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Everybody's Buying It!

Three goals that will be discussed at every annual board meeting and will consistently be objectives for marketing departments everywhere: 1) increase sales, 2) acquire new customers, and 3) establish brand loyalty.

One method that aims at meeting those three goals, is something I like to call, 'social buying.'? To explain, sites such as Groupon and BuyWithMe, which continue to grow in popularity, are exactly what I'm talking about. If you are unfamiliar with how they work, it goes like this:

  • Each day they put a ridiculously discounted offer on their website
  • Each offer comes with a minimum number of people that need to 'purchase'? the deal
  • If that number is reached, the 'Deal is on'?
  • If that number is not reached, there is no deal (nobody gets charged for anything)

Typically the offers are less often for a specific product, and more for a credit toward a local service or business in multiple markets across the country. As an avid user of both of these sites, I can attest that the deals are well worth it. A $25 gift certificate to the local bar/restaurant around the corner for $10, a paintball outing for half-price, a one-hour massage for more than half-off of what it would normally cost ' these are a few examples of the offers that I have purchased from these sites.

It's that simple. The overall idea is, the offer will be enticing enough to get a bunch of consumers to purchase the deal and get them through the door (acquire new customers). Once there, the hope is two-fold. Hopefully, the consumer will spend more than the amount they have a credit for (increase sales). Lastly, the consumer will hopefully have such a positive experience, that they will tell everyone they know and continue to come back in the future (establish brand loyalty).

Recently, Groupon took its daily offer to a whole new level. Instead of a local business, Groupon had an offer from a national store you may have heard of before ' Gap. Users who purchased this deal received a $50 in-store credit for only $25. The deal was purchased by 441,000 users, which if you do the math, comes out to over $11 million in sales. For Gap, this means that close to a half-million consumers are going to be heading into their stores, looking to spend at least $50. While not every Gap Groupon will be redeemed, it is anticipated that those customers who do use it, will spend more like to $75 to $100. And since Groupon states redemption rates are on average upward of 80%, that's a lot of cash money.

Expect the concept of 'social buying'? to continue to grow in popularity, especially as more and more national brands start to get involved. In the past five months alone, Groupon's subscriber database has grown from 3 million to more than 15 million. But what's next for in this world of social buying? I think these sites should tie in a social media component that allows users to connect with other users to share in each other's fun. But, only time will tell'?¦

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