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Watch out Groupon, LivingSocial is Gettin' Social

Last week a friend of mine sent me the daily deal from LivingSocial ' one of the many daily deal websites I'm already signed up for ' which offered consumers a $20 Amazon gift card for $10. For those living under a rock, LivingSocial ' like Groupon ' specializes in daily deals where users are able to sign up for discounts at their local businesses which typically range 50-75% off normal prices. Groupon did something similar this past August when they partnered with Gap offering $50 of apparel for $25. Consumers all over ' including myself ' took advantage of this great nationwide deal that ended up selling 441,000 in a single day generating $11 million in sales. Now that's a good chunk of change for one day! On January 19th LivingSocial took this same marketing approach when it featured a deal for Amazon. Funny thing is ' it didn't come from Amazon, despite the e-marketplace's $175 million investment into LivingSocial last month. Yes this 24 hour deal that sold over 1.3 million cards came from none other than LivingSocial themselves. What's more is if you got three new customers to purchase the limited-time special, you got yours for free! WHAT!? Crazy, right? Why would a company want to lose money and pay out of their pocket? While LivingSocial may not have generated large sales on this deal, that doesn't mean they weren't able to profit. The deal ' that operated in 170 markets ' introduced thousands of consumers to LivingSocial. The result ' not only does this raise brand awareness in the daily deal space, but also helps grow a subscriber following who will become customers of their local daily deals. Although I did not partake in this deal ' looking back I should have ' I couldn't help but notice the buzz surrounding it. Not only were my friends and co-workers talking about it, but it's all I saw on my Facebook newsfeed! People were posting the deal like crazy! Despite the fact that I didn't purchase this deal, I did go ahead to send it to numerous friends and family members who I knew would be all over it. And guess what? They purchased it and forwarded on to their friends and family. The deal generated so much hype that it even became a top trending topic on Twitter. '?¦Now that's good word of mouth!

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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