Facebook Enters the Crowded Daily Deal Market


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As I confessed in my article, “Confessions of a Groupon Addict,” I am addicted to Groupon deals…and Social Living, Tippr, Level-up, Daily Deal, etc. deals. Oh, I no longer buy every tempting deal that comes along. I’ve learned my lesson early on that prepaying for meals and events you might not use for a year can wreak havoc on your bank account. But I faithfully read every offer sent my way, and I pick and choose the ones that really appeal to me and that I’m sure I will use.

Now Facebook has entered the fray! Lucky for me, Boston (my base of deal operation) isn’t one of the supported cities in this new launch. Facebook Social Deals, which was initially launched in Europe three months ago, became available on Tuesday, April 26 in Atlanta, Austin, Dallas, San Diego, and San Francisco. The company hasn’t committed to expanding its deals markets until it sees how it goes in these venues.

It’s too early to make any definitive statements about Facebook’s likely success in this market—after all, this is not the first time a social network has taken a stab at the daily deals market: Twitter launched its own Earlybird Offers program last year, but the program was canceled just two months later. According to ReadWriteWeb,

“Why Didn’t Early Bird Work Out for Twitter? Maybe the deals simply weren’t targeted well enough and not interesting to Twitter’s users. Or maybe those who followed the account didn’t like the constant repetition and retweeting of the same deal. With just about 225,000 followers, Early Bird was definitely not a huge success for Twitter and probably didn’t bring in enough revenue to continue the program.”

This isn’t even the first time that Facebook has made a foray into the market. On November 2, 2010, Facebook Deals (now part of Facebook Check In—which is, itself, part of Facebook Places), became available. In this program, local businesses offer deals when you check in to their place on Facebook. But this program was small potatoes compared to Social Deals (now, aka Deals). Facebook is making a much grander entry into the daily deals market now.

I am optimistic about Facebook’s future in the deals business. Facebook Social Deals appears to have some real differentiators that can make it successful even in the overly crowded daily deals market.

Why Facebook Social Deals Should Work

It’s All about Social Networking! It’s true that many deals sites have a social component. If you get three friends to buy a LivingSocial voucher, yours is free. Groupon’s and Tippr’s offers become valid only after a certain number of people buy them. But most of the deals on these sites are not primarily about social networking. According to John D. Sutter, CNN:

“‘While many Deals on Facebook offer discounts, it’s more important to us that you find interesting experiences around you to do with friends,’ Facebook’s Emily White writes on Facebook’s blog. In other words, expect deals on group-centric activities, such as concerts or horseback riding. The social networking giant has already dabbled in deals by offering discounts to those who “check-in” at locations, but Facebook Deals are geared more towards activities that people might like to do with friends — from white water rafting to wine tasting — with fewer deals that are solitary, such as nail salons.

In addition, most deal sites only circulate their offers through email; the community aspect is secondary to the personal nature of the offers.

It seems to me that the same Facebook members who “live” with their friends on the site will delight in having offers to go together to a special fashion show at the Gap or plan a discounted trip to a theme park, all from the familiar context of their Facebook pages.

Finally, Tangible Products for Facebook Credits! Many Facebook apps and contests reward members with credits. And you can explicitly buy the credits. But, up until now, these credits could only be “cashed in” to buy virtual goods in online games or digital products like movie rentals. The credits weren’t real currency for actual products or services. Facebook plans to turn credits into an actual online payment platform. Of course, you can also use credit cards and PayPal, but providing value for Facebook credits for those of us who don’t want to buy a new weapon in a virtual world is very enticing.

The Advantage of a Massive Audience! While Groupon has 70 million members and LivingSocial has 28 million, Facebook has 500 million end-users worldwide. Groupon and LivingSocial have to offer incentives to get users to share the deals they bought with their friends on Facebook. On Facebook, that’s the default setting. That means that even if only a small percentage of users subscribe to the deals, all their friends will also become aware of the deals.

“Add to that the fact that many small businesses already have a Facebook presence, and the social network becomes a good fit for daily deals,” says Greg Sterling, senior analyst for Opus Research, reports Ellen Gibson at the Huffington Post.

Benefits for Businesses on Facebook. Facebook Deals will offer opportunities to get new customers by promoting deals to the membership. And, as mentioned, when a person buys a deal, all their friends will also be exposed to the company and its offers.

Furthermore, when a deal coupon is redeemed, the retailer gets access to a veritable motherlode of customer information—likes, dislikes, education, favorites, everything that a person posts about themselves on Facebook. This customer intelligence is invaluable!

Possible Challenges

There are a few potential challenges for Facebook:

  • Supporting daily deals can require high touch customer support, both to manage the deal with businesses and with its users. This is a new area for Facebook.

  • The deals are reportedly not as good as Groupon’s. According to John D. Sutter at CNN, Groupon claims to offer discounts of 50% to 90%. Most of Facebook’s coupons for Atlanta range from 13% to 75% off, with more of them seeming to fall on the lower end of that scale. Committed Groupon users might be discouraged at the low discounts being offered and let their discouragement be known—loudly!

  • There are those, like me, who are a bit skeptical about doing business on Facebook. Ever since Patty Seybold reported that all her contacts on her smartphone were made available on Facebook once she started accessing the site via her mobile device, I have been hesitant about what I post and what I do on the site.

I, for one, think that Facebook has the savvy and the wherewithal to overcome these and any other challenges it may face.

However, I do have another confession—although I am a member of Facebook, I’m not really the right target demographic for Facebook Social Deals. For one, I live in email, not on Facebook. I only go for specific purposes, like getting in touch with someone or finding out details on an event that I’ve been invited to. And I’m really too old, too stationary, too private, to set in my old-fashioned ways of arranging meetings with friends. But, then again, Facebook has many more of the right type of members than old fogies like me. Besides, someone has to keep Groupon in business!

Republished with author's permission from original post.

Ronni Marshak
Patricia Seybold Group
Ronni Marshak co-developed Patricia Seybold Group's Customer Scenario® Mapping (CSM) methodology with Patricia Seybold and PSGroup's customers. She runs the CSM methodology practice, including training, certification, and licensing. She identifies, codifies, and updates the recurring patterns in customers' ideal scenarios, customers' moments of truth, and customer metrics that she discovers across hundreds of customer co-design sessions.


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