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.

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

I am reachable at susmita@thesmartideas.in

Think the unthinkable: The radical marketing lessons of Whitbread

Manager of marketing, who are charged with the responsibility of getting and retaining business to produce profitable income for their employers, need to consider both the long and short-term requirements of their employer’s business. Decisions that have short term positive results may have long term negative consequences, and visa versa.

As markets and businesses develop, so also do attitudes, legislation and technology change, as well as other factors, which may profoundly alter the marketing environment in which a business operates. Such changes can and should bring about a full re-assessment of the business and its future, which may produce some radical views and ideas for consideration.

During the 1990s the Government of the day introduced legislation generally known as'the Beer orders', to attempt to break up the control that the large brewing companies had over the pub trade through their tied public houses. This legislation severely limited the number of tied outlets that could be owned by a brewing company, and also required the remaining tied outlets to supply at least one beer from a different company, in order to improve customer choice and competition.

This change in the law was probably fundamental in a major reappraisal by Whitbread Group Plc, of its business and long-term future. Founded in 1742, Whitbread Group Plc was one of the largest brewing companies in Britain, with extensive interests in pubs, restaurants, hotels and leisure clubs. After careful reassessment of its business and future, and despite its origin and a long history of brewing, the company decided in 2001, to sell all its breweries and brewing interests to Interbrew, and the following year sold its pub estate, to Enterprise Inns.

The company is now firmly established in the hotel and restaurant market, and is totally divorced from its original business of brewing and pubs. Whitbread’s radical departure from its original business is a good example of a business assessing its long-term future, and radically altering where it would invest its assets and resources for the best sustainable return.

Think the unthinkable

Marketers and managers in charge of getting and retaining business should, from time to time, be prepared to 'think the unthinkable'. As businesses and markets develop and evolve, so the situation can arise where the founding work of the business may only provide short-term gains, but may no longer provide for a sustainable profitable long-term future.

Marketers should not be deflected by 'vision statements', from their prime objective of producing income for the business. Vision statements are generally inspirational, but lacking in objectives, have little relevance to the day to day delivery of the business.

It is also possible that vision and mission statements may get in the way of clear thinking, obscuring rational and perhaps radical thought and creative solutions to changing markets and trading environments. Regardless of what vision and mission statements may say, the only purpose of any business is to make money for the benefit of both the shareholders and the workforce. As businesses develop and diversify into areas away from their original roots, marketers must be fully understand from where their profitable income is derived, where costs are incurred and where investment is needed for both short-term requirements and the long-term future.

While it was still heavily engaged in brewing and the pub trade, Whitbread had already expanded and diversified into the hotel and leisure industries, which had great scope for long term growth. By contrast, Whitbread considered that the opportunities in volume brewing were in decline, and therefore the requirement by legislation to sell the majority of their tied public house estate, was a singular opportunity to reassess the company’s future both long and short-term.

The principle lesson for marketers is that their prime responsibility is to produce and maximise sustainable profitable income of the business while minimising costs, assets and investment, in order to develop and maintain the long-term future of the business. The key question that has to be asked is, "Are we in business to make a product or to make profitable income for the benefit of the shareholders and the livelihood of the workforce?"

Continuous analysis of the market environment and especially detailed analysis of the business’s performance within it, may frequently produce a requirement for 'crossroad' decisions, where there may be a choice between a short-term gain with limited future, or a long-term benefit for a sustainable future. Such decisions may be radical with serious repercussions. But sometimes thinking the unthinkable may, as with the example of Whitbread, be a road to a sustainable profitable long-term future which is, after all, the purpose of business and marketing.

(by Nicholas Watkis)