How Facebook Deals Work

UPDATE (Feb 15, 2013)

Facebook Deals (like Groupon) was stopped by Facebook. However, Facebook Check-In Deals (more like Foursquare) are still going. Read more about what happened and how Facebook Check-In Deals work here.

Restaurant owners cannot overlook the new off-shoot of Facebook Places, Facebook Deals. Facebook Deals, which is currently available for free, is a potent marketing tool for businesses to reach the massive, interconnected and involved online Facebook community. The model is simple: restaurants, as a part of Facebook Deals, reward customers for “checking-in” to their businesses with the Facebook Places app on their mobile phone. In total, Facebook Deals provides restaurants with four different types of deals which will be discussed later on along with who should use what.

The value of Deals

Deals gives you the power to acquire and retain customers, as well as market your business.

Get customers

Over 200 million active Facebook mobile users are hitting the streets and looking to discover what’s happening around them. Because deals appear on mobile phones when people are nearby, offering a deal can generate exposure for your business and help you reach new and existing customers. Give people a reason to stop by your business and make a purchase.

Spread the word

Word travels fast. Each Facebook user has 130 friends on average, which means that if someone checks in to your business and you’re offering a deal, her friends will hear about it through word of mouth marketing and the organic stories that are generated on Facebook. Deals have arrived, and for good reason–people like to buy and save together.

Build loyalty

On average, Facebook users visit the site 28 times a month and they are always on the hunt for what’s new. Focus on building relationships with your most loyal customers. Remember that loyal customers generate repeat business for you. In addition, they influence the purchase decisions of those around them. Keep people coming back and re-discovering what you have to offer.

With preparation and creativity, a sizable chunk of restaurants can achieve those three objectives. Soon though, your restaurant won’t be the only one using Facebook Deals, so a strategy that sets goals and measures success will be necessary to increase receipts/traffic, bolster your restaurant’s online profile and strengthen customer loyalty over the long haul. Certainly, all restaurants, because they face different circumstances, should prioritize when it comes to marketing. With that in mind, we will examine what types of deals work better for various benefits. Also, I distinguish between primary customers (customers who find out about the deal through the geo-location mobile phone application), and secondary customers (those who find out about the deal through their Facebook News Feed), as each has marketing consequences. The secondary customers is Facebook’s big advantage over other geo-location services with deal programs. Before we get started, two important things to consider: (1) Facebook only allows a business to run one deal at a time (2) Facebook approves the deals (it takes 48 hours) so they have to provide value for Facebook users.

Four types of Deals

There are four types of deals you can create to reach different business objectives. Before creating your deal, think about your goals. Be sure to offer your customers a lot of value for all deal types as high-value deals can generate a lot of buzz and this word of mouth marketing can spread quickly on and off Facebook.

Individual Deals

This is a one-time deal (one check-in per Facebook member) that most likely will be a discount or freebie (the more appealing it is, the more new customers).

1. Most simple and asks the least of the customer; tend to be short-term
2. Objectives: Increase in traffic/receipts (good), online visibility (good because the redemption shows up in a lot of people’s News Feeds), customer loyalty (poor)
3. Targets new and familiar customers (remember it costs more to bring in new customers)
4. Other business motivations: launch a new product or get rid of excess inventory
5. Strong in both catching the attention of primary (through Facebook Places) and secondary customers (through Facebook’s News Feed)
6. To some degree, attracts bargain hunters who are less concerned with food/service than price
7. Requires creativity to stand out from the crowd
8. Good for new restaurants, casual food

Loyalty Deals

A customer receives a deal after a certain number of “check-ins.” Facebook restricts that the customer is able to claim the deal after no fewer than 2 and no more than 20 check-ins.

1. Expects the customer to return (and remember to check-in); long-term (note: FB only allows one deal at a time)
2. Objectives: Increase in traffic/receipts (not immediate but with the right demographic could pay off), online visibility (poor), customer loyalty (the whole point)
3. Targets familiar customers, and will actually work through secondary channels (many customers who already “Like” your FB Page) and through on-site signage/staff
4. Improve staff relationships with customers
5. Especially good for restaurants with a weekday lunch crowd (people are geographically tied to their office/work) or in an area with less mobile customers
6. Normally the older the community the more loyal, so Facebook, as the most active users are young, has it limitations (not to mention the necessity of smart phone applications)
7. If the number of times they have to return is kept relatively low (3-6 range), this could work for a more upscale restaurant

Friend Deals

This is a deal that rewards customers who come in groups and “check-in” together. The max number Facebook allows is 8 people.

1. Expects the customer to plan with friends
2. Objectives: Increase in traffic receipts (matters on restaurant type), online visibility (good as people are expected to communicate about it…sharing on FB seems a logical step), customer loyalty (good, social experience create strong memories of place)
3. Targets familiar customers (one person of the group at least) but they may bring along new customers
4. Best for bars, and restaurants with late night dining (both primary and secondary); this is the only real probably circumstance when a group (in urban setting; bar hopping most likely) will actually use the mobile application
5. As texting/group messaging becomes more like breathing, this may become more useful to more restaurants
6. For the rest, one can promote a group deal without the checking in on your FB Page
7. Could work in highly urbanized, tourist areas (with no customer loyalty of course)

Charity Deals

This is a deal where you donate every time someone “checks-in” to your restaurant. You have to manage the donation process.

1. Almost as simple as INDIVIDUAL except the charity must appeal to customer
2. Objectives: Increase in traffic/receipts (fair), online visibility (not a lot of check-ins comparatively but the ones you get will definitely send a message), customer loyalty (good)
3. Other than giving back, this connects you with your community; there is the chance for positive publicity (which may have a dramatic impact in traffic/receipts), especially if related to current events or is something unique
4. This one will again probably work through secondary channels (regular Facebook promotion); most people do not when making a spur of the moment dining decision (we think about restaurant quality if we know the restaurant and type of food if we don’t) consider charity.
5. Targets familiar customers and therefore the charity should match your customer’s sympathies
6. Some liberal/conservative communities (most socially generous people tend to be on the political extremes) might actually produce primary (mostly new) customers

Creating your deal

To create your deal, visit your Facebook Place on www.facebook.com. At this time, deals are only available to a limited set of businesses in the US. If you are part of the initial beta, you’ll notice a “Create Deal” button at the top right of your Place. In the future, we hope to add more claimed Places into the beta. To ensure that you have this opportunity, we encourage you to claim your Place on Facebook.

Step #1:

Choose your deal type

Step #2:

Define your offer

Step #3:

Specify run dates & restrictions

We encourage you to create your deal at least 48 hours in advance as all deals are subject to review. Please also specify your deal’s duration. We recommend you run a deal for at least a week to give your customers an opportunity to find your deal and visit your business.

Step #4:

Promote your deal

When your deal is approved, you can begin promoting it by posting a status update on your Facebook Page, or running a Facebook Ad on www.facebook.com. If you run an ad, be sure to target a local demographic and link your ad to your Facebook Place or Facebook Page.