Local businesses turn to social commerce

Peter Briffett, managing director of LivingSocial UK, sets out some guidelines for small, local businesses looking to harness the power of social commerce.

Peter Briffett
Peter Briffett

“Group buying” is an advertising phenomenon that has proven popular with local businesses in the US, and it is rapidly gaining ground in the UK marketplace as businesses look for cost-effective and low-risk ways to promote their business and acquire new customers. Group buying enables merchants to market their products and services directly to consumers living in their local area with zero risk and ROIs unmatched by other digital and traditional marketing channels.

Tens of thousands of subscribers opt-in to receive emails with daily deals for restaurants, spas, concerts, sporting events, attractions and consumer goods in their city at a significantly reduced rate. In addition, the retailer is promoted on the group buying website, through social media and the word-of-mouth “buzz” that the campaign creates by focusing on one great local merchant per day.

How does group buying work?

The concept of group buying is quite simple: Every morning subscribers receive an email with a daily deal from a local business at a significantly reduced price, generally 50-90% off. Subscribers who grab the deal within the 24-hour window immediately commit to becoming customers of the featured business, but don’t have to redeem the voucher for a few months to a year. It is a risk free platform that guarantees local businesses more customers into their shops, restaurants or venues without making any upfront investment.

How is this different from other types of online marketing?

Unlike other forms of online marketing such as Google AdWords which is constructed on the pay per click basis , “group buying” businesses only pay commissions on each deal sold. Local merchants also benefit from exposure on a highly trafficked website and to tens of thousands of email subscribers in their geographic area. On a per click model this would normally cost the business thousands of pounds. Although merchants need to put together an offer to generate interest, the cost per new customer has been proven to beat all other forms of traditional marketing by an order of magnitude.

Who buys daily deals and what’s in it for the merchant?

There are a number of different group buying sites, some general and some specialising in health and beauty or a specific audience. Contrary to detractors’ belief that group buying sites are only used by people on tight budgets or who would have shopped there anyway, the subscriber lists are comprised of affluent, socially networked professionals. They have higher than average income and enjoy going out, want to learn about new things to do in their city and like to get a great deal in the process.

In addition, the subscribers are social media savvy and use platform such as Twitter and Facebook to let their friends know about a great deal they’ve just purchased or plan to buy if their friends join them. This creates a huge word of mouth buzz about a business over a 24 hour period. Some of the group buying sites even offer free deals or rewards to those subscribers who recommend a deal to their friends who then purchase it. If they like the restaurant, spa or venue, they will keep coming back and spreading the word online and offline.

How to pick the right site for me?

Group buying has become a very successful marketing tool for many businesses. Below are a few tips on how to pick the right group buying site for your business:

1. The group buying site has invested money and energy into building quality lists in your city.
2. The group buying website has been running deals successfully in your city or others.
3. There is dedicated team on the ground that will help you make sure you get the exposure you seek and have someone to call if something is not to your liking.
4. Checkout past deals to see if you would like to be in their company.
5. Check the terms and conditions carefully to ensure you’ll be paid promptly for all the sales not just vouchers redeemed and that you have a way out in the future and are not promising exclusive rights to one group buying operator.

While this is still relatively new in the UK, group buying has already attracted the attention of many successful brands including the Marco Pierre White restaurant group and London Zoo. If you have wondered how to acquire new customers quickly, harness the power of social media and get your brand into email inboxes of tens of thousands of local residents, group buying could be the way to go.

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