June 20, 2011 / 5:24 AM / 8 years ago

Group Buying for Social Enterprises: 5 Ways Deals Can Do Good

Offer a sexy deal, drive massive amounts of new customers to your door, and you’re golden, right?

There’s been a lot of news these days about group deal platforms, and if you’re a traditional business - with excess inventory to move, highly perishable goods, or a low cost of goods sold - then a deal platform might be just what you need.

But what if you’re a hybrid business that’s both for-profit and for-social impact: say a fair trade or sustainable brand that invests in the well being of your suppliers and theecosystems they live in? Will the typical, discount-focused, deal aggregator work for you?

Not likely.

In our experience at the Hoop Fund, working with companies at the intersection of traditional commerce and philanthropy, at best the typical deal aggregator only shows off half of what you do, and at worst it might even undermine one of your core assets (your impact).

Here are 5 tops reasons why your typical deal aggregators won’t cut it for social enterprises, and what you can do about it.

“Stay on target” - most deals are blasted out over an entire city, reaching some people who might be your ideal customers, but way more people that will never be. As a socialenterprise, you need a way to filter down to people who will be attracted by your impact.

The Hoop Fund’s approach bundles deals on products that do good, with microloans to the people who make them. Customers get the deal only if they help to fund a project thatimproves the lives of the farmers or artisans making the product.

This is a fundamental shift from the traditional online “deals” model: sure, the Hoop Fund allows for immediate return (lower cost of trying a new product), but it combines that with a stickier, long-term social and economic reward (personal impact).

Discounts are blinding - it’s hard to get customers to focus on your impact if you’re flashing a giant “80 percent off” sign in their face. To get around this, Blissmo recently introduced a mystery box subscription for eco-friendly or organic products, as an alternative to their typical deal of the day promotion. By making the contents a mystery, Blissmo focuses the experience on discovering new products, not the discounts a subscriber is getting.

Think about the story they’ll tell - having a good story to tell, especially a personal one, is a proven way to make products more enjoyable. If you’ve ever visited a vineyard, a farm, or anywhere a product is made, then you understand the power of this phenomenon. Your visit and your connection to the product transform your experience of it. So learn from thewine industry and make sure your deal creates a good story for your new customer.

Compare a customer getting 50 percent off at your store because she earned it (say, because she raised $300 for a local charity), vs. if she had gotten 50 percent off for buying a coupon. Same customer, different intents, but the experience, and advocacy, of the former is radically different from the latter, which leads into the final reason...

Doing good is rewarding - Good deeds make us happy, and happy customers keep coming back. So be wary of watering down the good you do just to get new customers in the door. Imagine someone saying, “Hey, I just got 50 percent off on my donation to the United Way!” Focus your deals on helping people feel like they’re doing more good, not less.

While our brand partners like Alter Eco, Indigenous Designs, and Lotus Foods have a huge need to attract new customers, they also need to pay special attention to attract the right customer to make it all worthwhile: a customer that will care about their impact and efforts to do good, and hopefully one who is going to stick around long enough to help them.

Put simply, if you’re a company whose strength is doing good, then your deals should do good, too. You’re much more likely to attract the right customers and, in the process, give them good reasons to stick around... which after all, is the whole point of offering a deal in the first place.

Image by Vectorportal/flickr/Creative Commons

Patrick Donohue is the CEO of Hoop Fund.

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