Living Social makes Canadian inroads with big Starbucks program
January 24, 2013 | Russ Martin | Comments
Starbucks Canada‘s recent Living Social daily deal promotion drove unprecedented sales volume, according to those who monitor the space. The 50% discount deal on a $10 gift card was redeemed by 150,000 consumers and generated $750,000 in sales.
Dan Stuart, Living Social’s Canadian general manager, said the deal sold out at the 150,000 person cap set by Starbucks about 48 hours after it went live. “It was huge for us,” he said. “It took off very quickly. No one had done anything of this scale in Canada. It was treading new ground.”
According to the Canadian Deals Association, which tracks the group buying market, the deal represented the highest number of vouchers ever redeemed for a daily deal in Canada. (As context, American Apparel’s 2001 deal through TeamBuy saw nearly 20,000 consumers participate. Tuango’s landmark $1 million hair removal clinic deal in March had just under 4,000 participants redeem vouchers.)
A spokesperson for Starbucks said it was pleased with the results of the Canadian promotion (which echoed a similar Living Social deal in the U.S. in November). “This is our first program with Living Social in Canada. We are very pleased with the response, which was record-breaking,” they said.
Living Social has been operating in the Canada since 2010, but it is not nearly as popular here as it is in the U.S., where it is Groupon’s biggest rival. Instead, homegrown deal sites like WagJag, TeamBuy and Tuango dominate the Canadian market.
As part of an effort increase its Canadian presence, Living Social created the position of general manager for Canada in November and hired Stuart, who sold his Dubai-based deal site GoNabit.com to Living Social in 2011.
“We’re in a pretty strong position in Canada, but we’re not satisfied with where we are,” Stuart said. “We want to have a strong, healthy business in Canada and that’s what we’re working towards.”
According to Albert Bitton, president of the Canadian Deals Association, many of the promotions in Canada’s group buying space have been for local businesses and smaller brands. It’s not common for a brand as big as Starbucks to offer a daily deal to Canadian consumers, he said. “There is a stigma [that] it’s a discounted strategy.”
Bitton said marketers should consider these promotions as a distribution strategy as well as a marketing opportunity, and added that the chance to get in front of millions of consumers who subscribe to services like Living Social should not be undervalued.
The Starbucks promotion was supported by a limited spend on Google Ads.