What do Facebook Deals mean for UK Businesses?

Facebook has added yet another dimension to its social offering with the introduction of Facebook Deals in the U.K. The model, a clear imitation of the Foursquare concept, is a location-based service which encourages users to check into places or businesses such as shops, restaurants and bars, often offering discounts for those who do. Every check-in generates a wall post which is distributed to friends’ newsfeeds – in Facebook terms that’s generally 300+ people.

Facebook has segmented their Deals into four groups to cater for different customers and businesses:

• Individual Deals
• Friends Deals – to be redeemed by a group of people
• Loyalty Deals – offers based on frequency of check-ins
• Charity Deals – the business donates money to a charity for each check-in

Will Facebook Deals influence the retail market in the U.K.?

Following the mediocre success of Foursquare the immediate response from many people would be “no”, but Foursquare is no Facebook. The social networking giant has a large and dedicated user base, strong finances and a highly valued brand. Most businesses would welcome an association with Facebook. In just two weeks, we have already seen a number of UK brands jumping on the Deal bandwagon. O2, Alton Towers, Starbucks, YO! Sushi and Debenhams are some of the first retailers to roll out first offers via Facebook Deals, and are so far sticking to the individual Deals, with Alton Towers offering free entry to all customers who check in this Friday and YO! Sushi giving free meals to the first 1,000 customers to check in.

A good indicator for Facebook Deals is the ‘not unless there’s a discount’ mentality which has swept the UK over the last couple of years. Before stepping out for lunch it’s become part of people’s routine check whether there are any meal deals on Vouchercodes or Groupon. Facebook Deals will take this one step further. By showing users where they can get their nearest discounted lunch, coffee or cocktail, not only will local businesses benefit by attracting customers which may have otherwise passed them by, but they’ll also generate powerful social media marketing with a built in brand advocate.

What hurdles will Facebook Deals face?

It might be a great concept (thanks Foursquare!) but it hasn’t been all plain sailing for Facebook Deals. It’s an issue that’s come up time and time again for Facebook, with practically every new feature they launch. Can you guess what it is yet? Yep, privacy. You might assume people would be uncomfortable about disclosing their location in real-time over a social network but it seems not, leading to fears about making it easy for stalkers and burglars when people have declared their location as being away from home.

What’s in Facebook Deals for businesses?

Only the most powerful of all types of marketing – word of mouth. Facebook could not have put it more aptly when they said “The wisdom of friends has taken over from the wisdom of crowds”.  Facebook Deals offers businesses a great opportunity to expand brand awareness via social media, helping them to acquire new customers and enrich their relationships with existing ones. As an added bonus, Facebook Deals will provide businesses with any information which the user has chosen to share on their profile, improving targeting for the future.

Sounds too good to be true? It probably is. Naturally it will be the larger brands who can afford to give the biggest discounts, therefore capturing the most new customers, but it’s not all doom and gloom. Since the service is free it will also provide a platform for smaller businesses to experiment with mobile and realise the potential of the mobile market.

What’s in Facebook Deals for Facebook?

Facebook are expanding their business model to enter more profitable fields becoming a merchant for retailers, starting big with brands such as Amazon and ASOS. Although Facebook claim that motive behind the launch of Deals was to give customers the total user experience, recent photos of Mark Zuckerberg with dollar signs for eyes suggest otherwise. In addition to knowing demographic information of customers, Facebook’s database will expand to include their whereabouts and preferred shopping habits, increasing the value of the already $11.5 billion dollar company.