When Facebook launched its new Deals feature yesterday, it had already lined up a handful of companies to start beta testing the new service. A look at how two of those companies—Gap and 24-Hour Fitness—are using the feature gives some insight in how Deals might work for other brands. It also gives a preview of what changes your company might need to make in order to take advantage of Facebook's new deal.
The Gap: Giving Away 10,000 Free Pairs of Jeans
Tomorrow (yes, Friday November 5), the Gap will give away a pair of jeans to each of the first 10,000 people who use Facebook Places to check in at a Gap store. And everyone else who checks in that day will get 40% off one regularly priced item.
"For the Gap brand, it's about connecting with our customer wherever they are," said company spokeswoman Olivia Doyne, who attended yesterday's launch. "We know that they use Facebook incessantly. We know they are extremely attached to their smartphone. And so for us, Facebook Places is another way for us to connect with them where they already are." And while 10,000 free jeans adds up to a lot of scratch, Doyne said the Gap believes it will be good for business: "It might bring someone back in our door that we haven't seen in a while, or bring in a whole new customer."
Doyne said one of the advantages of Facebook Places is that Gap will be able to do more than just offer nation-wide deals; they'll be able to set up localized promotions as well. And while the Gap used Groupon in September to offer coupons entitling customers to $50 worth of merchandise for $25, Groupon can't compete with Facebook in terms of total numbers of users. According to Facebook CEO Mark Zuckerberg, 200 million people use the social network's mobile application. "If you want to capture attention," Doyne said, "it's the place to be."
To take advantage of tomorrow's deal, customers will have to show a store manager that they checked into the store on Facebook Places. What that means, of course, is that every store manager in the country needs to understand what it means when someone walks up to them on Friday and holds up their phone. Doyne said that didn't present a training challenge to the Gap. "We have a comprehensive communication system in place for communicating with our stores," she said.
24-Hour Fitness: Using check-ins to raise money for charity
Facebook's entry into the deals game means businesses can no longer afford to ignore the check-in phenomenon, said Bill Quinn, 24-Hour Fitness's senior vice president of merchandising, who also attended the launch. "Now that Facebook, with 200 million mobile users, and over 500 million [total users], has invested a lot in this space, you know that you have to put more time and energy into figuring out social and mobile."
Starting yesterday, the company will donate $1 to charity for every member who checks in at a 24-Hour Fitness location. The money will go to KaBOOM!, a non-profit that builds playgrounds around the country, and the promotion will continue up to $50,000. Quinn said it's not just a good way to raise money for charity. It actually helps both 24-Hour Fitness's members and the company itself. "The more our members work out, the more results they're going to get, and the longer they're going to stay with us," he said.
But incorporating these kinds of deals is not going to be a simple proposition for companies. "It's going to change a lot," Quinn said. "To fulfill the offers. For people to know that they need to check in. Our team members have to know about it, so operations [have to change]. Our pricing management group as well, that comes up with the promotions ... . It impacts everyone."
And he's also worried about fraud. Yesterday, Zuckerberg dismissed a question raised by a reporter about whether he had concerns that people might misuse check-ins, possibly by creating multiple Facebook accounts. But Quinn said it's a real issue for businesses. "Even though you'd like to think that most of this is going to be legitimate, you're going to have some of those challenges as well, particularly when you're giving out free stuff.
Quinn said 24-Hour Fitness was diving into Facebook's beta program as a learning exercise to understand how Deals might to impact their company. "We want to be prepared to catch this wave," he said.