It's almost 2011, and every business-big and small-is looking to leverage social media and all it has to offer. Social media strategist Jay Baer says that the most important question that will be "put to bed" this year is "Should my company be active in social media?"
He maintains that "every company will have to be social eventually, whether they like it or not. Our customers will demand that they be allowed to interact with businesses in this way -- the same way they demanded that we connect via websites and e-mail."
However, as a small business owner your principal concern is how to get that next sale. Everything else is merely nice to have. Your fan base on Facebook is growing but you struggle to see how photos of your company's holiday party will help close your next deal. You have over 1,000 followers on Twitter and you tweet regularly, but you struggle to link your latest customer acquisition to those 140 characters of genius you just tweeted.
So what's the solution to the existing gap between social media activity metrics (fans, followers, groups, tweets, likes) and the business outcome metrics (revenue, expenses, customers, profits) that count to those of us who run our own businesses?
Start with group buying.
Imagine a marketing campaign that is pay-for-performance and the "performance" is a sale to an actual customer. Now imagine you can actually measure the reach, frequency, conversion rate and cost of a marketing campaign precisely. If properly structured and executed, group buying can produce such a campaign and represents a huge social media breakthrough for lead generation and customer acquisition. It's not just an online coupon, but can be one of the key elements to a social media strategy that drives customer acquisition, revenues, has measurable costs, and most importantly, very measurable outcome.
We often hear "how the rules have changed" for marketing, but the rules haven't changed, the tools have. A critical element of marketing is and always has been to generate targeted leads to acquire customers, and both traditional offline and online methods offer tools or channels to achieve that goal. Group buying sites, like Groupon or OfficeArrow's Deal of the Day, offer an opt-in database of leads. These leads are not the typical 35 percent for a qualified business-to-business (B2B) lead, but rather direct targeted leads, because the prospect opts-in, thus eliminating the guesswork.
Much has been written about group buying questioning its value, wisdom and staying power. Many skeptics tend to focus on the cost of the daily deal, claiming a small business "loses" 50 percent of the revenue. But what about the lead generation or outbound marketing campaign costs that it replaces?
The key is properly structuring the deal to accurately capture the "cost", referring to your actual marginal cost of acquiring the next sale or a new customer, not a mythical if-I-had sold-that-much-at-retail cost. If your typical customer acquisition cost is $25, then a $15 for $30 coupon deal would "cost" at most $22.50 ( the $30 of product or service you deliver less your 50 percent of the $15 coupon), and that's assuming you have no margin, which is highly unlikely. This cost compares favorably to the $25 you usually spend to acquire a customer. Of course, some existing customers will buy it too, which could be offset by those who don't actually use the coupon, so it's important that you structure and place limits on the offer properly, instead of indicting the entire process.
The key is to reach buyers where they are and in the way they want to be reached, and social media is no longer just a part of consumer culture, it is the culture. Remember Jay's words and heed them: "customers will demand that they be allowed to interact with business in this way.."
The proof is there. According to comScore, Groupon already has over 30 million people subscribed to their daily emails! With proper strategy and execution, group buying could become one of the most effective forms of marketing ever invented for small businesses.
To incorporate group buying into your social media strategy, I'll explore in my next post how to calculate the associated costs and ROI of group buying, and how it compares to traditional advertising.