Paul Chaney - Internet Marketing, Social Media Consulting

Is Groupon a Good Deal for Small Business?

It seems everyone is raving over this new merchandising phenomena called group coupon buying from sites like Groupon and its many clones. Groupon, considered by Forbes to be the fastest growing business ever, raised some $170 million in venture capital and is valued as in excess of $1 billion. Not bad for a company only about three years old. 

I can see the upside to using this approach. It's a promised land of new foot traffic through a retailer's door, and the approach has its share of advocates. But, is all that glitters gold? I think not. There is, in fact, a forboding underbelly of liability, and small businesses better be forewarned.

LOSE MONEY WITH EVERY SALE

In order to stimulate interest, businesses are told they have to discount goods and services by at least 50 percent. Even deeper discounts of up to 80 percent are encouraged. On top of that, the group buying site keeps as much as 50 percent (more perhaps?) of the amount the merchant brings in. 

You do the math. If you offer a deal of $20 for $40 worth of goods or services, then the group site keeps as much as 50 percent of the amount sold, does that make sense? 

Oh, but it's advertising. Right, I get that. And if you're advertising budget is big enough, or the margins on your products are high enough, it makes sense. You don't lose your shirt with every sale. But, not every small business is the Gap. Quite to the contrary, most of us work on minimal ad budgets and thin margins. 

One small business, Poises Cafe, lost so much money the owners had to dip into their personal savings to cover what they claim was an $8,000 loss! The owner called it a "terrible decision," one that was made at the objection of her husband. Consider not only the strain this placed on their business, but their personal lives as well. 

SMALL BUSINESSES OVERWHELMED BY DEAL BUYERS

Unless a deal can be capped, something a number of these deal sites are doing now, a small business takes a huge risk that they will be overwhelmed by deal buyers. Take the case of Philz Coffee in San Franciso. According to an article at Walletpop, the owner said, "I nowhere near projected the amount of people that showed up. We just weren't prepared for it." 

LOYAL TO THE DEAL, NOT THE BUSINESS

I've come to the conclusion that many deal buyers are more loyal to the deal site itself than to the businesses offering them. These sites can become addictive, almost like a candy machine handing out a free daily confection. 

The pay-off for most small businesses is in the repeat business that comes from acquiring these new customers. There are many who testify to the positive effect Groupon and sites like it have. But, still, I wonder if there is substantial evidence to prove that new customers return once the deal is gone. 

Not only that, many of the deal buyers are already customers. For example, I had a business lunch recently at a local Thai restaurant I had visited a few times. The appointment had been made weeks in advance. A couple of days prior to the meeting, I saw a group deal for 50 percent off at the restaurant. Naturally, I bought it. The net effect to the business was they lost half of what I would have paid them otherwise. 

DEVALUE THE BRAND    

The last liability I see is that group buying has the potential to not only devalue the goods and services being offered, but cheapens the brand itself. 

For example, a local specialty foods gift business, Classic Golden Pecans, says they won't use group buying deals because they sell gourmet products. The owners do not see that it is in their best interest to offer them at a reduced rate. 

ADVICE FOR SMALL BUSINESS

I'm not opposed to a small business trying this marketing approach. For many, it has proven lucrative. To a business owner considering it, I would say this:

Do your homework. Don't be allured by the fact that "everyone is doing it" or that a competitor may have tried it and succeeded. Count the cost. How deeply can you afford to discount? How many deals can you afford to offer? What's the worse case scenario? What's the price of success? 

Determine ways to get return customers. As I said, repeat business is the real key to success. How can you guarantee that someone who came in your store thanks to a great deal will return once that deal is gone? Better have some follow-up mechanism in place to stay top of mind with these folks, or offer such a great product or service that they would be crazy not to return. 

Decide on the value of your brand. Do you want to run the risk of being thought of as a discounter? Do you want discount-oriented customers? 

ARE THERE BETTER ALTERNATIVES?

I want to mention a possible alternative that, in my view, holds promise. It's a Boulder-based start-up called Loyal2.me, that offers a unique twist on customer loyalty programs. They refer to what they offer as as "Personal Loyalty Program." Instead of the customer being loyal to the business, the business is loyal to the customer. 

(Visit the site to read more about it. The value proposition is unique...and it won't run a business onto financial rocky shoals either.)

If you are a small business in need of sound advice on how to navigate the sometimes unchartered waters of the social media sea, please contact me. 

Social Media Marketing: The Tail That Wags the Dog

I wanted to close this week by referencing a post written by uber-marketer Seth Godin titled "The distraction, the tail and the dog" in which he outlines the core of what makes a business run, "making sales, delivering on promises, overcoming the Dip and shipping." There's really nothing sexy about any of that. In fact, it's very hard work. 

In a related post, Seth points a finger at folks like me, people who pride ourselves on being social media hipsters and early adopters: 

"Yes, I know you're a master of the web, that you've visited every website written in English, that you've been going to SXSW for ten years, that you were one of the first bloggers, you used Foursquare before it was cool and you can code in HTML in your sleep. Yes, I know that you sit in the back of the room tweeting clever ripostes when speakers are up front failing on a panel and that you had a LOLcat published before they stopped being funny."

Sound familiar? I know I "resemble" those remarks. 

Seth then asks a very poignant question: "But what have you shipped?" (Ouch!)

How to Use Social Media for Lead Generation

How to Use Social Media for Lead Generation

View more documents from HubSpot Marketing. via www.slideshare.net

The folks at Hubspot coined the phrase Inbound Marketing and they have mastered the art. They've even written a book about it!

This presentation outlines in clear detail how to go about using attraction-based marketing techniques to turn visitors into buyers. If you're in sales or marketing, take time to review this. 

Let me suggest some other resources:

Can Social Media and Lead Generation Coalesce - post by Chris Sietsema (on Jason Baer's blog)

Best Fits for Social Media in the Sale Cycle - post by Chris Brogan

Increase B2B Lead Generation Using Social Media - Social Media B2B

LinkedIn: 22 Ways to Dominate - post/presentation by Jason Baer

The Complete Guide to Using Twitter for Business - ebook by moi (needs updating, but basic content is cogent)

The Digital Handshake: Seven Proven Strategies to Grow Your Business Using Social Media (I know, I'm pimping my own book, but there's good stuff in there that applies to this topic.)

How about you? What resources dealing with social media and lead generation would you recommend?

Is Social Media Marketing a Waste of Time?

MarketingProfs community manager Beth Harte started me thinking about this with her discussion in the MarketingProfs group at LinkedIn where she referenced a post by Social Media Explorer Jason Falls who said...

"I’ve got news for you. In the world of business, all that [social media] talk will get you exactly nowhere. Conversations do not ring the cash register. Engagement does not sell more product. Talking with people just means you have to take time to listen which prevents you from spending valuable time selling more product."

A short while later I came across a post by John Jantsch who suggests we should stop wasting our time with social media. He said...

"In short, without a plan, one that’s steeped in your overall marketing strategy, any tactical form of marketing, including creating a Facebook Group, will be a waste of time." 

What's the common thread between both discussions? Is it that social media is a waste of time and that we should all grow up, forget about this "markets are conversations" meme and get back to the real work of marketing? Not at all! 

Both Jason and John tout the virtues of social media engagement, but wisely discern that there are limits. It's not a panacea, not a nirvana, nor a replacement for other forms of marketing. Social media, in and of itself, is a marketing approach that needs to be integrated with other forms and help drive revenue to the organization.

"If you don’t stop selling the fluff and start driving the bottom line, you’re going to have to go back to whatever you were doing in 2005," said Jason. "Make your company blog drive search results to the keywords you want to win. Present calls to action that lead your Facebook fans to buy your product. Entice Twitter followers to subscribe to your e-mail newsletter where you can present similar calls to action for purchase."

John's emphasis is on the need to begin by crafting a marketing strategy of which social media may be a part. "In short, without a plan, one that’s steeped in your overall marketing strategy, any tactical form of marketing, including creating a Facebook Group, will be a waste of time," says John.

John suggests you start with strategy and let tactics follow. And he sees social media as a tactic, not an overall strategy. 

One person who has this down pat is Chris Baggott, founder and CEO of Compendium Blogware. Take a look, for example, at his own blog:

There are no less than five (count em, five!) calls-to-action associated with the blog, one in the header, three in the right-hand column and one beneath the post itself. While that may seem a bit like overkill, I think Chris does it to artfully emphasize the need to associate informational content-oriented marketing (i.e. a blog) with direct response, lead generation approaches.

In closing, here are my responses, first to Beth's discussion question, then to Jason and John's post respectively: 

"My mantra is that of the Cluetrain's, markets are conversations, therefore, participation is marketing. However, that being said, it doesn't ring quite so true down the hall with the sales staff. They want to see the cash register ring. To get that they need leads and plenty of them. (I find the CEO tends to side with them as well. Something about the balance sheet, P&L statements and EBITDA) 

"The onus up.on me now is to prove that social media works in real-world business environments. The blog posts I have on my edcal involve very pragmatic content, designed to prove the case for social media engagement."

------------------

"In 2005 I was doing the same thing I'm doing today, just with a different and more limited set of tools (blogs mostly), and that's proving the case for new media. 

"I'm a purist, but enough of a pragmatist to know that social media is not the begin-all/end-all. It's part of an integrated marketing effort that involves an emphasis on calls-to-action, lead generation and bottom-line differentiation. 

"One of the largest deals we ever signed at the company at which I work came as a result of my participation in the blog and social media spheres. You're right, it's the longer road, but it can and does lead to a payoff. 

"Chris Baggott just testified to the positive effect blogs are having. How long have they been around, more than a decade? Give Facebook, LinkedIn, Twitter et al time to mature. Each will find its place in the marketing mix. As you noted, it already is."

------------------

"I'm with you on this one. Any form of marketing engagement must begin with a focus on strategy. To do otherwise is to take a shot in the dark. Social media can and does work, but, as a form of marketing, it is subject to the same rigors and scrutiny faced by any other form.

"And while I'd love to suggest that conversations in and of themselves are sufficient to drive results, without and end game, they often do not. At least, that's been my experience.Lead with strategy and the appropriate tactics will follow."

Two Email Pitches...Guess Which I Liked Best

I received two pitches via email today, one from AMEX OPEN Forum and one from Kodak. 

AMEX Open Forum

 

If you click the image you'll be able to read the text that says, "Every day, more and more business owners are sharing their insights on Twitter. To help them find each other—and potential customers—we're introducing OPEN Forum PulseSM, a unique online experience that brings together the Twitter feeds of some of the most-followed business owners and industry leaders...You are specially invited to be among the first to participate in Pulse."

This appealed to my ego..."most-followed"..."specially invited"..."be among the first"... Oh, and the email referenced my name in the greeting, "Dear Paul Chaney." Now, it would have been better and more personable had it said simply, "Dear Paul," but at least there was the name reference. 

Contrast that with...

Kodak

No personalization...just one of a one million...generic message... I'm no one special. Plus, it assumed I would even want to attend the Ellen DeGeneres show. (I don't) The OPEN Forum message knew exactly what excited me, tweeting about business and using social media as a tool to make connections.  

I know both were email broadcasts sent via one or another email sending platform. OPEN pulled my info from a database just like Kodak did. But, that's where the similarity ends. 

OPEN did a much better job of making it more personal. There was a sense of exclusivity. It wasn't as good as if some PR person sent me a one-off email (I'm not that special!), but it got the job done.

Guess which one I clicked on. Yep, you guessed right. 

Want to get people's attention and respond to your overtures? Appeal to their innate needs for attention, love. a sense of belonging, self-esteem and self-actualization. All those things Maslow talked about in his hierarchy.  (And use their name for Pete's sake!) That's what the OPEN Forum email attempted to do and it worked.

Email, Social Media Chaos, and the Crashing of the Wave

(Image courtesy of Flickr Creative Commons)

The Wall Street Journal says email's reign is over. Real-time, always-on, collaborative forms of communication have taken its place. They are right.

The problem is that, while there is a semblance of order where email is concerned, the same cannot be said for these new forms. The Journal outlines some specific problems:

• Information becomes more frequent, which can result in it being less personal and more anecdotal. 
• The constant stream of information can be overwhelming, making it difficult to filter out that which is less significant.
• Communication via social media is tied to your personal profile. That's not always a good thing. Rather than hide behind the anonymity of of [email protected], the story of your life is being told. 

Social Media Chaos

We are in a time of flux. Some of the most prevalent questions I get regarding the use of social media have to do with time management and how to handle the fire hose of information being aimed in our direction. 

All I can say is, in time a new form of order will arise. That might come in the form of software applications -- tools like Tweetdeck and PeopleBrowsr, for example, which have evolved to help manage Twitter, Facebook and other accounts. 

In fact, I believe in many cases the answer is better software. How do you manage your personal finances? For many, Quickbooks or Mint is the answer. Similarly, you used to maintain your business calendar on a DayTimer. Now, you use Outlook, Google Calendar or some other office software tool. This is no different. We're just not there yet, but we will get there. Necessity is the mother...

Google Wave

If traditional email is dying away, what will replace it? Many think Google Wave is the email for the 21st century. In fact, Google is pitching it as real-time email, a mix of traditional email and instant messaging. Having just received my invitation, but really having no one in my inner-circle to converse with as of yet, I'm anxious to find out whether it will serve as a productivity tool or, as Robert Scoble alleged, a "productivity sink."  

One thing that is certain, "Times, they are a changin.'" We are effectively between the now and the not yet, the what has been and the what will be. There is no escaping it either. Email is less useful than it was. What will replace it is still to be determined. 

For those more interested, here's a great explanation of Google Wave by Rafe Needleman from CNet. 

Social Media Marketing is Good for Branding, But What About Business Development

Social media marketing is good for...

• Improving a company's reputation
• Spreading the word about its products and services
• Brand-building 
• Customer service
• PR

But, is it useful as a tool for sales prospecting and lead generation? According to a new survey, most small businessowners don't think so. 

A survey of 500 small businesses with less than 100 employees commissioned by Citibank and released just last week revealed that 75 percent of those surveyed don't use social media. Here's why...

"Our survey suggests that small business owners are still feeling their way into social media, particularly when it comes to using these tools to grow their businesses," said Maria Veltre, Executive Vice President of Citi's Small Business Segment. "While social media can provide additional channels to network and help grow a business, many small businesses may not have the manpower or the time required take advantage of them."

Small business owners don't have time to invest in marketing strategies that do not have a positive effect on the bottom line, especially during this tough economy.

Take my own company, Bizzuka, for example. We've done a reasonably good job of incorporating social media into the marketing mix, but have we seen it increase leads and/or sales? To some extent, yes, but not to the degree that I'd like. 

Case in point, a few months ago we rolled out a video series produced completely in-house, that talks about nine ways to use online media as a cost-effective marketing tool during the recession. It was widely received and the content avidly consumed. Even Dell picked it up and ran the entire nine-part series on their Dell Small Business blog. 

The result? Thousands of pageviews and video views. A brand-builder? Yes. Improved our reputation? Sure. Good for SEO? Yep. How about positive PR? Absolutely. Sales? Uh, not sure. Maybe not so much. 

Part of that is my own fault for not building into the campaign a way to measure leads generated from it. That was a severe oversight and patently inexcusable. 

Not only that, but we've been doing an Internet radio show on Blog Talk Radio for over a year called User Friendly Thinking. We've interviewed some of the Internet's top movers-and-shakers, everyone from Shel Holtz to David Meerman Scott to Robert Scoble, Ann Handley, John Jantsch, Toby Bloomberg, and the list goes on and on. 

As with the video series, for brand awareness and reputation building, it's been great. We've made lots of friends and the show gets high marks from colleagues. Has one lead or sale been generated from it? I can't say that it has.

Still, I have numerous case studies and examples that prove social media does work, and I'm going to get more. I'm also redoubling my efforts to prove its worth for Bizzuka. 

We're a small, regional B2B company that sells web design, web content management and Internet marketing services. There are lots of companies just like us in just about every town across this country. Still, I believe social media can be used to set us apart from the competition and bring in leads.

Small businesses, especially during these times, have to tighten their belts and their focus to achieve maximum results with minimal expenditure. The beautiful thing about social media is that it doesn't cost much, if anything, to deploy. So, if we fail, we can fail quickly and cost-effectively. I'm convinced we can succeed equally as well. 

What about you? What's your social media marketing success story? Share it in a comment. (I'm especially interested to learn how front-line sales people are using social media to prospect and generate leads.)

Evaluating the new RCA Small Wonder EZ209HD camcorder

(Excuse the shakiness of the video. I was holding the camera in my hand instead of setting it up on the tripod like I should have done. Hard to do two things at once and do either well.)

Over a year ago I purchased an RCA Small Wonder camcorder. It resembles the Flip video camera that everyone "flips" over, with two exceptions: It has more features and it's less expensive. Those were the exact reasons I purchased it too. 

Almost from day one I've been an ardent evangelist of the Small Wonder and more than once have stood toe-to-toe with a Flip user in defense of the Small Wonder's many attributes. (Attributes such as an SD card expansion slot which extends the memory, and a rotating view screen that allows the videographer to be in the picture and see what's being recorded at the same time. Oh, and did I mention it costs less? Very important point.) I even talk about it in my new book. 

My devotion to the camcorder finally paid off. In fact, it got the attention of RCA itself, via a member of their PR department, Caitlin Malone. We had a nice, long email conversation that resulted in Caitlin offering to send me their brand new HD model as a gift of appreciation. As much as I would have loved to accept it, I had to refuse. I don't accept either remuneration or gifts in return for my opinion. 

We did reach a compromise, however. I agreed to try the camcorder for 30 days giving it my honest, heart-felt opinion. And while I'm predisposed to liking it, given my past experience with the model I purchased, I'm going to do my best to give it an objective review. Then, I'll either buy it or send it back. 

My plan is to use the camera on an almost daily basis for 30 days, checking things like battery life, ease of use, convenience, ease of upload to YouTube and the like. I'll also give points for style, a category where the Flip has trumped heretofore. 

Some critique at the outset

RCA has done a less than stellar job in creating marketshare among social media types. For example, the Small Wonder Web site is the same one that's been there since I bought my device well over a year ago. In fact, it still features that same model! That's ridiculous. 

Compare it to the Flip Web site, which features their latest models, the ultra and ultraHD. It's a much more engaging site (once the flash loads). The company also offers the cameras to charitable organizations for use free of charge through their Flip Video Spotlight program. 

I think RCA could gain ground by engaging in social media and create good will through a charitable program of their own (Giving cameras to elementary schools in lower income neighborhoods perhaps?). But, why is there no Small Wonder Twitter account or Facebook Page? Easy enough to set up and inexpensive to run, yet could pay huge dividends. 

Caitlin has an RCA-related Twitter account which she doesn't really use (she's young; give her time), but that's about it on that front. To its credit, RCA does have a Facebook Page, but not one for the camcorder specifically (which is my point). In fact, that Page has less than 800 Fans and has not claimed its vanity URL either, which says someting about how much stock-and-trade the company is placing on it. 

Alternatively, what about a micro-site similar to that created by Sharpie, Sharpieuncapped, that pulls content from YouTube, Flickr, the Sharpie blog and other sources. A similar approach would work extremely well here and could replace the dated site that currently exists. 

I hope you can see from the above that I'm not fawning over the company, as much as I do like my camera. And, if anything, this is a prime example that the best product isn't always the one to win. Flip certainly has the upperhand in the word of mouth marketing department. 

It may be braggadocious to say, but I think I could teach this company a thing or two about how to use conversational marketing to engage Small Wonder customers, excite word of mouth among them, and maybe even win over some Flip users. 

So, the experiment begins. My next installment will be a overall review of the camcorder's features, or lack of them as the case may be. I also hope to compare the Small Wonder against a Flip camera. Just so happens our executive assistant owns one. Finally, part of my experiment will include allowing others to try the camera and express their opinion. 

Buy.com doing first ever Twitter scavenger hunt

Ecommerce merchant, Buy.com, is hold what a Twitter contest, which they're calling Tweet 'n Seek. It's kind of an online scavenger hunt. Here's how it works straight from the horse's mouth:

• Become a Buy.com follower on Twitter (www.twitter.com/buy_com) now and wait for the first question. (Which will be soon forthcoming at the time of this writing.)
• Each question will lead participants to a different web page on the internet.
• Once on the correct web page you will be notified and given the next question.
• Questions will be hidden on various web pages.
• Referring to other sites may be necessary in order to obtain question answers.
• Once you have completed all of the questions you must post all of your answers together on Buy.com’s Facebook Wall.

The grand prize winner gets a bevy of prizes including an unlocked iPhone 3G, Slingbox set-top box, $500 movie gift certificate, Toshiba portable hard-drive and more. It's certainly a prize package worth the effort. There are some runner up prizes as well which are not to be sneezed, five in all. 

What intrigues me most about the contest is not winning the prize package. The likelihood is that I won't participate, or for very long if I do. Time does not permit. I'm jazzed about the creative use of Twitter to build buzz and brand awareness and am anxious to see how this turns out and in what ways it benefits the company. I'd further like to know what their marketing objectives are with the campaign. (Anyone from Buy.com care to respond, please do.)

I'd be very interested in your experience as well, if you choose to participate. Please leave a comment to let me know. 

Facebook Page as part of your digital marketing strategy

Mashable asks, "Is social media making corporate Web sites irrelevant?" and points to a Facebook Page set up by Vitamin Water. Paul Dunay, in a recent MarketingProfs Daily Fix post, asks,"With Facebook Pages, who needs a Website?"

Following suit, I ask the question, should a Facebook Page be part of your online marketing strategy? Echoing the above questions let me take it step further and ask, could a Facebook Page suffice as your small business Web site?

Read full post at MarketingProfs Daily Fix.