RSSAll Entries Tagged With: "local business"

ShopKick is Next Big Thing in Local Social Commerce

Remember this name: ShopKick. You’re about to starting seeing a lot more of it. ShopKick is a new mobile application that tracks and rewards customers with points (called KickBucks) just for walking into your store. Think of it as a new digital way to easily drive foot traffic into your location. 

Customers earn additional points for picking up and scanning the barcode on an item in your store using their smartphone’s camera and, of course, for making purchases. The more involved with your store a shopper becomes, the more KickBucks they can earn. It’s like a digital version of the old-style repeat-purchase punch card, but with vastly more capabilities.  

KickBucks can then be redeemed for rewards such as discounts, gift cards, merchandise and charitable donations. Consumers simply download the free ShopKick app to their smartphones and start looking for nearby stores and restaurants offering “Kicks Rewards.” The ShopKick FAQ section helps explain in detail how the app works from the customer’s point of view.

ShopKick is amazingly simple and – apparently – effective as well.  Several big retailers such as Crate & Barrel, American Eagle, Macy’s and Target began experimenting with it in 2010.  Best Buy, the electronics big box giant, likes it so much it recently rolled it out nationwide.

The big news, however, is that ShopKick has just launched a pilot program to begin offering the service to local businesses in 11 cities and metro areas, including New York, Los Angeles, San Francisco, Chicago, Dallas, Houston, Austin, Seattle, Washington, DC, Detroit and New Orleans. Initially, 1,000 local businesses will be selected to participate and will get the service free for a year.

While any local business can apply for free, the preferred types of businesses for the experimental program are coffee shops, yogurt shops, bakeries, family restaurants and local clothing boutiques.  Other factors in your favor include these:  You have less than 20 locations are located in a shopping area, have a good Yelp rating and a distinctive store design.  Citibank is picking up the tab for the pilot program, and clearly sees big things ahead for ShopKick. Citi officials see it as an exciting new retail program that local businesses can use to help them connect with customers in their communities.  

A New Local Mobile Frontier

The huge growth of mobile commerce via smart phones is fueling Palo Alto, CA-based ShopKick and will change how customers interact with a local business. Already, about 20% of consumers use their mobile phones to check prices, according to a recent Booz & Company study. As smartphone penetration more than doubles over the next 3-4 years, that figure is expected to soar as well.  Booz & Co. also predicts that purchases made directly from mobile devices will more than triple by 2014.

It creates a new personalized experience for customers to tap into when shopping at local merchants.  And according to BIA Kelsey, which tracks local marketing trends, ShopKick is already available in 2,500 big retailer locations and 160 malls nationwide.

In short, ShopKick is a new retail technology that – for the first time – starts to meld the previously separate worlds of selling either online or offline.  Armed with their app-equipped mobile devices, customers can now exist simultaneously in both the digital and physical shopping worlds.

ShopKick, founded in 2009, has high-powered venture capital funding, and counts Kleiner Perkins, Greylock Partners and LinkedIn founder Reid Hoffman among its backers.

Copyright © 2000-2011 BizBest® Media Corp.  All Rights Reserved.

Why Daily Deal Sites are Doomed

Unsatisfied small business owners are abandoning daily deal sites such as Groupon, LivingSocial, Travelzoo and BuyWithMe and won’t return in sufficient numbers to sustain such sites long term.   That’s one key take-away from the most exhaustive study yet done on the daily deals phenomenon. The study by Rice University business school professor Utpal Dholakia –probably the nation’s top expert on this topic – analyzed the performance of daily deals offered through five major deal sites in 23 U.S. markets. The study examined the results that businesses achieved on deals offered over an 18-month period ending in March 2011.

Overall, the picture isn’t pretty.  Most small businesses that have been making discount offers on Groupon, LivingSocial and other sites either don’t track the actual financial results of their offer, or have a distorted view of what’s really happening. Results from three Rice University studies and some 500 businesses surveyed show that most offers are not producing anything close to the financial successes for participating small businesses that a few claim to be having.  In short, daily deal sites may in fact be doomed.  

As small business owners look closer at the bottom line results of offering deep discount deals online, two things will happen:  1) the daily deal websites will have trouble attracting enough local businesses to fill their deal pipeline; and 2) business owners will be able to demand a higher revenue share, lower fees and more services.

If your business has made or considered a deep discount offer on Groupon, LivingSocial or any of the hundred or so copy-cat sites that have sprung up, first consider why many small businesses aren’t coming back.  Some of the study’s findings seem rather positive.  While 27% of businesses said they lost money, and 18% broke even, 55% said they made money.  About 80% of deal buyers are new customers (a good thing); and a stunning 1-in-5 consumers who buy a deal never redeem the voucher they’ve already paid for.  While this may actually be the primary way many businesses are turning a profit on their offers, it’s not much of a business model.

As BizBest recently wrote (see:  How to Create a Profitable Coupon Offer), crafting a discount deal that actually benefits your business long term is tricky. Most small businesses don’t get it right.  And the Rice University study uncovered a number of troubling red flags that point to structural weaknesses in the daily deals business model in general.  For example, two big things that local businesses bank on when deciding to offer a discount via Groupon or elsewhere are:

1)      That deal buyers will spend at least a little money beyond the deal value itself; and,

2)      That a goodly portion of the deal buyer customers will return at some point for a full price purchase.

But things aren’t working out that way on either count.  According to the research, just 1-in-3 buyers (35.9%) spends anything beyond the basis discount deal price. Even worse, fewer than 1-in-5 (19.9%) return later to make a full-price purchase.

Salons, spas, bars and restaurants – the bread-and-butter businesses for Groupon – seem particularly disillusioned with offering online daily deals.  Only 35.9 percent of bar and restaurant owners said they’d do it again, while 41.5% of salon owners would run another such promotion in the future.

If you do plan to proceed with a daily deal offer, here is BizBest’s advice on making it work:

  • To increase your chances of a profitable promotion, consider offering a daily deal of relatively high face value (say, $50 or more) with a shallow discount (at most 25% off face value), a short redemption period (90 days or less), and a limit on the number of deal vouchers consumers can buy.
  • Among industries, health care, professional services and special events have been the most successful at using daily deals; more than 70% of them made money on the promotion. However, two of the largest industries – restaurants/bars and salons/spas – don’t perform as well. Only 43.6% of restaurants surveyed earned a profit from the daily deal promotion, while 53.7% of salons and spas made money.  
  • Most importantly, don’t cut your other advertising and marketing spending to do daily deals. “Many local businesses that are spending their marketing dollars on daily deal sites have dramatically cut their advertising budgets,” Dholakia says. “This is a problem because they’re not building their brand when they offer discounted prices for their products and services. Only about 20% of customers using daily deals return to businesses to buy at full price, but customers acquired through other programs typically have much higher rates of full-price repurchases.”

Copyright © 2000-2011 BizBest® Media Corp.  All Rights Reserved.

12 Local Business Online Marketing Success Secrets

Consumers seeking a local business, professional or other service provider search and choose differently depending on the product or service they need.  That seems like common sense, but it’s often misunderstood.  And that creates special opportunities for local business owners who get it right to be found first by customers searching online.

The basic secret to success is this:  Deliver the right types of information (consumers seek multiple pieces) for your specific category, industry or vertical.  In other words, today’s challenge goes beyond simply showing up in an online search. To win the business you need to deliver the right kind of information once the prospect has found you.  And that’s where the differences come into play.

For example:  The two things consumers want most when searching for an attorney, doctor or other health care provider are: 1) Information about professional credentials or specialties; and 2)  levels and areas of experience.  But someone looking online for auto repair services or any of the thousands of products and services that fall under “home improvement,” will first and foremost be interested in specific product or service details and costs.  Only then do consumers start to look for discounts, special offers or details about credentials.

These findings come from new nationwide research just conducted by WebVisible and the Chicago-based market research firm Synovate eNation.  Four different groups of 1,000 Americans were asked what kinds of information best help them make their choice when searching online for doctors, lawyers, auto repair services and home improvement product or service providers.

Different types of information include these:

  • Professional credentials
  • Special offers and discounts
  • A video featuring the service provider
  • Written customer testimonials
  • Personal referrals or recommendations
  • Product/service details and prices
  • The ability to find the local business in a variety of online directories

“Getting found online is just the first step,” says Ron Burr, CEO of WebVisible.  “Local advertisers have to make sure the information they provide will help close the deal. Do your customers want information or a discount? Do they want to read about your credentials, or see you in a video?  There is no one answer – no magic bullet that will make someone pick up the phone. It’s a combination of presenting yourself well, making a good offer and helping the customer feel educated and informed. Then, it’s a matter of giving them the chance to convert and take action right then and there.”

12 Ways to Perfect your Local Online Pitch

  1. Service providers who offer general, educational information – not just about their own company or services – will stand apart. In every category, people want a certain level of “education.” For attorneys, 52% of people want answers to common legal questions. For doctors, 46 % want to know about treatments and procedures. For home improvement, 44% want resources to learn about warranties, tax credits or energy savings. For auto repair, 32% want information about maintenance services recommended at various stages.
  2. Income is not a predictor of who will prefer special offers and discounts. In just one category – healthcare – the preference for discounts increased as salaries decreased (16% of those earning $75k+, compared with 37.5% of those earning under $25k). But in the other three categories those in the middle income ranges chose discounts at above-average rates.
  3. For healthcare providers, attorneys – or presumably any business offering a service that requires extensive education and training –consumers need details on credentials and experience.
  4. Half of the consumers surveyed say they want referrals and recommendations from people in their networks – an argument for having a Facebook page.
  5. Roughly half of customers say they want information about available treatments and new procedures when looking for healthcare providers, and about legal procedures and answers to common legal questions when looking for lawyers .
  6. When searching for consumer services like auto repair and home improvement, nearly 70% of people said they need information about specific products, services and costs. When seeking auto repair, 58% said they want a discount offer, while 54% said they want a recommendation from someone they know.
  7. When seeking a home improvement service provider, 54% said they want details about the provider’s certifications and experience, 53% want a deal, and 52 % want a personal referral.
  8. Women tend to seek greater information variety than men.
  9. Online video appeals to all age groups. In fact, across all four categories, both the young (ages 18-24) and the older (ages 55-64) chose video – either a profile of the owner/professional or of an actual customer testimonial – at higher-than-average rates.
  10. Discounts are important in the categories of auto repair (58 % of respondents named it as key) and home improvement (53 %).
  11. Discounts are particularly important to consumers under 45. Across all categories, the youngest age groups chose special offers and discounts more than the overall average.
  12. Across the board, nearly 30% of consumers want the service providers to show up in a variety of directory listings.

Copyright © 2000-2011 BizBest® Media Corp.  All Rights Reserved.