DB's Pixnet

Harvard Business Review, May 2012
Page 142, Case Study
Do Social Deal Sites Really Work?
The Experts Respond
Gideon Lask

Allie James is right that Flanagan needs to provide a better customer experience to sustain the business for the long term. What she doesn't see is that social-media discounts might be the perfect way to help the company work toward that goal. But those discounts must be handled with care.

A part of a broad promotional mix, price is a powerful way to drive sales--it always has been and always will be. Social-media discounts extend and refine the benefits of pricing by allowing merchants to reach beyond their usual pools of potential consumers and turn newly acquired customers into online advocates for a product or brand. The advocacy raises brand awareness.

But discounts can destroy margins. At BuyaPowa, we have a sign on the wall that says "Revenue is vanity. Profit is sanity." Many business owners forget that and focus more on the total dollars coming in than on how profitable each customer is. That makes it too easy for merchants--and their customers--to get addicted to discounts...

DB, SSN057-86-4042,
May 9, 2012, Wednesday,
National Central Library,
Taipei City