Strategic branding

Branding Lessons from LivingSocial

Sam Frentzel-Beyme Follow Managing Partner & Strategy Director

The Short of It

  • Brand experience is a continuum.
  • No business is perfect.
  • Part of the job of a brand is to continually remind existing and potential customers how much their product is worth their attention.

LivingSocial, one of DC’s locally grown startups, posted a $650 million dollar loss on on $536 million in revenue for 2012. This up from the $499 million net loss on $250 million in revenue in 2011. Given that Groupon’s stock is down 76% for 2012, it’s obviously not just a LivingSocial thing. But since I wasn’t a big Groupon user, I can’t really comment on them. As a LivingSocial user (at least in the beginning), however, I can point to why I think they lost me. Here are three reasons why LivingSocial isn’t really on my radar these days, what they could do about it and what we can learn.

1. Brand experience

In the beginning, LivingSocial was new and that "new" made it by default interesting. Looking through the deals was akin to wandering through a great antique shop. The journey was enjoyable, but there was always the hope that you’d find something perfect. But after a while, if a business doesn’t demonstrate that it’s learning about the customer and really helping them find what they need or want, then the customer is left to believe that the business doesn’t really care. Right now, I don’t read through LivingSocial because I feel it hasn’t figured out who I am, what I’m about and what I’m really willing to pay for. If LivingSocial wants more customers it’s simply going to have to get to know them as individuals and not just as segments.

Lesson #1:

Brand experience is a continuum. The positive bumps a brand gets in the beginning of a campaign or launch when something is new don’t automatically carry through unless the brand continually delivers the same level of experience and value.

2. Brand perception

If I think about the impact of LivingSocial, the first thing that I think about is the companies that have posted negative reviews. The ones that used LivingSocial once only to find that it not only negatively impacted their regular customers, but did so at a loss because of the discount. On top of that many of those businesses reported that they never go the uptick in temporary traffic to become part of their normal sales cycle. Regardless of whether this is actually widespread or just a small group of businesses, the overall perception of the brand from my perspective is filled with negative connotations.

Lesson #2: 

No business is perfect. But every business can do a better job of not just making things right where it thinks it’s appropriate, but making the information public. I recently bought a weighing device for suitcases by EatSmart for someone over the holidays and I remember reading on Amazon that some people had problems with the device. But in almost all the cases, those same people wrote a follow up to their recommendation stating that the owner had contacted the person directly and was getting them a new product. After receiving new products that were working perfectly they proceeded to give five stars. Along with a great product, it’s this kind of public attitude of addressing problems openly and fixing them honestly that creates positive brand perception.

3. Brand innovation

There was a funny post about Groupon saying that investors got what they deserved. After all, they invested in a coupon company. Not so fast. Part of the appeal of companies like Groupon and LivingSocial in the beginning was that they were taking a boring commodity product (coupons) and making them relevant in a digital world - and no one else was really doing that. That was good for a start. But what about from there? What about LivingSocial’s new meeting space, you say? While the pop-up aspect certainly adds a unique social element to their offerings, the model isn’t scalable and now puts LivingSocial in the market as a competitor against businesses it is trying to sell to. If I were LivingSocial, I would not want to be in the event business. I would want to be in the discretionary income management and allocation business. Solving the latter will get you the former. Solving the former will still put LivingSocial at a competitive disadvantage when someone figures out that latter in a more innovative way.

Lesson #3: 

Everyone get’s bored and forgets. Part of the job of the brand is to continually remind existing and potential customers how much their product or service is worth their attention. Companies that  innovate well will create more opportunities to really surprise and empower their users with things they never even knew they cared about, which in the end is what keeps them continually coming back.

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