Peter will be talking at our Digital Brand Strategy Summit November 22 on how to use location and social to drive engagement and commerce.
The last 12 months has seen an eruption of daily deal sites. In London alone there are between 20 and 30 companies established, disregarding the number of organisations that have failed in the process. Why the sudden explosion, and what makes for a success story?
“It’s a low barrier entry but a high level business to scale,” says LivingSocial UK MD Peter Briffett. “They have no set up fee. It’s about great offers. You need a certain amount of interaction with consumers for it to work. It needs to be consistent,” he adds.
Scalability is something LivingSocial had to learn all about during its four year rapid expansion process, from business model to the global number three in daily deals and unique can’t-be-bought elsewhere experiences.
Founded in Washington DC, the company launched its first UK deal on July 1 2010 in only one market. In the last 12 months this number has grown to over 40 in the UK, specifically seven markets in the capital alone, and 600 globally.
“We did a fish pedicure deal six months ago and within three hours 6,000 people had purchased it. We didn’t know something like that would happen but people were desperate to share it” comments Briffett on the companies’ speedy growth.
Briffett pins the success of LivingSocial partly on its dedicated team of on-the-ground researchers, ensuring a high quality of companies that they work with. Indeed, in the States LivingSocial has now opened up its doors to the upper-echelon food lovers offering meal deals costing over $1,000.
Undeniably the recent success of daily deal companies lies in the fact that they were born out of a social model, so today’s emphasis on social business works in LivingSocial’s favour, as social media already exists as an intrinsic element of its way in conducting business.
LivingSocial founders set up the organisation with a vision of wanting to find out how to market and acquire new customers via social networks. Early adopters of social business, they originally developed a Facebook polling application called PickYourFive in which users displayed their top five restaurants or bars. In a matter of weeks this became one of the most popular Facebook apps as measured by page views.
LivingSocial grew as an extension of this, and ultimately Briffett says “offering people what they want and where they want it is nothing new.” These laws have existed since early trading began with location based marketing taking off with the progression of mobile technology.
But sending out millions of deals a week, and that figure applies to just central London, could result in over saturation, especially for small businesses. In one instance Groupon released so many vouchers for a small two chair nail salon that they were booked up for the following two years. The small business opted to close rather than not make any profit for two years.
Recently the New York Times exposed what it found to be “the basic contradiction at the heart of the daily deals industry”; merchants are promised regular customers and consumers are told they never have to pay full price again. The backlash from these assumptions could be potentially devastating. Is this level of expansion sustainable given this unavoidable factor?
Unconcerned, Briffett sees no evidence of daily deal companies slowing down; “For us, this is how businesses will advertise themselves in the future.”
Briffett claims that LivingSocial can attract 2,000 customers to a business in 12 months, and in another notable instance it generated £39,000 revenue in a single deal for a partnering business.
Briffett does admit that it is challenging engaging in social conversations around the brand and creating “buzz,” but they offer more than just new customers. For example it provides a secret shopper service where the consumer offers feedback on the experience. In one case out of 2,000 consumers who purchased a deal, approximately 500 offered up their opinion, even without requiring the push of incentivising the feedback.
This data is incredibly valuable for businesses that partner with them. Not only that, but LivingSocial also boasts geographical displays of where and when money is being spent by using specialised heat maps.
Interestingly, 25% of LivingSocial subscribers view its offers via mobile. This statistic is responsible for a new feature, aiming to hyper-localise the market of Instant Deals where the offer is presented via application according to GPS.
“We see us as leading a social commerce revolution,” boldly states Briffett. “We have to take responsibility and keep engaging with customers and keep businesses excited,” he adds.
“The way we’re presenting deals is location based. It allows customers to engage with us through social networks. There is a lot more innovation around mobile, we know this is the future, we know this is how people want to communicate.”