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. 

From Conversation to Conversion: Using Social Media to Drive Sales

In December of 2004, I was interviewed about business blogging by a reporter from the Mississippi Business Journal. It was the first interview I did after starting my own Internet marketing consultancy. 

In that article, the reporter asked me to elucidate the advantages of using a blog for business purposes. I talked about how a blog can help humanize a company, build buzz, improve search engine results and facilitate customer feedback. (The same can be said of social media, for it, too, functions to serve similar ends.)

While each of those benefits hold true today just as much as they did five years ago, there's more to it now than then.

Recently, I was interviewed by a reporter from another business journal, the Wall Street Journal to be exact. This time, the question was different. "Can social media be used to drive sales," the reporter asked. I responded with an emphatic "yes!" Allow me to explain.

CONVERSATION ALONE A WASTE OF TIME

One of the smartest statements I've ever heard regarding the use of social media for business came from Infusionsoft marketing VP Tyler Garns, who said (and I paraphrase), "If engagement in social media does not lead to some type of conversion, then you are just wasting your time and that of others." 

Though some might consider that an audacious statement, I believe social media has transitioned from being a marketing medium strictly rooted in conversation to one that is proving to have a direct bearing on sales. Let me cite a couple of examples as evidence to support my claim.

Twitter

What would you suppose is the number one most valued type of tweet? DMs? Retweets? @replies? According to a SmartBrief on Social Media poll, the most valued type of tweet is "links to useful resources." Second to that are broadcast-style announcements. Not that conversation-type tweets rank fourth at only 7%. 

• Links to useful resources 60%
• Broadcast-style announcements 18%
• I love them all, 10%
• Conversation with other Twitterers, 7%
• Re-tweets, 2%
• Other, 2%

Twitter has become less a tool for conversation and more a tool for conversion. 

As you may know, I'm serving as social media director (part-time) for Practical Ecommerce, one of the ecommerce industry's leading, most widely-read and well-respected publications (small plug). 

When I started working with PeC, the publisher, Kerry Murdock, said he had three goals in mind for how social media could effectively serve the publication: 1) Drive traffic to the Web site, 2) increase newsletter subscriptions, and 3) increase webinar registrations. 

Those particular metrics are the ones he depends on to drive revenue, which comes primarily in the form of advertising. Thus, I set about using social media to meet his expectations. As a result, we have seen a double-digit increase in traffic coming from social networks. (I'm still working on measurements for newsletter and webinar registrations.) 

While I do engage in conversation, which includes retweets, DMs, and all the rest of it, I approach Twitter with those singular ends in view. For PeC, Twitter is a tool for conversion more than it is for conversation. 

Facebook Ecommerce

Since I'm spending a lot more time focused on ecommerce these days, allow me to cite another industry example. It comes in the form of Facebook ecommerce, or what is coming to be known as f-commerce.

There are a number of ecommerce platform providers - Volusion and BigCommerce being two that come to mind - along with several third-party app providers who have developed applications that allow ecommerce transactions to take place inside Facebook (or get their start anyway). 

For example, Payvment allows merchants to set up a shopping cart directly inside their Facebook fan page. The transaction is initiated within Facebook and completed on Paypal, where a secure environment can be guaranteed.

Essentially, Payvment and similar apps turn your fan page from something conversationally-oriented to one that's also rooted in conversion.

SOCIAL MEDIA OR SIMPLY MEDIA

I believe social media is headed in the direction of simply being "media." In the future, all media will be social, so there will be less need to dichotomize it. 

Facebook, which sees itself as the operating system of the social Web, continues to retain dominance by not only fixing its privacy problems, but also allowing the incorporation of social commerce. Not only that, the evolution of the Open Graph enables merchants to bring the Facebook experience into their very own Web sites. 

This "conversation + conversion" convergence doesn't occur without intention. A strategy must be put in place to facilitate it, along with the necessary tools and tactics to implement it. 

That's why I've become a fan of (and reseller for) Infusionsoft. It allows me to take the relationships that start on social networks like Facebook and Twitter and turn them into long-standing relationships that revolve around my brand, products and services, which is yet another reason I believe email and social media were meant for each other. 

You don't have to use Infusionsoft to facilitate such an approach, almost any email platform will do it. I just happen to favor Infusionsoft's "autoresponder on steroids" follow-up sequence capabilities.  

BLOGS AS A VENUE FOR CONVERSION

Let me end this post by returning to where I started, and talk about blogs in light of this new paradigm.

A person who has carried the banner for social media as conversation + conversion is Chris Baggott, founder and CEO of Compendium Blogware. 

Chris understands that, while the editorial content of a blog must remain non-sales oriented, it should always be accompanied by a definite, conspicuously-placed call-to-action. Click on the following screenshot, which was taken from one of Compendium's blogs and you see what I mean. 
 

 
 (click to enlarge)

In an interview from February of this year Chris said, "This word of mouth that I am providing...through my own social channels is going to provide a nice, healthy glow for the company and add measurable ROI. They are going to focus on conversion, and that's one of the big things that we haven't talked about. Companies are really starting to focus on conversion of their blog traffic."

By no means am I declaring an end to the use of social media for customer service, public relations, brand-building or any other conversationally-oriented marketing purpose. What I am saying is that social media is evolving into a channel that has a direct effect on sales and other forms of conversion. It has to, if for no other reason than the CEO (or small business owner) is expecting a measurable return on the investment as a result.

NOTE: This "conversation + conversion" mantra has had a profound effect on my consulting practice. Practically everything I'm doing now has conversion as an end in view. If I can help your company achieve measurable ends through the use of Internet marketing, and more specifically through social media, please don't hesitate to contact me.

The Proprietary Web

I'm seeing a trend develop toward an Internet that is proprietary, differentiated and splintered. Quite the opposite of the homogeneous platform we were hoping it would become.

The differentiation itself takes several forms. For example, one is device-oriented, dependent on proprietary operating systems and applications, while another has to do with divergent social networks.  

Allow me to cite four subject-matter experts who testify to the reality of this phenomenon:

Josh Bernoff

In his most recent post, Forrester analyst Josh Bernoff heralds the "end of the Web's golden age."

"As we all gird for the launch of the Apple Tablet, take a moment to step back and realize what all these new devices are doing. The whole framework of the Web (and Web marketing) is based around the idea that everything is in a compatible format," says Bernoff. "Now with iPhones, Androids, Kindles, Tablets, and TVs connecting to the Web, that's not true."

Michael Killian

Avaya engineer Michael Killian adds his own spin to this idea: "The explosion in device technologies and types is a major part of the communication revolution and the challenges it presents to us."

"Device overload is nearly as impacting to me as communication and information overload and the social impacts of the communication revolution that I've written about before," he adds.

Geoff Cook

Geoff Cook, CEO of myYearbook, refers to another type of differentiation, which he calls the "stream wars."

"Over the coming decade, at least two types of winners will emerge from the stream wars. The first set of winners will be the creators of proprietary, differentiated streams."

Rich Tehrani

TMCNet CEO, Rich Tehrani, was one of the first to call attention to the "splinternet" over two years ago. 

"In the good old days having a website was good enough. This was your portal to the world -- your customers and everyone else. But slowly but surely a wealth of new communities are being created and if you aren't part of them, you could risk losing tremendous market share. In other words, a single homogeneous Internet is no longer what marketers can count on."

Do you get that? There is no longer a single, homogeneous Internet. We have none other than the likes of Steve Jobs, Jeff Bezos, Mark Zuckerberg, Ev Williams and others to thank for that. 

So, sports fans, as Michael Killian said, no longer do we merely suffer from information overload (as if that weren't bad enough), thanks to the introduction of a wide variety of mostly mobile devices, operating systems, social networks and apps, we've got a whole new ballgame. We can either view it as a problem or an opportunity. For certain, one thing we can't do is ignore it.

What do you think our response should be?

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?

The Age of the Stream is Upon Us

via farm3.static.flickr.com

As you may know, Steve Rubel has ceased publishing to his long-tenured blog Micropersuasion, in favor of using Posterous to lifestream. According to Steve, lifestreaming is where it's at, and I've no reason to argue otherwise.

If that's truly the case, then where does that leave the rest of us? Steve has admitted he's out on the bleeding edge because his clients expect it of him. A lot of the people I deal with everyday are no where near the edge. For some, blogging is still new.

Where does that leave me? I've decided to incorporate lifestreaming into my publishing mix using Friendfeed as my primary source for aggregating content. But, I'm still going to blog long-form at The Social Media Handyman site and on Marketing Profs Daily Fix, as long as they'll have me.

Frankly, there is something to be said for sitting by a stream watching it go by. There's something even more to be said for being in it. My brain is trying furtively to philosophize about the idea, but I'm not quite there just yet. Maybe I need to actually go and sit by one to really bring the analogy into focus. 

Of course, for some, it's not a gently flowing stream, but a rushing river fraught with class 5 rapids. Only the most stout-hearted may want to jump in. Either way, it seems like there's something organic about it...something natural (see, told you I was attempting to wax philosophical...). 

Does the Web have to be nothing more than a series of 1s and 0s, or can it have a more human feel? Can we extend a digital handshake and, if so, how does lifestreaming fit into that? 

How about you? How does lifestreaming fit into your publishing paradigm? Feel free to wax philosophical yourself if you'd like. 

Authors using Facebook Fan Pages or Groups to market their book

I just created a Facebook Fan Page for The Digital Handshake and, in doing so, spent a great deal of time seeing how other authors are using the vehicle to market their own books. 

Though I did not find that many, I decided to start a list of authors who are either using Fan Pages or Groups. You are welcome to add to the list by leaving a comment with your entry. And it can be any genre or category, not just Web 2.0/tech/marketing books. Fiction, business, history, whatever, are welcome too. Here's the list as of today. 

Facebook Fan Pages

The Facebook Era by Clara Shih

Here Comes Everybody by Clay Shirky

Groundswell by Charlene Li and Josh Bernoff

Trust Agents by Chris Brogan and Julien Smith

The Whuffie Factor by Tara Hunt

Who's Your Gladys? by Marilyn Suttle and Lori Jo Vest

Facebook Groups

Content Nation by John Blossom

It's Not What You Sell, But What You Stand For by Roy M. Spence, Jr. with Haley Rushing

Made to Stick by Chip Heath and Dan Heath

Personality Not Included by Rohit Bhargava

Twitter Power by Joel Comm

It's my suspicion that these authors chose Groups over Pages due to the fact that Pages only recently came into vogue as the premiere marketing channel. I could be wrong, of course, as there are reasons for choosing this option. I'd be interested to hear the author's rationale for why they went this route. 

The other issue, though, is groups can be started by anyone, not just the author. At least with Pages there is some requirement that the person creating the Page be authorized to do so. 

I get the impression that, with the growing prevalence of Pages as the marketing channel of choice, we'll see more authors moving in that direction and less creating Groups. Still, that's not to minimize the effectiveness of Groups as an option. 

Other

There are some authors who use neither Pages or Groups, but instead link to their personal profiles. These include:

David Meerman Scott

Pam Slim 

Paul Gillin

Finally, I'm a bit surprised that some authors who've written books about Facebook have neither a Page or Group. Facebook Marketing for one; Facebook Marketing Bible for another. And, come to think of it, I don't see Paul Dunay's new book, Facebook Marketing For Dummies represented here either. Eat your own dogfood guys! 

More evidence the destination era of the Web is over

My latest post at MarketingProfs...

When I wrote about the experiment Mars did with its Skittles.com site a few months ago, some people turned up their nose considering it little more than a rip-off of something advertising agency Modernista tried a year earlier.

Basically, Skittles.com itself is a "widget." Links in the primary navigation go to Facebook, YouTube, Wikipedia and Twitter search. In other words, it links to sites other than itself and does so as part of its architecture.

Guess what, it's not a rip-off, it's a trend, and at least two more such sites have entered the landscape: Sharpieuncapped and Building43. 

Read full post at MarketingProfs

Social media advertising: Does it work or doesn't it?

My latest post at MarketingProfs...

The term "social media advertising" is, to some, an oxymoron. They will tell you it doesn't work for the simple reason that people don't visit social networks to view advertising, but to interact with their community. It's a mindset issue. 

You may be familiar with the recent report by Knowledge Networks, which found that less than five percent of social media users say they regularly turn to social media for guidance on purchase decisions, and only 16% say they are more likely to buy from companies that advertise on social sites.

Read the full post

Twitter a business tool...count on it!

I just returned from 140 | The Twitter Conference, held in Mountain View, CA, last week. BTW, despite indications to the contrary, it was the first Twitter for business conference. (Not exactly the same focus as TWTRCON, but business-centric nonetheless.)

The main takeaway for me is that Twitter IS a tool businesses should and will be using. There are ample case studies all along the continuum, from small businesses such as Naked Pizza, a New Orleans pizzaria that gained notice in local and national press, to enterprise-level companies such as Dell. 

If you had any doubt, allow me to reference a recent MarketingProfs poll which reported that "more than eight in 10 Twitter users, most of whom represent small businesses, expect their company's use of the popular microblogging tool to increase in the next six months."

One indication of Twitter's coming predominance as a marketing tool are the number of conferences about it, which now number as many as six. This leaves me to wonder why Facebook conferences aren't following suit. I mean, its value as a marketing tool is being proven even as we speak. 

You have to hand it to Twitter founders Biz Stone and Evan Williams. Whether they envisioned the app taking on such major importance as a marketing tool or not, I don't know. Considering their previous success with Blogger though, I'd have to say "once you're lucky, twice you're good." 

It's time for a sponsored conversations summit

After waging a small war on pay-per-post for years, I've come to the conclusion that sponsored conversations, as they're now being called, is a blogging business model that is not going away.

Forrester seems to think so anyway, having just completed a report on the topic, reaching the conclusion that "this practice will take its place alongside public relations and advertising activities in the blogosphere." That's a pretty bold assertion, don't you think?

Rather than further marginalize myself as an idealist or blogging purist, I've decided to take a more pragmatic approach. That being, if you can't beat em...might as well make sure ethical standards and best practices are encouraged. 

How do I propose doing so? By convening a summit. 

I outlined my proposition in a comment on Forrester analyst Jeremiah Owyang's post. I repeat it here, hoping it will become somewhat of a rallying cry for those of us who cherish this industry and want to see its best interests protected. 

I’ve staunchly opposed the idea of "sponsored conversations" for years. I believe that editorial and advertorial should be distant relatives, if related at all.

I know this form of "journalism" pervades every type of media, so it’s not surprising that it has crept (or leapt) into new media as well.

Above all, however, I’m a pragmatist and realize that, like it or not, this new business model is not going away. Given that, I believe its incumbent upon those of us who cherish the dignity of this medium to come together and create an ethical standard by which we all can abide.

As you well know, blogger ethics been a topic of conversation for years, one that’s been met with equal shares of derision and ridicule by many.

We’ve feigned the notion that new media is a territory that exists outside the realm of governance, one where each person does what is right in his own eyes. Given that new media is becoming more and more mainstream, that argument is archaic.

I propose one of two tactics:

1. A workgroup be formed sponsored by an objective third-party which does the grunt work of creating such a standard.

 or more preferably

2. A summit be convened consisting of all the major players who would have a vested interest in the outcome.

As president of the International Blogging and New Media Association (IBNMA), I would have great interest in offering our organization to serve the role as sponsor. I think we are ideally-suited for a number of reasons, not the least of which is our only interest is in pursuing that which is best for the social media “industry” as a whole. We take no official position on this matter, so our judgment as an organization is not swayed in either direction.

Alternatively, I could see both IBNMA and Social Media Club serving in joint partnership, and maybe some other entities as well (Blog Council, SNCR for example.)

I also suggest that BlogWorld and New Media Expo be the venue where such a summit takes place. A day could be set aside in advance of BWE proper.

The bottom line: It’s time we come together and do the hard work of ensuring that transparency and authenticity, which, by many, are now considered nothing more than cliches, continue to be the chief cornerstones upon which the social media enterprise is built.

I truly appreciate the role that Forrester has played in shedding light on this issue. Now, let’s go the next mile by convening a summit or forming a workgroup. Frankly, I prefer the former and believe that the latter would follow in due course. 

I recognize that, like me, many of you oppose the idea of sponsored conversations. However, I think you would have to agree that the tide toward the more widespread adoption of this business model is advancing at a rate too rapidly to stop, especially considering Forrester has given it their blessing and that a number of highly respected, high-profile bloggers have endorsed it. 

I would ask that, in the best interests of the business blogging and social media industry, you be willing to set personal differences aside and help us craft a standard that everyone can live with. 

I am not asking you to surrender your convictions about the practice, but, rather, view it from a larger perspective, the health and welfare of the industry. 

Of course, the alternative is to do nothing and let market forces dictate the outcome. Perhaps that is the better course of action. My concern is that we have danced around this Maypole long enough and it's time to reach a conclusion.

So, in summary, I'm calling for a summit of all the major players from all sides of this issue: Ted Murphy, Chris Brogan, Jeremiah Owyang or Sean Corcoran, Matt Cutts, Michael Gray, John Battelle, Wendy Piersall or other blogger who is on the anti-sponsored conversations side of the equation, and anyone else who has a dog in this hunt...maybe even Jason Calacanis (OK, well, maybe not Calcanis). I suggest Blog World and New Media Expo as the venue (hold the summit the day prior).  

What do you think? Is it time to lay this issue to rest? Should a Sponsored Conversations Summit be convened? I would appreciate your feedback either way.

Related posts on the topic that add fuel to my fire:

Don't Mistake PR and Creatively Earned Editorial Links for Sponsored Conversations - Adam Singer

Matt Cutts vs Ted Murphy on Paid Blogging and Sponsored Conversations - Searc Engine Journal

An Open Letter to Matt Cutts - Ted Murphy