As you know, I’m not exactly a fan of social coupon sites like Groupon, LivingSocial, and DealChicken.  So I was excited to hear about a success story today with a friend who used LivingSocial for her business.

Here’s some key reasons why it was a success for her:

  • She did all her calculations with the understanding that she was essentially giving a 75% discount on her revenue – 50% to the customer, another 25% to LivingSocial.
  • She offered services where she would break even with this level of discount, at least covering her out-of-pocket costs.
  • She has a new company, so is using this as a way to get visibility in the community.
  • She’s closely tracking which customers give her repeat business, and more importantly, are generating referrals.  She’s also monitoring the number of people who are actually using the coupon.

The strongest recommendation, I suppose, is that she’s planning to run a special again.  This is generating actual revenue for her (from repeats and referrals), but she’s very careful not to build her business around this approach.  If you use this too heavily, you set expectations in the market that they should never buy without that 50% coupon.

This is a great example of someone who’s using this new mechanism carefully and intelligently.  If you’re looking at it for your own business, make sure you pay attention to those four bullet points!