Everyone loves a bargain.
But social buying is more than Crazy Eddie with a modern twist and an added viral loop. The formula for success lies somewhere in the intersection of value, local orientation and an e-commerce system grounded in social behavior.
Successful discount and coupon aggregators have long understood that people love a great deal if it’s easy to find, is limited in availability and is simple to buy. What the social buying services added to that winning formula was the local loop, a service merchandise orientation and social incentives.
What is social buying?
Whether you call this social buying, collective buying or group buying…it’s all the same. This is an opted-in, deal-a-day local marketplace for services fueled by value and scarcity, and powered by community dynamics.
How does it work?
The core value is the daily local deal of course, but social behavior and scarcity creation come in two main flavors
1. Threshold buying as defined by Groupon
Epitomizes group buying (i.e., ‘group’ in Groupon). The deal has a threshold of participants that have to purchase for it to be good. If interested in the deal, you Share and Like and Tweet and reach out to your networks to fill the threshold.
Great deals and clever gameplay, including Groupon Bucks virtual currency makes this hold together.
2. Incentive buying as defined by LivingSocial, DealOn, BuyWithMe
Convince your friends to buy and your cost goes down. Or you get your product for free. Virtual currency incentivizes the referral process in most cases.
Same core value as the threshold approach. Terrific deals, incentives (LivingSocial DealBucks; DealOn Dollars) and gameplay drives community involvement.
These formulas seem almost too simple. But they work for both consumer and merchant alike.
My take on why social buying works:
1. Value of the deal
The deals must have significant savings on either trendy or expensive basic service items. 45% off flights of wine at new wine bar. Personal training for 50% off. Or a $400 dental exam and cleaning for $49.
Add must-have or been-thinking-about-that or never-thought-I-could-afford-it items with can’t-not-do pricing and scarcity… and it is hard to not jump on this.
2. Local matters
Forget geo-targeting as a trend as it has real utility in this model. The reason why social selling works in dense urban areas is convenience and immediacy.
This will go further as they begin to target by neighborhood, but even as a start, making sure the spa or dentist or gym is close drives the immediacy and personalization of the deal.
3. Social incentives and community orientation
This is word-of-mouth viral marketing within the context of a community-oriented and networked world.
Whether it is the threshold or the incentive mechanism, people want to share a great deal especially if it is something they can do with friends. Add Twitter and Facebook to this mix and bang…it’s just sharing fun stuff with friends, but on social media steroids.
4. Customer centric presentation
Never underestimate clear design. The daily deal-a-grams are the height of simplicity, focus and ease-of-use.
They are about you completely. No corporate baggage here. The deal is the why. It is impossible not to know how to share and transact if you have ever used a digital device. Add easy-to-understand videos and smart FAQs and there is simply no need for technical support.
Social buying is the most perfect example of social commerce that I’ve found so far and the cleanest use of social marketing in an e-commerce model either on Facebook fan pages or on the open web.
It’s like a hybrid of dynamic direct (e)mail and geo-targeted advertising. It’s smart marketing, clever adoption of social tools and an acknowledgement that commerce is a natural offshoot of community.
In social commerce, the customer is the winner
The social buying phenomenon has made discounts the new list price and the consumer wins every time.
What I like is that this has taken the idea of a consumer-centric world and made it real. And it has taken the concepts of social design and used them craftily for smart social marketing implications around e-commerce.
The consumer, and to an arguably slightly lesser extent, the merchant, are the winners in this model.
Looking ahead to the coming brand shakeout
It’s still early days for social buying…but maturing very quickly. And already the market seems overcrowded and slightly commoditized.
The mega dental deal I missed on Groupon 3 weeks ago, I just bought from TIPPR this morning (seriously!). This is great for me as the consumer of course, not so for the would be discount brand.
This commodization is a warning sign for the Groupon’s and LivingSocial’s and countless others. They need to both continually innovate, but more so, find brand value and recognition for themselves…and quickly.
My guess is that I’ll soon have a personalized deal dashboard or deal feed. Or more likely, one of my bookmarked shopping or info sites will feed all the deals to me under a brand that I have a long standing and trusted relationship with.
Like social commerce as a larger category, the social buying discount model is just getting started but I’m certain that it is here to stay. It’s just too good for the consumer.
The real question is whether the first movers and pioneers will win. Whether Groupon and LivingSocial will survive the brand shakeout and be where I find my deals a year or two out.
Sometimes the first mover wins…but in tech innovation, being the pioneer isn’t usually the same as being the winner.
