Group Buying is The New Black Thanks to Frugality
There are many ways that consumers and companies are cashing in on the escalating frugality trend. This is a direct effect of the increasing use of both social networking platforms and of smart phone use. As the population continues to talk on the phone less and less, we are also welcoming using our phones (and email) to receive notifications of deals on products and services that we like.
If you have a retail business and have not launched a campaign through group buying then you have missed out on a lot of business. Groupon and LivingSocial are at the top of the group buying mountain and can deliver results that will blow your mind.
The biggest problem companies have with these campaigns is not preparing their internal structures and supplies to meet the flood of demand they receive. One example is a Washington D.C. company that offered $50 worth of cupcakes for $25 and had to make their staff work around the clock to bake enough cupcakes.
The front end of why this works is that people opt-in to receive daily notifications of deals. Why opt in? Because everyone loves the gratification of feeling that they got a good deal, and even more importantly, people love to be the first ones to tell their friends about something cool.
This brings us to the backend value of participating in group buying. If Jane gets a notification about half off for a spa day at a local salon, not only does she get to talk about saving money (which means she's smart), but she also gets to be the one to forward the email to friends. This is both giving a gift and spreading influence which raises Jane's level of importance to people whose opinions she cares about. Deep psychological needs for connection and validation are met through this process.
But beware of magic bullets. There is no absolute guarantee that if you pay for a campaign the customers will come. You need to apply due diligence on what it will take to break even on a campaign. If you have a shoddy product and you have not proven that people will pay for what you have, even giving a great discount through group buying may not boost your bottom line. That said, if you ask yourself the right questions before committing to a campaign, there are few other avenues to build interest in your products as instantly as group buying offers.
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