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CRM Essentials for Group-Buying Sites

Social commerce is being talked about as a game changer for organizations in the near future. The adoption will be quicker for those operating in B2C domain. Social Commerce in itself is an umbrella under which many sub-models can be defined. One such model that is gaining popularirty are the emergence of Group buying sites like Groupon, Snapdeal.com and others.

This business model has seen lot of growth in recent times. Be it the incessant amount of funding for start-ups or the craze among customers, this concept has caught the eyes of all alike. Being a customer for few of them, somehow I couldn't resist myself in analyzing the model from CRM standpoint. Thanks to my passion with stuffs that brings value to customers :).

As a result, I scanned the web for analyst and real practitioners' viewpoints on this model and came across this wonderful article on Wharton's site - 'How Sustainable Is Groupon's Business Model?'. The article highlights some key issues which the model might face in the long run - i.e. how will organizations based on this model create a differentiation in the market in order to have customers coming to them and not to their competitors?

The organizations using this model will have to come up with long-term solutions since the primary basis of attracting customers are the heavy discounts. In my view, this value proposition of the model is also the biggest challenge it faces in its path to sustainability. Any customer would stick around till the time the company is meeting her needs provided it offers the maximum discounts compared to its peers.

As highlighted in the Wharton article, the discounts are the premise for these companies and hence it also puts pressure on their margins and subsequent cash-flows. Thus to build a winning model, companies needs to identify points of differentiation. This is where CRM strategies can play a vital role is realizing the long-term benefits.

The two important stakeholders that should drive the CRM strategies for group-buying sites:

a. The Partners:

 It all starts with companies selling the model's value proposition to the partners. For partners too, this model do help them to cut inventories and open up new customer segments. Though when a company is looking at maintaining long-term relationship with partners, it certianly needs to do more such as:

 1. The preferences of end-users - having a 360 degree viewpoint on customer's needs which could be a mix of data from customer touchpoints as well as other public channels. 

2. End-user feedback on existing partners - having a 360 degree viewpoint on existing partners where end-user's input, both from existing customer touchpoints as well as other channels, can help in partner priortization.

3. Partner specific programs - Any group buying company would like a loyal partner and hence it is vital for the companies to devise partner based programs that provide priviledges, reward points to partners based on level of customer service, quarterly performance and other quantitative and qualitative parameters.

Partners too can leverage these sites to also cater to their existing customer base. It is all about understanding what deals will be applicable to these customers. For instance, a up-market beauty salon might have its existing customers coming for basic services but they might not see the worth of a special beauty package at its current price. Thus, it makes for a good case to target them with group discounts on such packages.The partners can use these sites as a starting point to up-sell its products and aim for getting the customer base hooked to the upgraded product or service.

b. The Customers

Need based discounts attract them to a site at the first place. But in my view, group-buying companies should now look at devising customer retention and loyalty strategies right from the very first interaction. Give your users a unique experience. This would lead to repeat purchases and positive word of mouth. Fewof the measures could be:

1. Profile insights: Analyse profile and the transactions, see the group-behavior and target relevant deals to them. A person X might be only coming to your site for food deals, don't bombard the mailbox with spa, salon or mobile deals unless X's profile or X's conversations on social sites hints at that.

2. Customer Service: This as for other service companies will also act as a differentiator for this model. Apart from basic services like transaction issues and others, I think the main difference would be in having a robust model for effective dealing of problems faced by the customer at the time of utilizing the deal at the partner's POS.

3. Loyalty Programs: Customers could be targeted with category based loyalty programs such as Dining, Gadgets, Beauty etc. depending upon the volume of past transactions. Organization could also involve key partners as permanent members of these targeted programs for a win-win situation.

As a customer, I would keep availing the deals since I see immense value in them. Though as a CRM consultant, am also keen to see this model bring some differentation in the long-run and thereby helping us to learn some new tricks of customer acquisition, retention and loyalty.

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