.”

Charlie Kim is a featured speaker at ILM East, which takes places March 26-28 in Boston. Other loyalty-related speakers include Jim Douglass, SVP, Cartera, and John Valentine, VP, SCVNGR/LevelUp. You can register here.

We’re seeing more vertical players trying to leverage their brands with deal offerings and advertising. The latest one is Blue Cross/Blue Shield. Twenty-two Blue Cross state organizations around the U.S. are working with Analog Analytics to launch Blue365, a deal program offering health and fitness discounts, as well as adjacencies like tax prep.

SnapFitness, eDiets.com, Reebok, H&R Block and others are charter deal providers for Blue Cross. The launch will be supported via a media campaign launching in late Spring. “Health and fitness is the quintessential loyalty program,” says Analog CEO Ken Kalb. He notes that consumers are making more of their own health decisions, so a health marketplace makes more sense in this climate.

Besides health, Analog has made a move into travel, working with Travelsavers Partner Services, a mega- booker working with over 17,000 hotels and representing 20 percent of all travel bookings.

Kalb adds that the biggest problem with travel as a deals vertical is sourcing new deals all the time. While destination deal sites such as Groupon and Living Social are scoring very well with travel, smaller sites do well to hook up with a one- stop such as Travelsavers. ‘They have 1,000 people trying to find travel deals,” he says.

Amazon.com, which is moving in multiple directions vis a vis local, has agreed to buy TeachStreet, the service for matching teachers and students. Amazon’s interest appears to be less in TeachStreet than in the underlying ecommerce platform for SMBs. The platform already is being used by The Washington Post for its Service Alley SMB leads service.

TeachStreet had raised just over $3 million from Madrona Venture Group, Bezos Expeditions, Hulu CEO Jason Kilar and others. Amazon CEO Jeff Bezos has been involved form the beginning of the company.

The connection between Amazon and Teach Street is partially personal. TeachStreet founder David Schappell previously worked for Bezos from 1998-2004. GeekWire reports that the entire TeachStrret team has already joined Amazon Local, which now has offers in 40 markets. It reports that TeachStreet itself is being shut down.

Schappell also told Geekwire that he’s pumped to be “working on things that millions of people use.” At TeachStreet, he said they had been “pushing the peanut up the hill for a long time.”

In 2008, Schappell told BIA/Kelsey that he eventually expected TeachStreet evolve into all kinds of expert services. “We’re helping to find local experts near you,” he says. Categories could include a full range of advisory services, such as career counseling, or kitchen remodeling. “You might need someone to guide you through some of the steps. Or you may want some help negotiating to buy a car.”

Living Social, in a battle with Groupon and other deal providers to gain (and keep) market share, lost an eye popping $558 million beyond its $245 Million in net earnings, according to a regulatory filing by Amazon.com, which owns 31 percent of the company. The filing was written about in today’s Washington Post.

The Post article notes that Living Social has 4,900 employees, and claims more than 60 million members worldwide in 647 markets across 25 countries. Its vouchers grossed $750 million.

Here are the accounting details. Its vouchers grossed $750 million, giving Living Social net earnings of $245 million. It had operating expenses of $686 million. It also had other expenses associated with various acquisitions and stock compensation of $117 million, resulting in the $558 million loss.

In our view, companies such as Living Social (and Zynga and Groupon et al) aren’t really tied to earning immediate profits. The gamble is whether their massive spending leads to a solid foundation for growth –and profits– going forward.

Local isn’t easy, or even worthwhile. Chris Devore, Seattle-based co-founder of Judy’s Book, wants to remind entrepreneurs to stay away. In a new blog post, Devore gives three top reasons NOT to do a local + Online startup:

1- There’s no money in it
2- It doesn’t scale
3- It’s too obvious.

“ Combine expensive, high-touch selling, small budgets and high churn rates, and you have a perfect recipe for persistent negative margins,” says Devore. “There are literally millions of business opportunities that (are)…. better than the best local business I’ve ever seen.”

It’s a good blog post with sound reasoning. I suspect Devore, one of the most passionate entrepreneurs out there, has a major local project up his sleeve and will be socializing it at ILM East in Boston March 26-28.

The focus for vertical sites is likely to shift in coming months. In addition to regular features, such as listings, many vertical sites will also begin to blend personalized or on demand “maintenance” information with various social media features such as scheduling and reviews.

We’ve seen it with garden and health sites, and also, increasingly, with car maintenance sites. DriverSide and RepairPal, both launched in 2008, have pioneered the personalized garage approach, which links car owners with auto diagnosis and leads to service providers.

A new site, CarCareKiosk, aims at DIYs — Do It Yourselfers. Founder Hans Angermeier, a former investment banker, has developed the site to provide car owners with “how to” videos that are specific to their car make. AT&T/Compete research shows that “How to” videos are major drivers for vertical sites. The site now has 8,000 car repair videos in its library.

Based in Milwaukee, CarCareKiosk has a team of seven who work with new and used car dealers to contribute videos on everything from how to check your own oil to changing the cabin air filter. “Every car is quite different – the cabin air filter on one car might be behind the glove box on one model, but in a completely different place on another car,” says Angermeier.

CarCareKiosk currently has a PayPal “donate” button for support the site, but Angermeier says he expects to sell some search-based advertising. There is also a directory for finding local mechanics, a la RepairPal and DriverSide, but that is just at a starting phase.he real target are used parts manufacturers. Sites such as eBay Motors are stores onto themselves.

He cites research showing that used parts will account for $43 billion in sales in 2012 and $47 billion in 2013. The poor economy might be contributing to people keeping older cars and maintaining them, and also doing their own work, he suggests.

Gilt Groupe confirmed today that it is eliminating off 10 percent of its staff, including Gilt City chief Nathan Richardson and Park and Bond CEO John Auerbach.

The layoffs at the luxury-but-discounted goods provider includes closures of several Gilt Groupe offices, including Atlanta, Seattle and Dallas, and several Gilt City offices inherited from last fall’s BuyWithMe acquisition, including San Diego, Houston and Philadelphia — a purchase that occurred after BuyWithMe ran out of money.

Gilt Groupe CEO Kevin Ryan implied in an interview with AllThingsD that Richardson and Auerbach were more oriented towards “start up” modes, suggesting that development will continue. We would expect the separate companies to consolidate under one roof.

Speaking at ILM East last year in Boston, Richardson said the site had strongly differentiated itself from other deals providers, leveraging Gilt Groupe’s upscale list of five million members. He also noted that Gilt City’s flash sales approach — which put items on sales until inventory was depleted — provided higher average dollar values and better email open rates.

The Home Depot is set to significantly boost its home contractor leads network with today’s acquisition of RedBeacon. No price was announced for the acquisition, which puts Home Depot in the same boat as Sears, which has been quietly developing ServiceLive, its own contractor leads service.

RedBeacon, which takes a 10 percent commission for service jobs, was one of a number of socially driven leads companies that started in the 2008-2009 time frame. Others include Cox’s Kudzu, which has developed an intriguing partnership with Scripps’ HGTV; The Washington Post’s Service Alley; LikeList, HelpHive, and Thumbtack. The latter received $4.5 million in venture funding last week.

Last year, Red Beacon announced $7.4 million in funding from Mayfield and Venrock, but it hasn’t been easy sailing for the company. The service never landed media partnerships that it had been hoping for, and replaced its founder last year with new CEO Anthony Rodio. It has, however, managed to launch services in nine markets. Under Home Depot, one assumes it will take a national approach to contractor leads.

ILM East is coming back to Boston March 26-28 with a lineup of do-ers and innovators that are transforming and re-defining the local space.

Highlights include a featured keynote from industry legend Ted Leonsis (Groupon Vice Chair/Amex Board Member/Sports team owner/AOL mastermind), along with keynotes/interviews from Jason Calacanis, Leslie Berland, Jay Herratti, Michael Zimbalist and Michael Silberman.

Other highlights of the 2 ½ day event includes a pre-conference rundown on Local search run by Andrew Shotland of Local SEO Guide; a full plate of Top BIA/Kelsey research and forecasts; a special Venture Capital panel; and innovator panels on Social, Mobile, Deals, Video and Hyperlocal (the latter co-moderated with Merrill Brown.)

KEYNOTES/KEYNOTE DISCUSSIONS
• Ted Leonsis: Owner, Monumental Sports (Washington Capitals, Washington Wizards;) The Vice Chair of Groupon;, Board member of Amex, former Vice Chair of AOL; Author, The Business of Happiness
• Jason Calacanis: CEO, Mahalo; Investor. Calacanis’ career has been at the cutting edge of local and social media and reflects all the big trends, from his development of The Silicon Alley Reporter to Weblogs (AOL), Mahalo, and the creation of TechCrunch50 and Launch.
• Leslie Berland, Vice President, Social Strategy, American Express. Berland’s a major deal maker deeply involved in Amex’s mega FourSquare and Facebook deals.
• Jay Herratti, CEO, CityGrid Media. Herratti always gets top rankings at our events. He runs IAC’s super quad of the CityGrid Media Network, Citysearch, UrbanSpoon and InsiderPages.
• Michael Zimbalist, VP, Research Operations, New York Times Co. Zimbalist leads the NYT’s 12 person research unit. He’s deeply immersed in cutting edge social, mobile, tablet and video efforts.
• Michael Silberman, GM, New York Magazine Silberman is the mastermind of NYMag’s development of a super set of verticals catering to the “New York state of mind.”).

FEATURED SPEAKERS
• Bill Bice, CEO, SpaBoom
• Merrill Brown, co-founder. MSNBC.com, Court TV
• Jim Douglass, EVP, Cartera Commerce
• Jere Doyle, CEO, EverSave
• Walt Doyle, CEO, Where
• Adam Japko, CEO, Digital Sherpa
• Maria Kermath, Dir.,, New Tech & Sales Apps, AT&T Advertising Sales
• Mark Josephson, SVP, AOL Local
• Charlie Kim, CEO, Next Jump
• John McIntyre, CEO, Pixelfish
• Randa Minkarah, SVP, Revenue, Fisher Communications
• Randy Parker, President, SMB Apps
• Mark Schmulen, GM, Social Media, Constant Contact
• Andrew Shotland, Publisher, Local SEO Guide
• Andy Slater, VP, Digital Agency Sales, Katz 360
• Christopher Tippie, CEO, FindNSave
• Darren Waddell, EVP, Product and Corporate Marketing, Reply.com

Join hundreds of senior level local executives at ILM East for the local community’s best networking and insights. You can register here for earlier bird rates.

Internet Pioneer Ted Leonsis

Local Corp. has branched out in several directions in an effort to leverage its local platform. It has recently acquired Krillion (retail and product search) and Rovion (rich media platform and integration). Another major effort is its development of Spreebird, a deals company being built on top of its acquisition of Southern California’s Screamin’ Deals.

Spreebird has been mostly differentiated in the deals space by its profit share with local schools or charities. Users can designate which school or charity they want to designate 10 percent of the deal’s net proceeds for. To date, $650,000 has been donated, or 10 percent of its net profits.

The site, after roughly six months, has now unveiled a new look that gives it a stronger visual ID that is more feminine (more than 80 percent of its users are female.) The site has also revealed a new tagline: “Shop Smarter. Make a Difference.”

SVP Malcolm Lewis tells us that the site is really focused on providing a better shopping experience, and isn’t limiting itself to typical deals entitles such as restaurant and spa deals. A recent deal, for instance, sold several hundred sets of bath towels and bedding, he noted.

Deals are being highly targeted based on a number of algorithms for location, purchaser history and the popularity of the deals category. The algorithm will recognize buying patterns, he says.

Spreebird is also set to move beyond deals, which is just one of six promotional categories that he envisions (but won’t reveal.) The site is also very mobile-centric, with a “significant percentage” looking up deals via daily alert emails and mobile browser, although the percentage actually buying from mobile is much smaller.

In all, Lewis envisions that Spreebird isn’t trying to be a generic deals site. He thinks the site could compete as a strong premium niche, “like Volvo.”