Social buying is here to stay, but is it worth it for brands?

Lately social/group buying sites have been getting a lot of attention, and not just from the press. Of those, Groupon is probably its biggest exponent.

If you don’t know about it, Groupon essentially offers highly discounted, local offers for people to take up (from hotels to hairdressers to go-karting).  It currently has over 15m subscribers worldwide.

But are these sites a good thing for brand?  Do they help them?

Personally I believe not.  They work only where purchasing is infrequent and discounts are high, not where you are trying to create and maintain loyalty. These sites are purely about the carrot.

Will you go back to a hairdresser who will charge you £130 for the same haircut you got for £30 two months ago?  I believe not because the perceived cost associated with offering that service is £30 rather than £130 (why would you run a promotion at a loss otherwise?), so to get them to come back you need to run that offer again, compounding the problem.

It’s a slippery road to either run these projects at a loss or to show what the real cost of such products/services really are.

What does this say about your brand?  To me it says you are overcharging.

Also, although you might raise awareness for new potential customers how will your current customers feel?

Let’s stay with the hairdresser example. If I’m a regular customer receiving what I perceive to be a premium service, how pissed will I be when people I deem to be of a lower status than me start getting the same service as me and, even worse, for less.  How ‘loved’ will I feel as a customer?

They say that social buying is a game changer.  It is that, I’m just not sure it is a sustainable one for the businesses that use it as a means to generate repeat business and customer loyalty.


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