It's easy to see why group-buying promotions like Groupon are popular among consumers. Massive discounts (50 percent-plus) are coupled with urgency (one-day deals) and a built-in social component – the coupon only goes into effect after a predetermined number are sold, encouraging buyers to share the deal with their networks to ensure the deal will tip.

Thus, group-buying sites are booming, Groupon in particular. The site reached profitability in seven months, and is reportedly in acquisition talks with Google – estimates claim the search engine may buy Groupon for upwards of $3 billion.

But the promotions on these sites are not profitable for retailers in and of themselves. The 50/50 sales split with Groupon means that, in many cases, retailers take in less than 25 percent of list prices on these sales. The retailer does not get the e-mail addresses of customers who purchased their deal – only Groupon has access to those. Groupon reports that 95 percent of businesses would self-reportedly try Groupon again; another study puts this number closer to 68 percent.

Profit Outside the Deal – Great Experiences and Word of Mouth

Retailers are betting on the side effects of these promotions to provide the real ROI. Specifically, one big draw of group-buying deals for businesses is the word of mouth generated both pre- and post-redemption. Businesses offering the deals hope that users who buy the coupon will share it, spreading the word about their brand. They also hope that, after trying their business, customers will tell their friends about it, driving even more visitors to try it. This requires visitors to have a great – not just good – first experience; great enough that they remember it and later tell their friends about it.

Retailers are also counting on repeat business. They hope that after trying their business, visitors will become repeat customers and return to pay at full price. Groupon estimates that 22 percent of its customers return to pay full price. Good word of mouth is necessary to drive more customers to try the business, generating more repeat customers.

So, exceptional customer experiences and positive word of mouth are key to retailer success in group-buying deals. If a business determines a group-buying deal is right for them, they should definitely take the hit on labor costs and staff up (with their best employees) during the special. In addition, they should take extra steps to help bring customers back and get them to share their insights.

Open the Lines of Communication With These New Customers

Basic marketing dictates that, in exchange for the great deal, the company should ask for contact information – just an e-mail address will work – from each new customer. This not only fuels your marketing database (one way to suck up the costs of your promotion), but it also gives you a way to ask them to provide valuable feedback.

Right at the point of purchase, ask customers to provide feedback. Include a link to your website (if you can take feedback in this venue) or to Yelp and ask them to take a moment to share their experiences. This gives new customers a great first impression, letting them know you think they'll have a kudos-worthy experience. And it even reminds return visitors – who love you already – to take a minute to give you feedback.

Additionally, they can leave feedback via tweets, Foursquare, or Facebook Places check-ins, and more, depending on which social activities your business is engaged in. Prioritize your efforts based on ongoing value to your business.

Use in-store signage to encourage social media mentions – prompt them to check in on Foursquare or Facebook Places, or encourage them to tweet questions or comments while they shop to your store's Twitter handle. Direct them to a URL where they can read and submit customer reviews. Include this URL on receipts, bag inserts, bags themselves – everywhere you can to encourage customers to submit feedback.

After they leave, take time to e-mail everyone who came in from the special promotion to invite them back and get their feedback. You can even couple this request with a second, less drastic offer as a reward: "We want to hear what you think! Review your experience and get 10 percent off your next purchase." Not only will you gather lasting word of mouth and insights that can help you improve your business, but you'll encourage a second visit – one step closer to a repeat customer.

The increasing popularity of Groupon and other group-buying sites makes these sites tempting for business owners. While it's important to understand that the promotion won't likely be profitable, businesses can take steps to reap the benefits of the conversations these deals create and gain insights that keep new customers coming back.

The need to delight customers is nothing new – obviously, to keep customers buying, we need to keep them happy. But growing trends like social networks and user-generated content such as customer reviews allow consumers to share any experiences they have with a brand with hundreds (or thousands, or hundreds of thousands) of other potential customers. Ad campaigns can't drown out bad word of mouth the way they once may have – delivering excellent customer experiences is now more important than ever to sustaining a strong brand.

Many brands are experimenting with ways to offer a better customer experience using social tools. These initiatives take many forms: customer service accounts on Twitter, Facebook fan pages, live onsite chat functions, customer Q&A on products and categories, mobile apps…with so many shiny objects for companies to choose from, it's hard to decide where to start and what will be most effective.

My common recommendation is to think about any program or initiative in terms of ongoing profit and loss. Good projects will have sustaining value, like a business that has sustaining profits. Great projects' value will grow in impact over time. Ideal projects are these great projects that also take fewer resources to maintain as they grow.

For example, take the traditional one-on-one customer service model. In this model, every customer contact is added cost. You respond to each customer who calls or e-mails on an individual basis. You may deliver an excellent service experience, and hopefully the customer will share this experience with others via word of mouth, building positive associations for your brand.

But the resources you spent to satisfy that customer do nothing to better other customers' experiences – every new customer with a similar issue will need to be individually satisfied, meaning more resources. The same is true for tools like onsite live chat: when the chat session ends, any information you shared dies with it, unable to help another customer.

Facebook and Twitter offer a more public forum for customer interaction. Many brands are using these social networks to effectively answer shopper questions and respond to complaints, delivering good experiences. Best Buy's Twelpforce is a great example – tweeted customer questions about electronics are answered by members of Best Buy's team, helping customers while building the brand's image as a knowledge leader. And other shoppers with similar questions are helped as a result, amplifying the program's value.

It's important to remember, though, that content on social networks has a short shelf life. Tweets and posts on Facebook walls are quickly replaced by more recent posts. Anything good people say about your brand is quickly lost in a sea of user-generated content, as are the helpful conversations you've had with customers.

Rather than letting the resources you've spent to satisfy these customers expire along with these conversations, use the information you learn from these online interactions to continue to help other shoppers. Build the answers to common questions you encounter on social networks into the product copy on your site. Syndicate the positive feedback and Q&A you generate on these networks back into your brand site when possible.

Onsite community Q&A is a good example of a project with growing value and decreasing cost over time. Shoppers post their questions to product or category pages, and receive answers from other customers as well as retail and brand reps. The content not only helps the shopper who initially posted the question, but it lives on your site in a searchable form, helping future shoppers with similar questions.

The community becomes more valuable as you gather more questions and answers, as many shoppers will find their questions are already answered on your site – community Q&A decreased support costs for one retailer by 81 percent. And the cost of answering new questions no longer falls solely on your customer service teams – your customers will do the work for you, answering shopper questions out of their desire to help other people like them.

Prioritizing your customer experience efforts like profit and loss will help you uncover the ideal programs for your company – those that increase in value and decrease in cost to your business over time.

When it comes to customer conversations, context is king. For most brands, customers won't initiate and build a valuable brand conversation on their own – it's the brand's job to start a conversation customers want to join. Here are some tips for building context that gets customers engaged in ways that help you sell.

Give Customers a Topic – Something to Get Them Thinking and Talking

In the context of an open brand community or social network page, only a small percentage of customers will be initiators, those who comment without a prompt. And of those initiators, an even smaller percentage will leave comments relevant to helping other customers buy. To increase valuable participation, you have to give your community context.

Invite customers to respond and react to your prompts around topics relevant to your brand. On Facebook, for example, you can encourage fans to post pictures or video of themselves using your products or engaging in relevant activities. Golfsmith, for example, encourages its Facebook fans to post pictures of their great golf shots, connecting their passion for the game to the Golfsmith brand. You can also use Facebook and Twitter to conduct polls on brand-relevant topics, sparking opinionated conversations that keep people talking. Tactics like these give your communities relevant context, and give your fans something to talk about.

Fans share photos of their great shots on Golfsmith's Facebook page.

Engage Customers Around Topics That Matter to Them

Too often, I see brands expecting active, engaging conversations just to spring up around their customers' love for their products. "Tell us what you love about our brand!" is a prompt I see far too frequently.

It's important to remember that your customers online are real people, with real interests and questions. If you contextualize a conversation around something they like, love, or want to help, they are more likely participate. These interests may not be directly tied to your brand or products, but can be related to the feelings or causes your brand invokes (or would like to invoke).

Skincare brand Philosophy, for example, asked customers to share stories of their moms' philosophies in a Mother's Day campaign. Not only did customers submit over 1,000 stories, but analysis showed that 39 percent of all site traffic for May originated on these stories' pages. Writers and readers shared stories with others, bringing new visitors to Philosophy's e-commerce site who may not have considered the brand before.

Match Your User-Generated Content to Your Customer Needs

Shoppers bring their own context: tasks, needs, questions. They come to any page on your website with something on their minds. And as we know, they trust other customers' words more than your brand's. Match the conversational content your customers have created back to the context shoppers have on your site, and it's a win-win situation for everyone.

Reviews and questions are the purest forms of contextual conversation – a shopper is viewing your product, so you show questions people like them have about it, and authentic testimonials and answers from people like them who have bought it. If customers are reviewing and asking questions about your products on social networks, be sure to syndicate this content back to your product pages where it can help shoppers buy.

Context is king in creating conversations that are valuable for both your customers and your brand. Building good context, and recognizing your shoppers' own context, focuses these conversations to drive sales.

Note: Golfsmith and Philosophy are Bazaarvoice clients.

Dmitri Siegel, Executive Director of Marketing, Urban Outfitters

"We don’t have a logo," says Dmitri Siegel, Executive Director of Marketing, Urban Outfitters. “We don’t have a style guide. We have a spirit.” That spirit inspires all of UO's marketing. The brand's social strategies reflect this spirit and get their customers involved — so much so that on some levels, it’s difficult to tell where their corporate brand ends and their customer-created brand begins.

Dmitri has really helped me see how retailers can create a social experience; here are four of his key tips for letting customers shape a brand.

Know who you want to be friends with. UO started out by featuring some of their customers on their blog — fashionable, artistic people they or their customers would "want to be friends with." UO interviews these customers to draw others in who share the same style or lifestyle. Not every customer makes a blog feature, but the retailer doesn't ignore the masses. They take steps to get all types of customers involved — not just the fashionistas and style mavens who regularly review products. The company embraces different uses of its products — even when paired with clothing and accessories that don't come from their stores, encouraging customers to send pictures of the entire outfit. Seeing how customers actually wear and pair their apparel in the real world brings the products to life for the Urban Outfitters team.

Be a good listener. This is basic, but many companies aren't here yet. This point goes hand-in-hand with another Dmitri often makes — stop talking about yourself so much. Many brands make the mistake of seeing social media as a new medium to push marketing messages and promotions through. Dmitri encourages brands to be quiet and let customers do the talking. UO digs into its customer reviews to learn what it's like to be their own customer. One woman, for example, reviewed a shirt she purchased as too big, but went on to detail how she cut the shirt and wore it off the shoulder for a new look, and included a photo. Listening to customers helps Urban Outfitters see how their products are actually used and worn, which in turn helps them better design and market new products.

Ask good questions. Part of being a good listener is asking good questions, and your customers' answers can inspire your brand long after the question is forgotten. Last year, UO did a "lo-fi, high style" campaign/contest, encouraging customers to share photos and stories of cool items and outfits they'd created for cheap. As the photos rolled in, the marketing team realized their customers are as beautiful and creative as UO's professional catalog photo shoots. Real photos of customers using Urban Outfitters products now inspire Dmitri and the design team daily. Today, when the retailer mashes up their own professional photos with those submitted by customers, even the marketing team can’t tell the difference — which is exactly as it should be.

Even the UO marketing team can't tell the difference between their customers' photos and their own professional shoots.

Focus on connections, not on numbers. Traditional advertising is ruled by "impressions" – the number of people who potentially see a marketing message. But social media can’t be measured in impressions alone. Social marketing is a conversation, measured in deep connections with individuals that build over time, creating annuities that continue to grow. Growing these relationships is the key to social success, says Dmitri, and one way to feed your community is to make some introductions. The more connected your customer base is with each other, he says, the better the experience and stronger the community.

Dmitri’s tips speak to the heart of social marketing – it’s a conversation, not a broadcast. By following these tips, other businesses can work to reach the level of true engagement with customers Urban Outfitters has achieved.

Urban Outfitters is a Bazaarvoice client.

Want all of Dmitri's tips, plus more insights from other Bazaarvoice clients and social commerce thought leaders? Our Social Commerce Trends Report has strategies from all of the speakers at our 2010 Social Commerce Summit. Download the free report here.

Has your business started planning for the holidays yet? It may be months before the "official" Black Friday-start to the holiday shopping season, but that doesn't mean potential holiday shoppers are waiting.  According to an eMarketer study, 47 percent of consumers will have already started their holiday shopping by the end of this month.

So what's the real impact of social on shopping? Let's look at a few key trends.

Shoppers Are Searchers, First and Foremost

59% of shoppers this year will start their gift search at a search engine, so it's key to grab shoppers' attention at this stage in the game. Updates like Google Instant and Google Caffeine make it more important than ever to prioritize freshness in your SEO strategy. So, if you do nothing else, spend time optimizing your site for search, to make sure you drive the right buyers to your site. Some ideas? Ensure you have fresh, constantly-updated content on your product pages. Use Google Rich Snippets to surface content like customer reviews in search results. Look at how your customers describe your products, then test new keywords from there. And take advantage of all of the new features in Google Product Search. Spending time at the very beginning of the purchase cycle can pay off big.

Put Your Customers to Work

If you have customer reviews or Q&A capabilities on your site, now is the time to reach out to your customers and get them to contribute. For anyone who's made a purchase over the past year, e-mail them to write a review, share an experience, or answer a question (or all three). Again, this content helps increase search, and helps holiday shoppers make more confident decisions. Last year's Black Friday and Cyber Monday sales saw a boost over 2008 (11 percent and 5 percent respectively), and social media had already affected 28 percent of last year's shoppers' purchases as of December 4, 2009. A recent ChannelAdvisor study shows that customer reviews alone will influence 83 percent of all 2010 holiday shoppers.

Retailers can get manufacturers involved – get them to add expert content or answer customer questions on the retail site. Let your customers give shoppers all the information they need to buy the best gifts.

Get Customers to Invite You to Meet Their Friends

According to eMarketer, 27 percent of holiday shoppers last year (and likely even more this year) used social networks like Facebook and Twitter to look for clues as to gifts friends and family might like. Once customers review products, make it easy for them to share their input on their own social networks. Yelp does a good job of this, letting Yelpers connect directly with Facebook. Retailers and manufacturers can get on this, too, to help friends figure out what to buy.

We've seen that men and women interact differently with businesses on social networks, so consider this when planning your holiday social network strategy. Fifty-two percent of men say they want "to show others I like or support this brand" as one of their main reasons for connecting with a brand on Facebook or Twitter, compared to 34 percent of women. Focus on getting those male customers to connect with your brand now – position it as a way to "drop hints" about where their friends and family should go to find great gifts for them.

Women, on the other hand, name "to receive discounts and promotions" as their primary reason for becoming a fan of a brand. Women indicate this reason more often than males on both Facebook (30 percent vs. 18 percent) and Twitter (34 percent vs. 23 percent). Give your female customers what they want by using your brand presence on social networks to promote holiday deals – especially on super-deal days like Black Friday and Cyber Monday.

Shopping continues to change, and I think this year will be the year that social media plays big here. Do what you can now to make sure search and social media do everything they can to help you prosper this season.

So, let's say you've been reading this column for the past several months, and have determined that your brand and customers could really benefit from adding user-generated content to your site. However, you need real information that backs you up, because your CEO, owner, or CFO aren't as easy to convince.

This is a common issue – many companies feel uncomfortable about "airing their dirty laundry," as they may see it, on their site. Here's a rundown of the most common issues your execs may have, and how to answer them.

"What if our customers post negative comments or say bad things about our products?"

This is a great question, and one of the most common concerns when "opening up" a brand site to contributors. But think about it: if your products are getting a bad rap, people are talking about them where you can't listen or – more importantly – respond. More than likely, you'll get positive content – research we've done at my company shows that more than 80 percent of all reviews are positive. And those negative reviews can really open your eyes, not only giving you specific information about what customers may not like, but also giving you a chance to respond to customers directly, and even potential new product ideas.

The ratings J curve: most reviews are positive.

Oh, and if you're worried about profanity, that's a legitimate concern, too – that's why you need to make sure you have guidelines for moderating content before it goes live on your site.

"User-generated content is great for retail, but it doesn't apply to our business."

It's true that business use of user-generated content – comments on YouTube videos, sharing on Facebook, and especially writing customer reviews – began with retail. Today, though, all types of businesses (insurance companies like USAA and Nationwide, plus other highly-regulated industries, such as banks) are finding ways to let users contribute. It comes down to what your business wants to accomplish with the customer voice. In most cases, consumers of all types – even B2B clients – will look for input from their colleagues, friends, or industry experts. See how you can get these voices engaged in your business.

"What's the real impact going to be? How will we measure it?"

I agree – the bottom line is truly the bottom line. This answer depends on your overall business goals. Take an honest look at what your company (not just your website) aims to do, and connect that directly to the impact the customer voice can have on it. If the goal is to sell products, you'll want to tag user-generated content interaction to conversion. If you want to gain marketshare, how can increased search traffic, customer interaction, and improved products – all potential benefits of user-generated content done well – help in that goal (and how will you measure it)? If your company aims to totally delight its customers, how would customer input help with this goal? Because user-generated content lives on your site, it can be tagged and tested to quantify its impact on the business. What's more, since it builds over time, you can track its impact far longer than a one-off campaign.

"There are so many other priorities. Why should we do this now?"

Prioritization is always a concern – this was a huge issue when I ran the retail site for Dell Corporation. I weighed several variables when making a decision – both long- and short-term goals. Many times, the net present value calculation (commonly calculated as the profit your company gains from an investment, is equal to sum of that investment's impact over time) became the determining factor of what came first. When looking at priorities, compare the net present value of all options. In general, the addition of user-generated content will dramatically increase the amount of relevant information on your site, which can improve conversion rates and search traffic, even though it needs to build over time.

As with any new initiative, it's important to have your ducks in a row when you're ready to sell it upstairs. Align these objections with your own exec's concerns, and the impact the customer voice could have on your organization should be clear.

In the past when a shopper was looking for a TV, they went to their local retail store. To combat choice overload in product aisles, shoppers were met with tools designed to influence their decisions and help them buy confidently. End-caps showed featured products. Signage and POP displays grabbed their attention. Sales staff was on hand to answer any questions. For manufacturers and retailers, these merchandising efforts were meant to lead the shopper to purchase their product.

Traditional merchandising efforts don’t translate to the social web.

But the decision-making process is no longer an in-store activity. Many shoppers are increasingly making their purchase decisions online before ever setting foot in a retail store; Forrester even predicts that by 2014, more than half of total retail sales will be influenced by the web. Today’s shoppers don’t go to a store to determine which TV they want — they already know which product they want when they arrive.

But traditional merchandising efforts don’t translate to the social web. Trust in marketing is gone — people want to hear from others like them. "Social" is no longer a label that can be applied to certain aspects of business and ignored in others; it's just one way to shop amongst all the ways we have always shopped. For merchandising to be relevant, it has to get social.

Social merchandising is all about context. Shoppers research online to discover products, compare or reduce choices, and build confidence in their final purchase decision. Bring contextual user-generated content (UGC) to the research process that maps back to the shopper's task. Here’s how UGC helps shoppers in some different phases of online decision-making.

Discovery phase

At the widest point in the purchase funnel, shoppers go online to discover products. This often starts in a search engine, and UGC equips pages with the scalable freshness that search engines crave to maximize search results and drive traffic. Increasingly for some shoppers, this search starts on social networks. Friends' shared reviews, questions, stories, and products on these networks introduce shoppers to new products and draw them into the purchase path.

Golfsmith shoppers can shop by golfer profile.

Once on an ecommerce site, shoppers in the discovery phase can shop by profile, starting their search on profiles of customers like them to see what products they like. UGC adds additional filters for discovering products, such as top-rated category pages.

Choice phase

Online, the same obstacle confronts shoppers as in-store — choice overload. Product specs and marketing copy can be nearly identical from product to product. Reviews and stories from "people like me" add a new filter to product choices to help shoppers decide.

Ecommerce doesn't exist in a vacuum. Most shoppers arrive on your site with preconceived notions about products and brands. UGC helps to validate or combat these with trustworthy testimonials from real customers.

Additionally, customer Q&A helps shoppers make choices based on their specific needs. Reviews and specs may lead a shopper to a specific flat-screen TV, but they may need more info to make a purchase. The ability to ask questions like "Can I hang this TV on my wall?" can lead to the information shoppers need to move past the choice phase and select a product for purchase.

Validation/confidence phase

Once they’ve decided on a particular product, UGC can give shoppers the last bit of confidence they need to make a purchase. Much like in the discovery phase, shoppers can check profiles of reviewers to make sure people like them like the product. With features like Facebook Connect, they can also see what their friends on social networks think of the product.

PETCO products with reviews 20.4% lower return rate. Click to read the case study.

Customer opinions also work to set expectations for shoppers. Reviews (especially negative reviews) give a realistic depiction of performance, leading to more satisfied buyers and decreased returns. And UGC can point out product details to help shoppers make the exactly right purchase for them — "These shoes are fantastic, but they run a little small. Be sure to get the next size up."

Shoppers are never alone online — networks of customers are always just a click away, ready to share their opinions. Will that click steer them away from your site? Social merchandising helps manufacturers and retailers alike by serving the end-goal of both — helping shoppers buy. As more shoppers make their decisions online before ever entering a retail store, merchandising must get social to stay relevant.

It makes sense that consistently adding customer reviews, stories, questions, and answers helps people find the right products on a site. However, there are subtleties to make the content even more impactful – especially now, with the advent of fairly recent features by Google: Google Caffeine and Rich Snippets.

While search engine providers have talked about fresh content for years, Google Caffeine's enormous and costly infrastructure update centered on freshness gives user-generated content a lot more weight. Maintaining a good SERP (define) ranking now requires that at least some of the page's content is fresh and dynamic, which indicates to Google that the page is still relevant.

Adding customer reviews or user-generated Q&A can obviously help provide fresh content, and to make sure Google can easily find it, make sure that at least a few reviews are included in your primary page for each product or service. A handful of fresh reviews or Q&A content can make a significant impact on how Google perceives that page's freshness.

"Integrated blogging" or adding snippets of customer stories on product pages can also help improve search results. Each time the snippets change, Google Caffeine will see those updates and once again consider your page fresh, and thus more relevant.

Even before Google introduced Caffeine, OpenTable changed the way it displays reviews on its site and saw a measurable increase in search results. OpenTable.com provides real-time online restaurant reservations for diners and reservation and guest management for more than 13,000 restaurants worldwide. Rather than requiring the restaurants to continuously rewrite their content (which just isn't scalable), customer reviews create a ready stream of fresh content for search engines to crawl.

In 2009, OpenTable began placing the content of the first four reviews for each restaurant directly into the pages' code. Since implementing, each restaurant profile page receives updated content as often as once a day. Only three days after making this change, OpenTable noticed an uptick in natural search traffic to the restaurant profile pages and to the overall site, as well as an increase in the number of keywords driving traffic to their pages.

Over the next four months, the total search engine traffic to the restaurant pages on OpenTable.com increased by 10 percent, as compared to the same months in the previous year, and 17 percent from Jan. 2009 to Jan. 2010. The number of unique search terms for these pages ranked also increased by 100-plus percent year over year.

Google Rich Snippets has also improved the impact user-generated content can have on sites, by displaying star ratings and review "snippets" in search results.

Google says its own experiments have shown that users find the new data valuable – if they see useful and relevant information from the page, they are more likely to click through. Google's Rich Snippets show a summary of review information, and pages with more reviews will appear more favorable, so it's important that products get as many reviews as possible.

By paying close attention to how user-generated content is arranged and displayed, its impact can have an even bigger impact on Google search results. Take note of these details and make the most of your users' contributions.