Groupon:

Groupon bands thousands of users together to get bulk discount deals from local businesses in various cities. They have managed the most successful execution of this strategy to date and have become profitable by taking a cut from each business that offers goods or services on the site. The ability for Groupon is to tap into the concept of ‘collective buying power’ is very valuable and makes Groupon a great company.

While Groupon are very good at using social media tools to build their database, they are not a social network and their growth is limited by a number of factors. Firstly, there are reportedly over 150 competitors to Groupon and copying the model is as easy as putting on sales people in a city and developing the software (I have heard of developers quoting under $5000). Secondly, because there is only one deal per day per city, the deal is based more on what offer the advertiser of the day has and this doesn’t necessarily apply to ‘me’. Finally, as a web business their network growth is tied to theiractivity and the principle of Metcalfe’s law does not apply. So in my opinion their long term value is limited by these factors of ease of competition, relevance and limited exponential growth opportunity.

Fourqsuare:

Foursquare is a location-based game and social networking website for mobile devices. Users “check-in” at venues on their mobile handset and they are then awarded points and sometimes “badges” for their activity. The company has received much attention because marketing campaigns with popular brands like Starbucks that allow for special offers and coupons to be promoted to users. In addition to benefits like checkin validation, in-store redemption, businesses can view stats on visitors and get detailed breakdown of their activity.

When compared with Groupon I believe that as a social network, Foursquare have a much brighter future. Their value is in the database of “check-in” activity and the ability potential advertisers will have to target promotions based on this activity. Like Facebook they do face issues around privacy and the use of this information, but the ability to promote time sensitive special deals liked to location is highly valuable provided deals are relevant to the user. When assessing long-term business value, (1) it’s difficult to copy Foursquare as their value is in the network and the “check-in” activity, (2) because of the volumes of data being collected, the promotions in Foursquare will have greater user relevance and (3) as a social network there is much greater opportunity for exponential growth of their network.

One limitation of Foursquare is the low average age of its’ users. As a consumer in my 30s i can think of many of my peers who “check-in” and use their service but with over a million checkins each day I’m sure that they are happy with their niche in the market.

Technorati Tags: Foursquare, Groupon, Local Business

Six months prior to the Alice.com launch they started using social media, company blogs, Twitter, Facebook, and YouTube to connect with a list of key influencers.

Lead by Rebecca Thorman, the company developed a community of loyalists by targetting mom and frugal bloggers who provided input during the pre-launch phase and then on launch brought attention and grassroots credibility to the service.

The Alice team also offered incentives like discounts and coupons to select bloggers, so they could extend incentives to their readers to try the service.

In the first week after launch, Alice received 110 pieces of unique coverage and nearly 70,000 tweets. In early June, the pre-launch Alice.com site had 170,000 site visits — before anyone could even use the service.  At launch time in July, Alice.com’s traffic jumped to nearly 400,000 site visits.

All pretty amazing when you consider that Alice does not invest in advertising — this was all grassroots Social Media Marketing.

Uploaded with plasq‘s Skitch!

Technorati Tags: Alice.com, Social Media Marketing, Web2.0 Expo

Five lessons from Web2.0 land:

1. Get your product out there; the common message from presenters is that it’s better to launch your website and get user feedback even if you feel your app isn’t perfect.
2. Location location; the launch of the iPad and many new mobile computing devices is opening up a host of new location-based services. Knowing what you do and where and when you do it, presents new and exciting opportunities around behaviorally targeted advertising. The most important part is ensuring buy in from the consumer.
3. Embrace Open API’s; Saw a great talk by Sam Ramji discussing the importance of having API’s to allow your services or brand to be sold through other websites. In his talk Sam talks about how retail outlets like Nike, The North Face and Maytag grew their businesses by allowing other successful retailers to sell their products. He then draws parallels to how an effective Open API strategy can have the same results for emerging Web2.0 sites.
4. Effectiveness of Social Media marketing; I saw a talk by Alice.com on how they used social media and blogging to generate enormous traffic in the lead-up to their launch. A good example of companies now using grassroots social media marketing to build a brand.
5. Have a great product and deliver value; all the most popular applications offer real value over incumbent solutions. The simplest rule in business still applies.

Technorati Tags: Web2.0Expo

Not much more to add…just have a read!

Free E-book

Technorati Tags: eBook, Seth

In the presentation Mark highlights the movement from Web1.0, with links and banner ads being the path to revenue, to Web2.0 with currency and monitization coming from SEO, SEM and Google Ad Sense and Ad Words. He goes on to describe new Web3.0 Third business plan of the internet that is generating revenue from the “app economy”.

In this app ecomony, Mark talks about how sellers of the future will increasingly use social media and friends/network sharing for sales of product and become less reliant on Google ad clicks. I believe that we are only seeing the tip of the iceberg both in relation to Google type advertising and social media generated sales and that the market for both approaches is still in it’s infancy.

Technorati Tags: Mark Pincus, Social Media, Web2.0

When the famous Australian spread Vegemite launched a new spread, made from Vegemite and cheese, they ran a competition to name the spread. From 48,000 suggestions the company then decided on “iSnack 2.0″. Publicity stunt or genuine stupidity?

Technorati Tags: Social Media

96% of online retailers surveyed currently employ or plan to employ Facebook Fan Pages within the next 12 months, and 84% plan to use Twitter for publishing.

The report provides strong evidence that retailers are understanding the importance of Social Media and avoiding Social Media is becoming less of an option. According to an August ’09 study, the top Social Media networks being embraced include:

• Facebook (74 percent)
• YouTube (65 percent)
• Twitter (63 percent)
• LinkedIn (60 percent)

Technorati Tags: Social Media, Web2.0

Elimination – Time Management

Ferris recommends doing away with time management and focusing on achieving the few important things that need to be done every day. Concepts include:

• Being busy is a guise for avoiding the few critical important but uncomfortable actions you need to complete every day.
• Effectiveness – Things that you do that get you closer to your goal.
• Efficiency – Doing the things in the most economical manner. Efficiency does not mean you are effective. 1.    Doing something unimportant does not make it important. 2.    Requiring lots of time does not make it important. 3.    Apply efficiency to the right things in order to be effective.

Eliminate all that is irrelevant and focus on doing what is important.

Pareto / 80-20 Principle

The 80/20 principle states that, for many events, roughly 80% of the effects come from 20% of the causes. Ferris advocates keeping the 20% good and reviewing or removing the 80% bad. For business, the 80/20 principle can be applied to:

• Clients
• Affiliates
• Problems
• Marketing
• Suppliers
• Products

Most things make no difference so it’s important to identify and focus on the important few and ignore the rest. For more information on the Pareto Principle click here

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Parkinsons Law

Parkinsons Law states that a task will swell in perceived importance and complexity in relation to the time allocated for it’s completion. If you have less time it will result in a focus on completion through execution of the essentials.

1. Limit tasks to the important to shorten work time.
2. Shorten work time to limit tasks to the important.

So in a business application, identify the few critical tasks that contribute to the most income and schedule them with short and clear deadlines. Don’t let minor tasks distract you! For more information on Parkinsons Law click here. In addition to these concepts, Ferris has a number of useful suggestions on being effective, dealing with time wasters, setting goals and actions, and eliminating irrelevant interruptions in your life. If you think you’ll get value from understanding and implementing these concepts buy the book or hire it from your library. It’s an easy read and rates up there with the E-Myth by Michael E. Gerber.

Technorati Tags: 80/20 Principle, Business Tools, Parkinsons Law

1. The local discount program that has many 5% discounts (low value offers) is unlikely to attract attention of customers. Saving 5% on a meal isn’t that sexy compared with a 2 for 1 deal! So 5% discounts can lower the perception and uptake of the entire local discount program.
2. For the customers who do take notice of the program, you should expect to get a better result from a 10% deal compared with a 5% deal….it’s natural selection!

I always encourage merchants to think about the discount in terms of ‘what is the perceived saving?’ (view the presentation below to find out more). If you are offering 5% on a meal the saving only equates to 50c on a $10 purchase and I don’t believe this is enough to motivate people to use the voucher. Put yourself in the shoes of the customer and ask ‘would this saving motivate me to use the voucher?’.

Feel free to connect with me on Twitter or subscribe to my blog so we can keep in touch!

Technorati Tags: Discount Coupons, Restaurant Promotion, Small Business Tools

The best advice I can give for coupon restaurant promotion is to (1) limit your exposure and (2) use ‘perceived value’ to your advantage. Attracting new customers with a discount coupon is great for business as long as the terms of the offer limit your exposure by not giving away too much margin. You also want perception of value so potential customers feel compelled to use the coupon.

So here are some suggested marketing tips to attract customers and limit your exposure:

1. Put a maximum on the value of the discount. If you are offering a 25% discount on the food bill then consider applying a cap to the total saving. As a guide the cap should be equal to 25% of the value of four average full price main meals. So if your average main meal is $30, the cap on the saving should be ($30 x 4) x 25% = $30.
2. Structure a discount that is easy for your staff and customers to understand and calculate. It’s much easier to understand the value of 20% compared with 22.5%.
3. Limit the discount to ‘food only’ or ‘main meals’. The perception to the customer of ‘25% off the food bill’ and ‘25% off main meals’ compared with ‘25% off the bill’ is the same. In their mind they are saving 25% but options 1, 2 and 3 in table 1 illustrates how a perceived saving of 25% can actually only result in a 10% reduction in the bill.
Discount Calculation

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4. Consider BOGOF deals as opposed to percentage discounts. BOGOF deals are ‘2 for 1’ meal deals and are usually worded “Buy one main meal and get the second equal or lower priced main meal at no charge”. They have excellent perceived value as 2 for 1 implies a saving of 50%. In reality most people purchase more than just two main meals so the actual discount is less. Table 1 shows that the difference between the perceived saving and actual saving for a BOGOF offer is significantly better than other options reviewed so far. The chart below represents the perceived saving vs. actual saving for the four options in Table 1.
   Restaurant Promotion
   
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My example in table 1 relates to a typical bill for four people but every restaurant is different so I encourage you to review the options and how they relate to your restaurant. Measuring your offer: Once you are promoting your offer, hopefully it’s resulting in increased patronage, but if not here are some things you can review:

1. Measure how many coupons you collect and ask customers who come in with coupons why they selected your restaurant.
2. Ask the local discount program to give you an indication of how many members are in your area. Check if the members match your target market (this also applies to paid advertising in which you are promoting a discount).
3. Ask the local discount program what sort of usage other restaurants in your area are getting and what discounts they are providing. If possible, change your offer so that you are more competitive.
4. Review the ‘perceived value’ of your offer. The best way to do this is to ask customers what they think of the offer and ‘listen’ to their feedback.
5. Test discounts by doing local letterbox drops or promoting your offer with local retailers and measure which coupons yield the best results.

Technorati Tags: Discount Coupons, Marketing Tips, Restaurant Promotion