Some of the most careful thinking about the evolution of the deals segment is coming from Perry Evans, who runs Closely. He had a great presentation about where deals could go next at the Local Social Summit last year in London and spoke about the role of deals in the SMB marketing mix at the C3 conference in San Francisco earlier this year.
Last week he took me through a very interesting new product he’s launching today, called Social Select. It’s a private deals platform. Think of it kind of like “Groupon in a card” for only “your best customers.” Evans sees this as a complement to daily deals and not a replacement.
Social Select tries to solve two indirectly related problems for SMBs and others in the deals space. It relies initially on physical “offer cards” that SMBs hand out to customers as a reward or thank you, to stimulate repeat or return visits. This is one of the problems with daily deals that Evans says is growing: “the one night stand.”
Evans told me that merchants are very “comfortable” with the idea of giving out these physical cards to customers. He was also clear that there will be other mechanisms to distribute offers from merchants to customers (e.g., email, mobile); offer cards are the starting point.
Merchants will be able to create the offer, print on demand (think VistaPrint) and then distribute them as frequently as they like to whomever they like. Once a consumer receives one of these cards she “unlocks” the card online or with a QR code reader. Here’s a mock up:
Over time this process helps create a best or preferred customers list for the merchant. As mentioned it’s intended to stimulate return business: “20% off on your next carpet cleaning . . . ” However it could (depending on the merchant’s rules) be passed along by the customer to friends and associates and thereby generate new business. In this way it gives customer a kind of “social currency” (literally) to deliver to others.
Evans was candid that there are a few details still being worked out. For example, I suggested that customer enthusiasm would be highest immediately upon receipt of the card (and following the merchant interaction) but that the need for the “next visit” might be far off. If I’ve just had my carpets cleaned I won’t need that service potentially for another several months. As mentioned, the cards could be passed along to others if the merchant permits it.
This “discretionary” element is very interesting but perhaps even more so is the “customer centered” social network that it helps create for the SMB. This slide captures the multi-faceted value proposition of Social Select very succinctly:
Evans made the point that SMBs are often clueless about what to do after they create a Facebook page. And Likes often don’t translate into real customers. Indeed, there are data that argue simply because a user has “Liked” a business doesn’t mean that she wants that business to regularly communicate with her.
Social Select potentially helps create a list or private network of actual customers who would presumably be more receptive to SMB communications. Savvy merchants could also use existing networks to leverage these best customers to help generate word of mouth online.
Evans has a go to market strategy that relies on third parties (e.g., small agencies) to push this to local merchants. As I said, he’s been quite thoughtful about all of it.
What Social Select represents is one evolutionary branch off the main daily deals line. I believe that Evans is speaking about it today at the BIA event in Boston. I’d be interested to hear your thoughts and reactions.
March 22nd, 2011 at 6:12 pm
What’s the fee structure ?
March 22nd, 2011 at 9:41 pm
Rev share . . . piece of the deal.
March 23rd, 2011 at 2:47 am
This is smart. Merchants will of course be more inclined to reward loyal customers versus first-time or occasional customers with nominal LTV.
We’re seeing a family of deal-based products emerge beyond the so-called Groupon 1.0 product – each designed to address a different merchant problem or opportunity. Get new customers through the door? Get existing customers to try a new product/service? Or a seasonal product/service? Get loyal customers to come back sooner? Encourage loyal customers to spread the good word? Need to fill seats in a hurry? Or on a slow night?
There aren’t enough local merchants around to churn and burn them with one-night stands. Instead, deal providers will need to build long-lasting relationships based on a family of products that allow merchants to push consumers through the funnel from first-time customer to loyal and vocal fan.
March 23rd, 2011 at 1:32 pm
Yep. It’s fascinating to see this “product” evolve and diversify its forms. I believe that we are seeing a permanent change in local marketing tied to deals and their various forms of distribution.
Heath Clarke in my Borrell session with him called it “Pay per Customer.” I think that’s a good phrase.
March 23rd, 2011 at 2:19 pm
Yes it’s absolutely here to stay. Assuming the merchant negotiates the appropriate discount wrt their margins, it’s a zero-cost, guaranteed-performance product. It’s also the first online local advertising product where the interests of the SMB and the local advertising service provider are perfectly aligned (unlike SEM services, for example).
On a tangential note, I do think it’s in the common interest of all deal providers to reset consumer expectations on what constitutes a “great deal”. 50-90% makes it hard for anyone to win beyond the consumer. For the ecosystem to thrive we need consumers, deal providers, and merchants to all win. One way providers can absorb margin compression on merchant rev shares is if we can train consumers to be happy with discounts in the 25-35%. Obviously the % varies based on category, location and the nature of the purchase (mandatory vs discretionary), but I don’t think 50-90% across the board helps anyone in the long run, including consumers.
April 19th, 2011 at 2:45 pm
[...] With presence and “reputation management” we’ve seen aggregation of data and reviews and now we’re starting to see efforts to move beyond monitoring into a more “proactive” mode — reaching out to users with offers and loyalty incentives. Needium is trying to do with a focus on Twitter. Closely is doing this in a different way with its clever and novel Social Select program. [...]
July 11th, 2011 at 12:28 pm
[...] SMB/mobile loyalty. For example, Groupon aspires to be a CRM platform (eventually). Startup Closely offers an interesting spin on loyalty that can involve physical cards or be purely digital. An early mobile app called CardStar puts all [...]
July 12th, 2011 at 5:54 am
[...] SMB/mobile loyalty. For example, Groupon aspires to be a CRM platform (eventually). Startup Closely offers an interesting spin on loyalty that can involve physical cards or be purely digital. An early mobile app called CardStar puts all [...]
July 18th, 2011 at 11:32 pm
[...] demand” and provide tools to reward the “best customers.” His “social select” card is a clever (if somewhat retro) way to do both. And today he’s shown off a new [...]
August 9th, 2011 at 5:33 pm
[...] private offers to top customers. This is similar to what Perry Evans’ Closely is doing with SocialSelect. LocalResponse, the social analytics and marketing platform, also tries to identify “best [...]
August 31st, 2011 at 7:43 pm
This is a great idea, however, the price point will be very interesting.
What is to stop a merchant from just printing his own discount cards on VistaPrint and giving them out? No revenue share on that model. Sure, they cant change the offer on the fly, but they can always print more cards. Seems this help the merchant by removing the need to print cards, but at the cost for the service, how many will pay for that convenience.