Authored by Ryan Cohn, CEO of What's Next Marketing
On February 17th, LivingSocial went live in Tallahassee with its first deal campaign. The initial restaurant was Kiku Japanese Sushi with a spend $25, get $50 in food deal. I personally purchased this deal, as I'm quite a fan of Kiku's sushi and will most likely redeem it by the end of the week. I have, however, purchased quite a few deals from LivingSocial's direct competitor, Groupon.
Both LivingSocial and Groupon are major national players in a new digital industry, that of collective buying websites. How they typically work is that one business in each market is selected per day and a great deal is sent out via email to everyone on their mailing list. Groupon's list is now composed of over 56,000 verified email addresses in Tallahassee. We have worked with multiple clients to promote Groupon deals, and have an excellent working relationship with the Tallahassee representatives at Groupon. We do not plan to have the same relationship with LivingSocial though, for a variety of reasons that I will now lay out.
An early problem that Groupon ran up against in other markets was the over-purchasing of deals. For example, they'd get a restaurant in Portland offering an outstanding deal and then wouldn't cap how many people could redeem it. The restaurant would get a sudden influx of 6000+ new customers over the next 1-2 months that they simply couldn't adjust their systems for properly. This problem has been solved by ensuring that Groupon only delivers an appropriate maximum number of deals mutually decided upon with the business itself.
LivingSocial does not do this. The Kiku deal will not max out and if 10,000 deals are sold today, they must accept them under contractual obligation. They also do not place a maximum limit on the number a single individual can purchase. For example, a Kiku regular could purchase 15 deals and not pay full price at the restaurant for half a year.
Every time I've ever gone to Kiku, I've partaken in their every day Buy 1 Get 1 Free deal. My perception of Kiku's brand is that they have fairly quality sushi for an affordable price, and this deal is well-embedded into that expectation. Only after I purchased the deal did I read the fine print: “Not valid during happy hour or with any other promotions or discounts” Without seeing this, I would have gone for dinner expecting a great deal and gotten almost exactly what I would have gotten otherwise.
Another problem that not only occurs with today's deal, but has happened in many other cities, is that LivingSocial often recommends much higher deal values than appropriate for a business. They are known in other markets for selling $15 for $30 deals at ice cream parlors. Have you ever purchased $30 in a single visit to an ice cream parlor? I've never paid more than $30 for a two person dinner at Kiku. You better believe I'll be bringing home plenty of leftovers (hopefully they won't try to enforce the “not valid for takeout” fine print clause).
LivingSocial also brings potential customers into its service with bait-and-switch Facebook Advertising. Their current campaign is called “Tallahassee Bucket List” and makes no mention to whom they are and what they do. It merely pulls in prospective customers to sign up under different expectations.
All our experiences with Groupon have been authentic and we genuinely believe that they have their clients' best interests at heart. They are upfront about expectations for their service, and predominantly due to that, have built up a large following in the Tallahassee community. For the above reasons, I will continue to recommend businesses utilize their services over LivingSocial.
