Profiting from the fundamentals of Group Buying: part 3… Scarcity

Posted on by Billy Tucker

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A key tactic more often employed by Flash Sale sites than Group Buying sites is scarcity, but there is more to this tactic that meets the eye.image

Stock limitations can be a condition, i.e. we really only have 200 available in our warehouse, however setting a stock limit can be a very effective tactic to drive up sales, this is the Scarcity Game Mechanic. To set an appropriate limit, forecast the likely sell through of a particular item, then set a stock limit that is 10 – 15% higher than that forecast, the Scarcity Game Mechanic if played right will ensure the limit is reached and your forecast is exceeded. image

To illicit the right response, the shopper has to feel some sense of urgency due to the stress that comes from missing out, clearly this is less effective in the early phase of the sale but that’s ok given the forecast amount would have been reached on its own. Having a genuine countdown display is key, either literal or abstract, regardless though it has to be genuine, once the limit is reached the item is “Sold Out”, it’s tempting to find and release more stock however once this occurs, the scarcity mechanism will be discredited for good. imagePromoting the Stock Limit though display advertising or EDM is also good, however the level of promotion provided has to be proportionate to the Stock available. Lastly, if a Consumer comes to the site after the limit has been reached, this is a great time to reinforce the “don’t miss out next time, be first to know with our SMS program” or similar engagement/re-targeting program.

Twitter hash-tags have lost their mojo.

Posted on by Billy Tucker

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I spoke at iStrategy some time back in Melbourne and was blown away by the level of engagement from the Audience via Twitter, by far the most hash-tagged tweets I have ever seen. My iPad twitter ap was alive the entire time I was speaking with real time commentary about my presentation, can’t beat good-honest real-time feedback!

Only, it wasn’t.

I felt the entire time that Twitter and particularly the use of a hash-tag had lost its mojo. Previous when I have been speaking there has been a real balance to the Twitter feedback, some great, some not so great, and some just plain old brutal. But not this time. In fact, I don’t think there was a single tweet that could be euphemised as “brutally honest”. I suspect the medium is just too prolific.

In a conference of the size of iStrategy, which numbered around 300 delegates, there’s nowhere to hide and worse still there is a very good chance that the speaker you have just appraised will know what was said and by whom. And no one wants a possible confrontation!

As a speaker at the conference I wanted that brutal feedback, and I was looking for it real time to make adjustments to my session. But it didn’t come. I’d appreciate any suggestion that my talk was perfect, however I saw some sessions that were quite poor yet no negative tweets emerged!

I think we need to bring some anonymity back to twitter, at least find some other way to harvest the ugliest of commentary. Or accept that feedback is a gift, good, bad or ugly!

Corporate Risk and the untold impact of Social

Posted on by Billy Tucker

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I spoke at a great business breakfast recently about the impact of social on commerce in Australia and was struck by how traditional businesses can find sound reasoning not to engage in social conversation.

The key objection I heard was around Risk, which is interesting given how big business currently thinks about the notion of Risk.

Risk Management is defined as the identification, assessment and prioritization of risks, coupled with coordinated and economical application of resources to minimize, monitor and control the probability and/or impact of unfortunate events.

Commercial exposure from unfortunate events is inevitable, and in a world of Twitter and Facebook the pace of at which that Risk manifests is astonishing. The viral nature of Social therefore undermines the traditional view of Risk mitigation and damage control – so the first thing big business has to do is acknowledge that the world has already changed, they just haven’t caught up yet.

We know that people have an inherent desire to share, regardless of the sentiment.  If a business has no means to monitor/control the conversation, that’s where the risk exists. And establishing a social platforms early is the only answer.

If your customers are worried, give them a platform to share their concerns, make them feel like they are heard, while you monitor and moderate the conversation. Take some control of the discussion. If they are angry, frustrated or even delighted, give them a platform to engage and share.

There is no reason why the conversation platform you provide can’t operate with strict rules of engagement and therefore the existing risk framework. Sure there are NEW RISKS attached to social engagement, but they exist already, start mitigating these new risks before the unfortunate event you fear most.

Five key truths about Social engagement:

•Your customers will find very effective ways to broadcast “feedback” about you online whether you like it or not

•You can and should measure the sentiment of your target Audience, engage them and give them a platform, Radian6 and People Browsr’s Kred are exceptional platforms

•Monitor and moderate the conversation, but never astrosurf

•Social brings New Risk to business, get used to it!

•It’s prudent to provide a platform BEFORE the event you fear the most happens

The issue I describe here around the inevitability of social engagement is told well by the history of a UK Cable company NTL (now Virgin) and its relationship with a consumer lobby group nthellworld in 2000, worth a read.