I got a last-minute request on Monday to do an interview with a local radio station about Social Shopping. I’ve been learning quite a bit about these services lately, so I thought I’d pass some of that information on to you.

Social Shopping is well on its way to becoming a phenomenon. Basically, you, as a business, would approach a social shopping company and apply to be their daily deal. The people in charge of the site work with you to establish the parameters of your “deal.” Your deal must be at least a 50% discount, and you must sell a certain amount of them in a certain amount of time before anyone is allowed to get the deal. The social shopping site has tens or even in some cases, hundreds of thousands of names on an email list, and every day they send out a new deal to that entire list. It’s in the consumer’s own best interest to promote good deals to their social networks like Facebook and Twitter (and the site makes it easy for you to do so), because the more people buy the deal, the better the chance they have of getting the deal. My understanding is, that there are very few deals that don’t “tip” and sell their minimum amount.

How could this be a useful marketing tool for a business?

• The email alone, even if not one person bought your deal is an excellent touchpoint.
• The psychology of selling maintains that the more barriers there are, the less chance there is that you will purchase something. If you are a bit nervous about trying something new, you will probably not invest a lot of money in it. After all, your money could totally go to waste if you end up hating the experience. The half-price (or better) deal lowers a barrier. You think–“Oh, I’ve always wanted to try Izakaya, but I’m not sure about those octopus ball things… but this is half price, so even if I hate it, it won’t be a complete waste.” Or a Swedish massage, or a yoga class or microdermabrasion.
• For a business, social shopping could be a really powerful way to either
  • introduce your new business or
  • introduce your existing business to a new group of people.

Here’s a couple of case studies:

I met Christa-Lee McWatters-Bond at Eat.Drink.Tweet. She is the owner of a new restaurant, Local Lounge, in Summerland, and we had the opportunity to have dinner there on Saturday night after the conference (yum, by the way, if you’re ever in the ‘hood). Because they are a relatively new restaurant, they offered a Groupon to the local Penticton/Kelowna area Groupon subscribers: one for lunch and one for dinner. Christa-Lee said that, in her experience, “it’s not about making money on the gift certificate. It’s about driving new business.” They offered a $60 gift certificate for $30, and found that the average check amount of the Groupon users was actually $90. 90% of the Groupon users were new to the restaurant, and they had already seen repeat business.

Pacific Theatre is a well-established theatre in Vancouver’s South Granville Cultural District. Andrea Loewen is thier publicist, and she echos Christa-Lee:  “We decided to do a Groupon to get people who would may have never even heard of our theatre through the doors.  It’s all about audience development, not about making money.”

“In keeping with our goal of getting new audiences into the theatre (and hopefully getting them back), the most important thing that we did was a little thing I like to call the Groupon Seduction Package.  A simple folder with a season brochure, GVPTA Theatre Guide, and a letter written in the same style as Groupon.  The letter welcomed them to our theatre and let them know that we really want them to come back, but since we don’t know them very well yet, we didn’t know what to offer them to get them back through the doors.  Then they were presented with a choice: on their next visit they could either have free concession items, 15% off their ticket purchase, or they could apply the cost of their Groupon towards a 10-ticket flex pack for next season.  The goal of this is to get them through the door a second time, and to do a little market research to find out what kind of deals people (or Grouponers) like. (Note: So far most people have selected the flex pack, which is a huge surprise to us).”

What are the drawbacks of offering a Groupon for your business?

You have to be prepared for success. If the best-case scenario happened, and you sold thousands of Groupons, does your business have the infrastructure to accomadate all those new customers? Christa-Lee talked about adding extra servers on right after the Groupon at the restaraunt, and Andrea talked about adding extra staff to the phone lines on the days the Groupon was selling, as well as putting procedures and policies in place for dealing with the new onslaught of customers.

Over  all, Social Shopping could be a big boost to your business if you do it right. Here’s a list of the top 12 Vancouver Social Shopping Sites.

And you can listen to my radio interview here.