Friday, February 18, 2011

Facebook Deal - Tool to Customer Engagement?

"Facebook itself already has over 200 million loyal people actively using its mobile service around the world, putting it in the ideal position to influence purchasing behaviour," suggests Justin Cooke, Chair of the British Interactive Media Association (BIMA) and CEO of digital agency Fortune Cookie. "It’s a very targeted marketing tool that will encourage users to build new relationships with companies or brands by making them aware of one another at the right time and in the right place, changing the face of brand/consumer relationships."

Facebook’s new Deals platform appears perfectly pitched for the customer sweetspot. Combining elements of increasingly popular location-based services such as Foursquare and social-buying initiatives such as the phenomenally successful Groupon, Deals allows users to find offers in their vicinity.

By using Facebook on a mobile device, users can look for special deals in their area, view what offers are being provided by firms they ‘like’ and also see what their friends have bought. Once an offer has been found, the user simply goes into the store to redeem it.

But it would also appear that Facebook Deals is also a very attractive proposition to brands. It not only enables merchants to target and offer deals to Facebook users to drive more business, but it does so without Facebook taking a cut of the margins – something that could have implications for the likes of Groupon.

How to get the most from Deals

Starbucks were among the first big brands to sign up to the scheme, offering 30,000 free cups of coffee to customers who ‘checked in’ at their various UK outlets. Mazda were also quick off the mark, giving away five cars every month for five months, as well as a 20% discount on certain models for those who check in.

Cooke predicts that most early adopters of Facebook Deals will be businesses that have "used sponsored listings on Google and created target advertising on Facebook". But Jefferies believes that there will be pressure on many brands to embrace Deals sooner rather than later. "Brands should consider acting swiftly on this opportunity – if people start checking in and expecting to see a deal but there is not one available they could quickly become dispirited about that brand."

So how can brands best approach Deals? Are there any potential mis-steps they can avoid, or winning tactics that can be deployed?

Jefferies believes that there are a number of things that brands need to be aware of before setting a Deal live. "The main one is tracking – we see the in store systems being able to track discount codes and take up across stores being a major factor for multi-site retailers getting involved. In addition to this, brands must ensure they can meet demand – if customers attempt to use a Deal and the product is not available they are likely to be disappointed. In addition, in store employees must be informed about all the deal basics and how to manage difficult situations that may arise, ensuring customer satisfaction is always maintained."

So will Facebook Deals be a runaway success? 

For brands to really gain traction, there needs to be critical mass of people ‘checking in’. However there is still some reticence to broadcast individual movements on a regular basis. One reason being, phone batteries are cited as a key reason for reservations towards checking in on Facebook; enabling your GPS tracker can drain the battery.

Encouraging people to ‘check in’ means they are posting their destination and highlighting that they are out (or away from home or work). Some individuals may not be happy to allow partners, employers and burglars to constantly have a good idea of comings and goings.

The most serious concern, however, regards privacy – an issue that has consistently dogged Facebook. "Is there going to be a code of conduct for how Facebook and the promoters will handle personal data?Only recently Yahoo! warned us about default settings (a warning liked by 26,000 readers). Facebook’s default setting or the 'recommended settings' mean that your status, photo, posts, bio, favourite quotation, political views, family and relationship details are shared with everyone. Changing all to Friends only, and you're safe from the prying world, but not from advertisers for much longer.

Not everyone, however, is convinced about the validity of this concern. People who want to post their location have to opt-in and deliberately enable Facebook (and FourSquare et al) to do it for them.

Indeed, despite some concerns, Facebook Deals has on the whole been warmly received. Whether or not brands will embrace it remains to be seen – but when it comes to the Facebook factor, it certainly shouldn’t be short of businesses willing to at least give it a try. What is for sure, however, is that irrespective of whether Facebook Deals is a success, it represents a milestone in the development of location-based marketing.

Wednesday, February 16, 2011

Segmenting by Purpose or Job-to-do

When planning new products, companies often start by segmenting their markets and positioning their merchandise accordingly. This segmentation involves either dividing the market into product categories, such as function or price, or dividing the customer base into target demographics, such as age, gender, education, or income level.

Unfortunately, neither way works very well, according to Harvard Business School professor Clayton Christensen, who notes that each year 30,000 new consumer products are launched—and 95 percent of them fail.

The problem is that consumers usually don't go about their shopping by conforming to particular segments. Rather, they take life as it comes. And when faced with a job that needs doing, they essentially "hire" a product to do that job. To that end, Christensen suggests that companies start segmenting their markets according to "jobs-to-be-done." It's a concept that he has been honing with several colleagues for more than a decade.

"The fact that you're 18 to 35 years old with a college degree does not cause you to buy a product," Christensen says. "It may be correlated with the decision, but it doesn't cause it. We developed this idea because we wanted to understand what causes us to buy a product, not what's correlated with it. We realized that the causal mechanism behind a purchase is, 'Oh, I've got a job to be done.' And it turns out that it's really effective in allowing a company to build products that people want to buy."

Christensen, who is planning to publish a book on the subject of jobs-to-be-done marketing, explains that there's an important difference between determining a product's function and its job. "Looking at the market from the function of a product really originates from your competitors or your own employees deciding what you need," he says. "Whereas the jobs-to-be-done point of view causes you to crawl into the skin of your customer and go with her as she goes about her day, always asking the question as she does something: Why did she do it that way?"

from :Clay Christensen's Milkshake Marketing as published in HBR

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