In this earlier piece in the BusinessInsider, we discussed how coupon and deal sites have completely missed the plot behind the original intent of coupons – as a sound economic strategy to extend market share.We also introduced social coupons – a customer acquisition strategy that ties coupons to referrals from existing customers. Now we show you how social coupons work and why brands see them differently.
Let’s first start with a couple of links to actual social referral programs. You can click through them to see how they work (links may not be live if campaign has concluded).
- Huggies Diapers: mums are the target audience for the Huggies brand. They are also the most connected and vocal social community. Engagement and referrals from mums is exactly what marketing spend yearns.
- Hershey’s Simple Pleasures: Program ties coupons to referrals. It sets up two consumer offers – a regular coupon; and a social coupon of higher value, earned through referrals. Program runs on the website of retail partner CVS, as part of a joint marketing strategy.
Why do brands see social coupons as different from coupon sites and deal sites? We look at five areas that matter:
Deal & Coupon Sites
Control & Flexibility
Deal sites control deal terms – they set massive discount levels (70%+) and decide revenue splits.
Offer presentation and brand messaging is set (or limited) by the coupon and deal sites.
Brand sets and controls all deal terms.
Brand decides offer, its presentation and messaging. They decide formats and engagement models (like video and contests).
Leads & Traffic
Deal and coupon sites are destination sites. They use brands to build traffic to their own sites.
Social coupons strategies are set up from Brand properties, like website or Facebook page. They drive traffic to Brand properties.
Massive discounts promote brand switching, rather than consumer loyalty and engagement.
Social campaigns drive new customer acquisition using the social connections of existing customers. They motivate consumers to affiliate with the brand, blog, and even brag about their products.
Consumer response rates are high during the period of massive discounts and completely fall off with full price sales.
Open rates, click-through rates, and redemption rates for social coupon programs are several times higher than typical coupon programs. Referrals increase awareness more than 5 or 10 times.
Knowledge of consumer behaviour is captured by the deal sites and not by the brands.
Consumer knowledge and behavioural insight accrues to the Brand.
We think this explains why larger brands shun the deal sites. They participate with coupon sites, but prefer to build brand equity by engaging directly and deeply with their customers.
A social referral platform provides just the right vehicle. Brands leverage existing brand assets and investments, without additional margin loss. Programs tie existing promotional budgets to new referrals for the business.
There is now a way to monetise the fan base and put a smile in your CFO’s face.
Vijay Sundaram is the CMO at SocialTwist, a Silicon Valley startup that helps its customers acquire new customers by creating social referrals.
NOW WATCH: Ideas videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.