Facebook is cashing in on the cultural addiction to daily deal Web sites and social networking with its latest platform, Facebook Deals. The Deals feature launched last month in five select cities and small businesses are trying it on for size.
Jason Sadler, founder of I Wear Your Shirt, said Facebook is in a good position to learn from the mistakes of Living Social and Groupon, which he says small business owners had some struggles implementing into their marketing efforts.
"Facebook is doing their research," Sadler said. "Some small businesses felt Groupon was overwhelming, they lost money on their products sold and it was expensive."
Deals bridges the worlds of social networking and daily deals by allowing users to sign up for discounts and special offers in select cities and share promotions with friends.
When using any type of a daily deal as a small business owner, Sadler said it is crucial to strategically incorporate the offering into other areas of marketing. "It has to align with the other strategies you have going on. This gives you the chance to build longer-term customers. [Deals] can't be your one main thing."
Deals are currently available in Atlanta, Austin, Dallas, San Diego and San Francisco, according to Annie Ta, Facebook spokesperson, via e-mail message. Facebook has a sales team that helps small business owners get started with the Deals platform. Facebook declined to comment on how many small businesses use its site and the Deals feature.
"People can now encourage both old and new customers to come in again and again," Ta said. "Deals on Facebook allow them to create experiences that make people remember their business, not just a discount."
Facebook declined to comment on when, and if it will be expanding the deals platform to other cities and it also refused to disclose how much money business owners pay per deal offering.
Tim League, founder and CEO of the Alamo Drafthouse Cinema in Austin signed up for the Deals’ this past winter, and has experienced positive results.
The Drafthouse, which has several locations in the Austin area, shows movies with dinner and drinks to patrons. The theater held a contest among its 10 locations where movie goers "checked-in" and received a free pint glass. The theater that attracted the most patrons will win a free outdoor screening of a movie of their choice this summer, League said.The deal worked in a similar manner to FourSquare, having customers rewarded for announcing their presence at a business.
The Alamo pre ordered 10,000 pint glasses and ran out of them during the deal, which brought it to a close. The deal itself began as a pitch to loyal customers, but word of mouth took hold on Facebook, League said.
"We have a lot of communication and interaction on Facebook, and I like that integration," he said. "Facebook opened it up for anyone who checked in."
The Alamo already had a solid following on Facebook, which made the foray into its deals different from past experiences with Groupon and FourSquare.
"I think with Groupon we get more people who don't know our business," League said. "With check-in deals, I like how it spreads on Facebook in general, it integrates nicely."
On deal platforms in general, small business owners struggle to keep customers coming back after the offer ends, Sadler said. Facebook does give these entrepreneurs the unique opportunity to network with their customers and fan base before and after a deal ends. Sadler said small business owners should make sure they have an engaged, active community on Facebook before signing up to use the Deals platform. This way they have an interested party before jumping into marketing the special offer.
Small business owners should learn from their experiences, Sadler said. When offering a deal, make sure they have enough of the product they plan on selling, and also have the business properly staffed.
League said the most important thing is to ensure the product being offered is in demand.
"There is a lot of competition in this space," he said. "You need to do something that people actually want and give a nice discount to people."