Posts Tagged ‘Living Social’

Ron Stack of Zavee to Speak on Marketing for Shopping Center Retailers

by on Thursday, July 21st, 2011

I will be speaking tonight on a panel sponsored by the Broward County chapter of the International Council of Shopping Centers (ICSC). The ICSC is the world’s largest shopping center trade organization.

The topic for the evening is “Shopping Center Marketing and Networking Trends” and I will be speaking about how Zavee expands the reach of merchants’ word of mouth marketing, offers effective, affordable, easy-to-use loyalty tools, and provides actionable data about merchants’ customers and their purchasing behavior. More generally, I will be discussing how technology like the Zavee platform and the wide adoption of social media offer local merchants effective and affordable new ways to build their business.

Also on the panel will be several shopping center professionals plus a representative of Living Social. One of the points I intend to make is that Zavee’s social loyalty platform combines the social media tools that have helped Living Social and Groupon grow so quickly with the core loyalty marketing strategy of building long term value creating relationships between merchants and their customers. This gives merchants the best of both worlds: social shopping that builds loyalty as well as traffic.

The seminar is today at 5pm at the Hard Rock in Hollywood. If your business is in a strip center, why not call your landlord and suggest that they attend. What they learn can help them market better – and that can help you.

Is A “Deal of the Day” Right for You?

by on Tuesday, December 7th, 2010

Every year some online concept seems to catch on with users, commentators and venture capitalists alike. This year’s hot concept is the “deal of the day” pioneered by Groupon. The daily deal is a deeply discounted product promotion available for one day only. Groupon features the deal on its web site and blasts emails to users who have opted in. It can provide substantial exposure to a marketer or product, although it doesn’t necessarily pay for itself. Is Groupon (or one of its many imitators) right for your business and its products? As usual, it depends.

The marketing psychology behind Groupon’s deals is simple: an ultra-low price to stimulate interest plus very brief availability to stimulate action. You’ve seen the same thing on direct response infomercials on late night TV. But those infomercials work. And so, at least to some extent, do Groupon’s deals.

The New York Times business blog “You’re The Boss” recently analyzed the math behind a typical Groupon deal. Separately, a team at Rice University studied how satisfied merchants were with their Groupon experience, and how likely they would be to use a Groupon deal again.

via Sofianos Rezk (Creative Commons)

In the Times article the bottom line was whether it cost more to acquire net new customers via the Groupon promotion or through conventional channels. That like a perfectly reasonable metric, although perhaps not the only relevant one. In the Times’ example the hypothetical business spent about the same to acquire net new customers through the promotion as through other channels, which made the promotion a wash, but the author pointed out that even small changes to the many variables could alter the result significantly.

That’s important because the Times example described more than a dozen different variables, from the the percentage of coupons redeemed to the percentage of redeeming customers who were not previously customers of the merchant. Depending on these variables a Groupon program could be anything between a home run and a disaster.

But running the numbers is not the only way to decide whether a deal of the day makes sense. The Rice University study led by Professor Utpal M. Dholakia (full pdf available here) reported a wide range of views from merchants concerning their satisfaction with the Groupon promotion and the likelihood of their using Groupon again. The three key predictors of repeating a Groupon promotion were

  1. Effectiveness in reaching new customers
  2. Percentage of Groupon users buying more than its value during the visit
  3. Employee satisfaction with the Groupon promotion

In other words, the promotion would be considered less than successful if it promoted trial but did not produce net new repeat business; did not result in substantial on-premises upsell of Groupon users; and did not satisfactorily account for reductions in commissions and tips. Merchants reported that unless these factors were present they would not be inclined to repeat a Groupon promotion even if their promotion had been profitable:

There is widespread recognition among many business owners that social promotion users are not the relational customers that they had hoped for or the ones that are necessary for their business’ long-term success. Instead, there is disillusionment with the extreme price sensitive nature and transactional orientation of these consumers among many study respondents.

Is Groupon too much of a good thing? The suggestion in the Rice study that Groupon shoppers are qualitatively different from ordinary shoppers would be troubling if true. This would suggest that consumers who are highly motivated by the brief availability of an extreme price reduction are not willing or able to see beyond the deal and are not particularly open to learning about the merchant or her (non-discounted) products.

Are there any benefits to a tool that brings traffic but maybe not genuine trial? It depends on the business. A retailer that does better when the store is full (e.g., because of a social element to the brand) may be able to leverage the traffic Groupon can bring. A restaurant that cannot adequately service a Groupon-driven wave of first-time customers (who may not be the best tippers) is likely to have an unsatisfactory experience regardless of the numbers. The key is to understand the process, understand the numbers and have realistic expectations.

The Zavee takeaway:

  • Groupon isn’t as much about promoting trial of your product as it is generating buzz about your brand.
  • For the right business, Groupon can result in incremental sales to one-time customers and an acceptable level of new customers, all without upsetting and under-compensating your staff. But it doesn’t seem to happen very often.
  • Brands aren’t built with magic bullets. Surprise and delight your customers, reward their continued loyalty, and make it easy for them to share their experiences.