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It’s often noted that the deal-a-day space is burgeoning because it is so easy to enter. Success, however, is another matter.

Understanding the key drivers of success requires data, and Jim Moran, founder of Yipit, shared some data-driven insight on deals this morning in “Group Buying by the Numbers” at ILM East in Boston.

Moran calls Yipit “ for the deal space.” The company recently moved beyond deal aggregation to add a data product, responding to companies asking Yipit to repurpose its consumer data, past offer data and competitive information. Companies use the data to understand which merchants to target, which price points work best and so on.

Here are some of Moran’s early takeaways, after about one month of tracking the space in detail, as well as his general analysis of the space.

* Proliferation. There are more than 400 daily deal sites, a proliferation Moran attributes to white-label providers. A key factor in this growth is the entry of major media companies.

* Low bariers to entry; high barrier to scale. Players with the larger list are able to sell more vouchers, which leads to more offers, more commissions, more salespeople, more offers, etc. “There is an increasing reward to being larger in the space.” Moran sees the major players staying big, with others that could do well including the major publishers that enter the space.

* Operators follow “bifurcated” strategies. Operators are following two paths in how they structure deals, favoring offers with higher deal value, as well as very low value deals that are effective in acquiring and retaining customers. One key to the lower value offers is once customers buy a deal, they are more likely to buy another, perhaps more lucrative, deal.

Retention is key. Because discounts are so huge, the initial economics of a deal break even (or worse). The idea is bringing in a repeat customer. The target retention rate for a successful deal is category dependent, with as low as 10 percent or as high as 19 percent being necessary for a deal to work.

Moran cited the extreme example of a 69 percent off deal for a butcher in Toronto that generated $200,000 in commission revenues. It’s unclear what retention numbers the butcher needed to make that deal seem like a good idea in retrospect. Moran said in general that more personalization of deals will be a big driver of retention.

Some interesting random datapoints:

* Groupon remains the No. 1 deal site, generating three times the volume of LivingSocial, but Groupon has a lower revenue per deal than LivingSocial.

* The breakage rate (unredeemed vouchers) on deals is roughly 20 percent.

* “Hair removal” is the best revenue generating category.

* Among merchants who have done deals,  93 percent say they would like to do another.

* Asked if they would shift spend from other media to fund deals, 43 percent said yes.

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