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One of the biggest questions related to social media is, is it a sales channel? Can it be a sales channel? How do you monetize it? A billion $ question, if you ask me. Social media is like a black hole – every company is trying to figure it out. Ones that have figured it out and are looked upon as “best-in-class” have yet to monetize the channel.

One of my favorite sites is the award-winning much-touted OPEN forum. It is a forum by American Express for its small businesses. It provides content relevant to small businesses and keeps the user engaged enough to come back for more. It performs extremely well in organic search. It is a website all by itself. I have seen online advertising on sites such as http://www.entrepreneur.com just for OPEN forum, displaying video content. Many people have cited the forum as a best-in-class, and it makes perfect sense for Amex because the company not only signs up small businesses for its card, but also provides services. Now for the big question – does it increase leads?

Starbucks got a lot of attention when it made its “free pastry” promotion viral on social media. However, the company did not share results on how much sales it got as a result in its stores.

There are ways to monetize this channel, but it will never be a big component of e-commerce. Facebook and YouTube are the largest visited social networks, and users are there not to buy, but to interact with networks and watch videos. Users are likely to buy after visiting forums, communities, and blogs, but these are not as widely and frequently trafficked. Hence social media as a whole will not have a positive ROI in terms of sales, and should not be viewed as such. These sites, however, provide access to a wide network, and networks of network, with the ability to drive significant traffic. In addition, the great thing is that one does not need to spend a lot of money – all it requires is creativity, persistence, and really committing to the channel. Of course a lot of money spent the right way does help – the OPEN forum is a great example. But eventually companies start viewing the investment in terms of ROI, and it becomes a white elephant that is too expensive to manage and does not have positive ROI.

Take the example of Facebook. Here are a few steps to follow:

  • Build a professional-looking page and make it interactive – An in-house creative with HTML knowledge can do a fairly good job. Freelancers can do it for as little as $500.
  • Leverage existing properties – Add Facebook link in emails, direct mail, brochures, catalog, and all communication materials, website/Homepage, store windows, etc. Every customer touch-point by the company should have the URL.
  • Customize URL – Have a URL that makes it easy for the user to find you. For example, http://www.facebook.com/openforum and/or http://www.openforum.com/facebook. I prefer setting both up but promoting the latter just because it makes the user remember the website.
  • Explore Facebook advertising – This step should be done only after a professional-looking page is in place, else users will not “convert” or like the page.
  • Drive fans to the page – Include links in your and partner Wikipedia entries. Make links available to affiliates and partners and “exchange” fans with them. Use sweepstakes to add fans. Leverage networks for sweeps – for example, every user that enters a friend into the sweeps automatically gets 1-2 extra entries to win something. For consumers, it could be anything – gift cards, shopping spree, paid trip for two, iPad, free music downloads, etc. For small businesses, the incentive could be a paid trip to a conference or conference pass, Facebook advertising credits, subscriptions to magazines or research tools, online conferences, etc. Fan-only content and exclusive promotions and discounts are other ways to drive fans by making promotions viral. A referral program is also a great way to add fans. Members get an incentive to refer a friend, similar to the sweeps example above.
  • Provide engaging content to keep users engaged – Exclusive promotions and discounts, user-generated content (photos, videos, discussion groups, tips) are all ways to keep users engaged. These are subtle ways to increase sales. If a user sees another users’s outfit, he/she may like it and want to buy. A specific shoes website (don’t recall the name) has videos accompanying the products, and seeing the shoes on someone makes a world of difference and can potential increase conversion rates. A similar strategy can be used on Facebook through user-generated content, testimonials, and videos and photos on outfits.

Now for the most important part, how do you measure performance.

  • Have the number of fans increased? Keep track of an increase in fans on a weekly basis and compare it with competitors. Over time you may come to a consistent % weekly increase – use this as a benchmark. Has this % increased after your efforts? If so, then you can use it to justify performance. This is the best and easiest way to measure performance.
  • Do the efforts drive traffic to the site? Measurement is as simple as adding a tracking code in all Facebook URLs, working with a technology partner that has tracking ability, or simply looking at free web-based tools and evaluating before and after traffic from Facebook as well as Inbound links.
  • Has Google page ranking increased? This is a little more far-fetched since none of the efforts drive traffic to the website, but in the long run it may be worth exploring this metric.
  • Do your customers engage more on social networks? Again, this is a very subtle metric. Rapleaf is a company that takes your email and direct mail database and identifies their patterns in social networks. You can use Rapleaf’s service to understand existing user behavior online, and see if that pattern has changed after building and promoting your Facebook page. Again, this is subtle but worth exploring. It is a cost-effective way because Rapleaf works on a monthly-fee basis.
  • Does it drive revenue and sales? There are several ways of testing this. Use a separate promotion code on Facebook to track redemptions and sales. Every person that “Likes” a page is an existing or potential lead. If running a sweeps or referral program, see how many users who signed up and shared their email ids end up purchasing something. Once you have a user’s email id, it is easy to track revenue driven by them. Apply a customer lifetime value to every new sign-up. Over time, there should be a consistent % of qualified leads from all the leads. So revenue = qualified leads * customer lifetime value. It is easier to track if users purchase directly from Facebook – if the revenue is collected elsewhere (eg. stores, website sign-ups, search, affiliate), it is difficult to track the impact of Facebook. A lot of times users may see a promotion on Facebook but convert through another channel such as search or affiliate. If you have an existing web analytics package or ad server, do a path analysis for before and after Facebook efforts, and see if Facebook has increased its standing in the path.

Again, social media will never be a prominent sales channel, but its relevance and importance cannot be denied. Lets go beyond revenue and leads for a few minutes. What are other benefits of this network?

  • Customer service – Want to reduce costs at that expensive call center? Use Facebook. Get customers to post their questions and concerns on Facebook. It is easier for them as well to write on Facebook than wait for 10-20 minutes on a call. Concerned about having the world read customer issues? Set up an email id with facebook@companyname.com, and address all issues through email. The benefit is that if call center reps have to address the issues, they can respond during downtime.
  • Making customer feedback constructive – An unhappy customer will want to tell the whole world about their bad experience. Two instances come to mind. One, a customer was so unhappy with customer service at the call center that she wrote it as a status message. Two, one customer was so unhappy with her experience that she made it a point to write a negative comment on almost all posts by the brand. How to you deal with this? Take all comments offline and encourage customers to be constructive. Write a templated response informing that you have heard them. Email them and ask them to email their issues to you – they will have to write something constructive – “I hate you” which is prominent on the Wall will not show up in the email response. The customer in case two above stopped expending energy in writing negative responses and wrote a constructive email explaining her frustrations. We apologized and mentioned that we will channel the feedback internally to the group concerned. RESPOND to the customer and genuinely try to address the issue. If possible, give them an incentive to make good for the bad experience. Jet Blue posts a templated response and drives users to their customer service page.

One thing to keep in mind is NEVER delete comments unless they are inappropriate or spam. Customers need to air their grievances, and Facebook should encourage an open communication. Sephora deleted a few negative comments. This made a customer angry and she responded with strong words on their Wall. More customers posted comments on how this was unprofessional of Sephora, and it became a heated conversation. Deleting negative comments is the worst thing a brand can do – there are other ways of dealing with this feedback, so why do anything that reflects negatively on the brand and company? Gosh, this is a looooooong post. There is always so much to write about social media, and in this case Facebook! More to come… adieu.

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Ideeli recently launched IdeeliAccess which gives Ideeli members handpicked deals and offers that are localized. The deal features a significant reduction in prices, and becomes active only if enough people sign up for it.

It is currently running a deal for Spa Chakra where you can get a spa service for 90 minutes at 67% off! Regular price is $337, deal price is $109. This is an excellent deal! I have been to Spa Chakra on Fifth through a deal I purchased on Haute Look, but it was not this good! There is a condition though. Enough people have to sign up for the deal to be a “go”. So if you want the deal to work, you can ask your friends to sign up. Once the spa meets its minimum number, the deal is valid. How awesome is that! I love these invitation-based sites – since they are e-com only, they go all out and do the most creative things.

I also checked out Gilt and Rue La La‘s iPhone apps. They are easy to use and quite nice, but I cannot fathom buying through iPhone. I like to look at products in zoom version, and the phone is too small to get an idea of the product’s look and feel. People do buy using the app – I am not there yet. Both apps are very similar – you can organize products in list or grid form. The only issue is that it takes a while for the pages to load, and by the time you go back and forth and check out all the sales, some may go out of stock. Its so much easier on the computer where I open one tab for each brand and browse away.

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Google is my favorite company – it is THE apex of innovation. I truly admire the company’s ability to find ways to make more money and provide the best customer experience. It has been making great strides online, and its technology is second to none.

CPC-model is Google’s bread and butter. It started with an algorithm, and has grown into a giant empire. Last year, users were able to type a company’s name and a list showed up with the company’s URL directly in the search query options. While this meant that Google had to forgo CPCs, it provided for a much better customer experience.

In Nov 2009, Google introduced Sitelinks, which allows advertisers to add deep-links to the site on paid search ads. This allows for a more customized user experience, and allows advertisers to provide separate landing pages for each and hence increase qualified traffic and conversions.

In Nov 2009, Google also rolled out product extensions. Advertisers could display their product images in paid search ads.

Last year, Google started testing product listing ads on a CPA basis. If you searched for a product, say iPhone, Google showed ads for iPhone on the right hand side with product images from various sites/online sellers. Users tend to click on organic ads more than paid ads, and ads on the right hand side get even less attention. Having product images show up is an innovative way to increase (qualified) traffic and possibly conversions. We participated in the Beta and were happy with the results. Google talked about adding a promotion to product listing ads, but that has not yet materialized. Google performed various tests, and we never had visibility into any of them. The tests showed by as “Experiment 1” and so on.

This year Google unveiled its new look with several filtering options, and rose to the social media challenge by allowing Facebook and Twitter to show up in search.

Recently I noticed that ratings have started showing up on the right hand side for merchants. This is probably in beta, but its another way to increase clicks, CPCs, and conversions. The ratings are sourced from Bizrate, and I am willing to bet that they are being used from Google Shopping. Here is more information on ratings.

Google has also been using page recommendations at the bottom of search results. So if you type Groupon, you can see Groupon’s competitors at the bottom of the page.

Google has been using the Shopping data feeds in innovative ways for adding images to Google searches; I won’t be surprised if Google eventually does away with Shopping or finds a way to monetize that. Which is a pity because how will merchants justify investment in CSEs if there is no free Google or Bing Cashback anymore? CSEs will have to either reduce CPCs or do a damn good job of driving conversions to compensate for the cost. My peers and I find the CSE program to be the smallest and most expensive, but it is worth investing in because it drives a significant number of new customers. Whether the quality of customers is good is yet to be seen.

Google is trying to figure out how it can leverage its own real estate above the fold to make more money from merchants and yet not impact customer experience. Google never has a “me too” approach – it always stays miles ahead of the rest. Kind of like Amazon. A long time back I was asked in a job interview, “Tell me 3 of your favorite sites”. “Amazon” is always my answer. For the second site, I blanked out and said “Google”. My answer was declined because Google is not really a website, and I had to think some more.

Its amazing that Google never advertises — I remember the old saying that there is no need to advertise something good. Bing advertises on TV shows, online ads, etc., but their algorithm is so bad that I cannot bear to use the search engine. I tried using cashback, but for cashback alone because the search engine is far inferior. One smart thing Bing has done is showing up as sponsored listings on Facebook. So if you search for something on Facebook and scroll all the way to the bottom, you see Bing ads, not Google.

In the affiliate channel, Google has made many improvements to its interface used by advertisers and affiliates. I asked Google’s two biggest competitors —

  • Competitor 1 – Google has made so many improvements to its interface. Do you have any plans to make such improvements to your interface? Their response – “We focus more on growing through affiliate reach and relationships than technology, so no, in the near future we have no such plans.” What a shame. If you cannot fulfill basic data needs without having to go through a complex process, eventually clients will switch. Why not focus on both and stay a step ahead of Google?
  • Competitor 2 – How does your interface compared to Google? Their response – “Our interface is not as pretty”. Google’s interface is not pretty, just easy to use. Intelligent clients would never choose looks over ease of use and and business needs.

On the flip side, Google has certain processes in place and has streamlined all its newly acquired businesses. Which is good for Google, but not so good for clients. A lot of language in their contracts cannot be negotiated. Google is one of the few vendors that comes to meet clients in jeans, brings presentations on recycled paper even though they seem to be of poor quality, and they use both sides of the paper. Which is why I admire the company. Their employees do not need to bend over backwards for clients.

Google employees are happy people. They have a free cafeteria, can work from home, get maternity and paternity leave, and can relocate and still work with the same team virtually. The company truly cares about its employees. No wonder Fortune has listed it as the 4th best company to work for. However, I have heard that the company does not pay as much. And the titles are not as high. You may be a manager in another company and an associate manager at Google, although you have the same experience and possible same salary.

Google and Pixar are my favorite companies because of their innovation and creativity. I don’t hold Apple in as much regard because their technology is not as superior. I truly admire Google, and am looking forward to more innovation from the company.

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Everyone wants good deals, and nobody wants to pay full prices anymore. Retailers, manufacturers, and service businesses have tried to satisfy consumers’ growing appetite for deals with even bigger discounts during recession. Consumers are smarter than ever before, and search the Internet for deals before making a purchase – online and offline.

A number of deal sites have cropped up to fulfill this need, and are investing heavily in online marketing. These sites are different from the regular affiliate and coupon sites – they are localized and bring small businesses and customers together – small businesses that do not have the budgets and are not Internet-savvy to do their own marketing.

Groupon, Buy With Me, Spa Sally (also called 25 Tuesdays), KGBDeals, Woot, BloomSpot, ScoopSt, Lifebooker, and Living Social Deals, to name a few. Too many sites to keep track of? Well, not to worry. Yipit aggregates deals from these and other sites and brings it all to you. Twitter is joining the race too.

Subscribing to invitation-based sites, deals sites, retailer emails, industry information, LinkedIn updates, Facebook updates and now the newly-launched Facebook Marketplace, blogs newsletters such as NyMag and Apartment Therapy,  occasional visits to GoFugYourself and Celebitchy to catch up on celeb gossip, visits to Spoiler Tv and TWOP to catch up on True Blood and Vampire Diaries spoilers and videos, forums such as GardenWeb for renovation ideas, and blogs such as Reality Blurred to keep track of shows I don’t watch, sure keep me busy! Yes people, I am a “digital” nerd and damn proud of it! I don’t watch TV, and more than make up for it online.

Anyway, back to deals sites. These sites are very localized and offer deals on restaurants, spas, shows, museums, fitness, activities, etc. Deals are available for a limited time and customers are required to make a purchase during that time; the deals are valid for one year so customers can redeem them anytime. I think the sites themselves get a % of sales, so risk is minimal to merchants. There are several factors into play here.

Barriers to entry, capital investment, and switching costs are low. All it requires is getting partnerships and investment in website and online marketing which does not require a lot of capital investment. In addition, since you can login and receive a web version of the purchase, there are no hassles with order fulfillment. And if you are smart like Yipit, you can capitalize on other sites’ work and just aggregate deals. Since entry barriers are so low, it helps to have the first-mover advantage and aggressive marketing tactics.

In terms of marketing, the key is partnerships, online marketing, and PR in that order. If you have good merchants willing to offer the best deals, it becomes easier to acquire customers. If your website is SEO’d and you have invested in online marketing, customers will come. Groupon does retargeting – I have not seen other sites invest in retargeting efforts yet. When you search for Groupon on Google, above the fold you have one paid search ad for Groupon, two organic, one Twitter, and one Wikipedia link. Not a single competitor shows up on the first page!

Analytics is key. Small businesses would want to work with different sites to test quality of customers acquired. They need to have advanced analytical capabilities to associate a customer with that specific site, see if the customer is new or existing, analyze the number of times the customer returns, spend per trip, cost per new customer, lifetime value and long-term viability of the site or channel. All this can be done if the small businesses just have Excel and a record of all their customers.

I purchased a spa service through Groupon, and went all the way to Tribeca (quite a trip from my residence) to get the service. The service was great, and I was told that I could avail of the same discount on weekdays during non-peak hours. I never went back despite good service because it was too far. Its easier for me to walk across the street and get the same service.

The consumer psyche is a different matter. The levers are location, services covered under the deals, quality of service provided, and differentiation among different deal sites. For spas, getting a mani-pedi has low loyalty while a facial or massage or haircut may generate higher loyalty and customers may not mind venturing far for the service again. Customers who subscribe to such sites may be deal-savvy and aware of other sites as well, and hence more likely to be deal-sensitive and hence less loyal. For restaurants it is tricky – how frequently do you go to a restaurant after having been there once? Once a month? Less frequent? AM finds it embarrassing to redeem coupons in restaurants. As for shows and museums, how many times do people go back? Does foregoing margins make up for the increase in volume? What are the redemption rates? Since consumers make a choice to purchase in advance, I am assuming that redemption rates would be very high. For customers who don’t redeem, will they buy on these sites again knowing that they did not redeem the last time? If customers know that the services don’t cost that much to begin with, will they end up being more price-sensitive and less loyal?

What is the future of these sites? They will become commodities. As it is there are so many many sites already in this space, and there is no reason for customers to be loyal to one over the other. The existence of such sites and deals make customers even more price-sensitive.

So how should these sites acquire new customers, generate loyalty, and stand out?

  • Build top-of-mind awareness through effective PR
  • Differentiate from competitors by offering something over and above deals. NYTimes has an interesting article about these sites and how they differentiate from one another. LivingSocial will give you a deal free if you persuade three people to buy the same deal as you.
  • Diversify into new markets, especially untapped ones, to get the first-mover advantage
  • Get customer feedback on services, work with merchants that customers are happy with, and offer deals on services customers demand. Customers can leave feedback on Groupon’s deals.
  • Diversify into different services – should this extend to dry cleaners, parking, and maybe accounting or law services?
  • Have exclusive agreements with merchants (probably a hard-sell)
  • Build a strong loyalty program where customers get points which can be redeemed for future purchases. Lifebooker has a cashback system, but the cashback expires within one year – it happened to me and since expiry I have never purchased from them again.
  • Create a presence on key social networks – one, studies have shown that customers are more likely to buy from brands that they are fans of on Facebook & Twitter, and two, word-of-mouth is key and social networks provide the best way to have a referral program and make deals viral.
  • Explore partnership and syndication opportunities – for example, Groupon could syndicate deals to NY Times’ or other newspapers’ local sections, or online at Yahoo Shopping.
  • Have a good website that uses Facebook Connect, has a community, allows customers to rate and share their experiences, and is easy to use are key as well.

The sites need to use innovative marketing tactics to stay competitive.

One thing going for these sites is word-of-mouth. The sites are localized, easy to use, and provide the best deals. A perfect way to take girlfriends to spas or go with a group to try a new restaurant, or recommend the services and sites to friends after having tried them. It would be interesting to see how many referrals these deals bring to businesses – I am not sure how savvy small businesses are to measure them though.

As for me, I am so bombarded with emails now that I don’t know how to handle them and delete these deals without reading. I will never take a risk with my hair, so salons are out; never for massages because I am loyal to one Thai place, so that is out. Since AM is embarrassed to take coupons to restaurants, that it out. Which leaves me with other spa services and shows. I wonder how many of these sites will go out of business and who will be left standing in the next few years.

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How shall I tell thee of the inefficiencies of Time Warner Cable? Did the MBA degrees from Ivy Leagues amount to nothing that the management is so dumb? Will TWC be another company swallowed by recession due to inability to handle size and inefficiencies?

I wanted cable installed in my new apartment, and scheduled an appointment with TWC for 6-9pm. Its amazing how every time I schedule any appointment with companies, servicemen come at the last minute. So the TWC guy came at 9pm exact. There was some issue with cable in one room, so I asked him to walk across into another room and install it there. But he could not do that because the instructions did not say so. I called the company but they would not budge. They asked me to reschedule. Such a bunch of morons running the company! I have heard from others how TWC would rather you reschedule than add to/remove from instructions. They probably end up paying a lot of money on customer service calls and servicemen. In India, I would just put a Rs. 100 note in the guy’s hand and he would do the needful. Not so here. I have been using TWC for years, but maybe its time for a change. I had sworn off Verizon due to their crappy service 5 years back, but maybe its time to reconsider since Verizon is the best.

Two years back my Internet service went caput. I called to schedule a service, but TWC could not send someone for a week!!! If there is one thing I cannot live without, its the Internet, and I am not the only one. In a recent study, Internet is the last thing people would give up in recession. Anyway,I tried really really hard to get TWC to send someone earlier. I spoke to the supervisor and called several times to speak with different people in the hope that someone would have mercy. Embarrassingly enough, I even pretend-cried on the phone saying that I needed to work from home, to no avail. I am sure they must be used to people acting crazy on the phone – people have admitted as much on forums about crying for TWC to resolve Internet issues at the earliest. To TWC’s credit, I have not had any more repair issues in five years – I hope I did not jinx it!

I subscribed to T1 at Starbucks and used Internet there till I got my service. Its kind of silly but I cannot spend a single day without the Internet. The only time I can do without is when I am in India, where it takes ages for pages to load unless I use it early in the morning. I am from a small town and my parents rarely access the Internet, so service sucks.

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