• Slightly Different Business Models: The Pros and Cons

   

  Groupon conducts all its deals with its merchants through the phone; rather, LivingSocial has 2 salesmen based in each city to ensure compliance and build merchant relationships. Still, Groupon’s model gives it more flexibility, which, apparently, has brought great and fast growth.
• Groupon and LivingSocial’s business model is still a bit flawed. C’mon you know the critism! Say it with me: The business model doesn’t drive repeat customers.
• Well, if you’re looking at a 5-1o year time horizon, maybe neither.

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• When LivingSocial launched in 2007, the co-founders thought it would be interesting to match a user’s location with their interests.

• LivingSocial’s 5 Simple Tactics for Getting 30 Million Subscribers

            

   

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  When LivingSocial launched in 2007, the co-founders thought it would be interesting to match a user’s location with their interests. The model has evolved to selling vouchers to users for local experiences, and LivingSocial now serves daily deals to over 30 million subscribers. Want to know how they did it? Earlier this month, Andrew Warner of Mixergy.com interviewed LivingSocial co-founder Tim O’Shaughnessy. In the interview, Tim reflects on the early days and shares the strategies LivingSocial used to fuel its explosive growth. This post includes five of those strategies.

   

  1. Build Connective Tissue

   

  

   

  Tim believes LivingSocial’s over 30 million customers are “establishing that connective tissue with us, where we send [them] a great thing to do every single day”. How can you reach as many people as LivingSocial does? Tim explains, “to do that, we have to know what your email is”, so “we just made it as blatant as we possibly could”.

   

  By requiring first-time visitors to provide an email address, Tim says you help those people who “would want to subscribe and wouldn’t really know how to do it”. Don’t miss out on this opportunity, because as Tim points out, “email is one of those things that people keep open as a tab
• in their browser all day long. So if you have a compelling value proposition, then it can work”
• So the LivingSocial team created Instant Deals, which Tim thinks, “is one of the big, new places that the space can go”.
• . Steal Facebook Users
• Tim believes setbacks are a learning opportunity. When something doesn’t go exactly according to plan, Tim asks himself “What did I learn here, how can I apply that to the things that I do, and what are the things that I enjoy in life?”. For Tim, running a company means having flexibility to try new things.
• When Facebook opened up their platform in May of 2007, Tim says, “two light bulbs went off”. The first “was that if you had something mildly interesting, you could probably acquire users faster and cheaper than you ever could in the history of the web”, and “the second was that you could get generalized location data on a per user level”.
• So Tim and the team started building products to attract users. First was Virtual Bookshelf, one of the larger book-sharing applications on Facebook, which “at one point in time… got more book reviews per day than Amazon.com got.” Next was LivingSocial, and in version one users inputted what they liked to do in real life which the site matched with their location. Even though Tim and his co-founders “didn’t necessarily know how we were going to monetize”, they thought “if we had those data sets, we would have an opportunity to build a product and figure out what the model was later”

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• As for Groupon, it could be flailing in reputation in the face of consumers amidst reports of unusual accounting schemes, costing business owners more money than they receive in return, and even bleeding money itself.
• There’s also a big difference in the types of deals that LivingSocial and Groupon offer. The former usually publishes deals that have a little more value and respect. Groupon tends to send out anything it can get. Seriously, who needs a daily deal for Domino’s Pizza? It’s already a bargain (if you want to eat it). No wonder Groupon is losing money and traffic when it wastes its time on these kinds of promotions.

• “Groupon has its own playbook and LivingSocial has its own,” said Tige Savage, a board member of LivingSocial and a co-founder of the venture capital firm Revolution. “Our playbook is focused on using the social elements of the Web and delivering broader packages of value to consumers.”
• Even so, it is difficult to ignore Groupon’s fingerprints on the LivingSocial business model.

• The traditional model of ecommerce treated buying things like a chore, crossing things off of a list
• Some of the newer commerce models, the ones that are quickly growing to millions in monthly revenue, help users discover great deals and great items that they were not explicitly looking for. By manufacturing serendipity, they help create demand, rather than just fulfilling demand. Living Social falls into this category.

• The most important thing is that we personally try every product that we feature. We try to present what we experienced in a way that is genuine and make sure it is something that we really, really like. Our biggest challenge as we grow is that we don't compromise the quality of what we feature every day, and we maintain the quality and feature a really first-rate product. We want to make sure we treat our customers right. We answer every e-mail and when people contact us on Facebook we respond immediately. Our customers are our best advocates.
• On our site, we have specially selected merchants featured. You will be guaranteed to find a spectacular gifts at a good price. We are bringing back a lot of our favorites from the year. Many of our specials are coming back for the holiday.