In my post yesterday about flash marketing via Groupon and LivingSocial, I neglected to mention another interesting opportunity: working directly with the marketing companies to add your brand to the service.

Because payments and credit are crucial to ecommerce success, financial brands are a logical addition to the checkout process. And Visa just so happens to be featured today at LivingSocial (see inset and screenshots below).

Anyone who buys today's Seattle deal, a $25 restaurant certificate for $10, automatically gets a second certificate to use as a gift, if they pay by Visa Signature card (see notes 1, 2). It's hard to say what Visa is paying for the promotion, but given the massive website traffic and transaction activity, it's likely a pricey sponsorship (note 3).

Email from LivingSocial with Visa branded add-on offer (28 July 2010)

Landing page (link)

Notes:
1. Some interesting items in the fine print for the Visa-sponsored comp certificate:
- valid only for Visa Signature cards, which might irritate some non-Signature Visa customers
- offer not valid for purchases made via iPhone (there must be something in the shopping cart that does not work on the iPhone)
2. My saved credit card in the site is a MasterCard; when I went to purchase the deal, there was no mention of the free certificate, nor any prompt to switch to Visa.
3. The merchant is receiving $5 for each certificate issued under the main deal. Visa's sponsorship would need to cover some compensation to the merchant, but perhaps at less than $5 each, since fewer of the gifted certificates will be redeemed. It looks to be a popular offer, having sold almost 2,600 units (by 7 PM), with almost 10 hours remaining.

We want to pause in our usual blogging activities to thank the sponsors whose generous support keeps NetBanker a free and high-quality resource for everyone to enjoy.

Please take a moment to think about supporting our sponsors (listed below in alphabetical order) so they can continue to support us:

• Backbase -- They're promoting their fast-to-implement portal software for financial companies including Web 2.0 personalization and online marketing functionality. You can get more information or watch a demo here. 


• IntelliResponse -- Get a complimentary whitepaper on how self-service via the mobile channel can improve your customer service and benefit your business. Download it now!


• Intuit -- Intuit is promoting their FinanceWorks platform. They've got a number of on-demand webinars that are worth checking out. 
  


• MyBankTracker -- MBT is a new financial community built by avid fans of the banking world. Check out how they're innovating at MyBankTracker.com. 


• Strands -- Promoting the white-label version of their PFM platform, which recently won a Webby award. They're offering a video tour and a case study of their implementation for BBVA, Tú Cuentas, that attracted 250,000 online banking users in 4 months.
  


• WorkLight -- Offering (complimentary) results of a new survey on consumer satisfaction and concerns regarding banking applications for the iPhone, BlackBerry and Android. If you're trying to understand the smartphone trend, it's worth accessing the results. They also have a free webinar on mobile applications coming up on Tuesday August 10th.
  


• Yodlee -- Check out Yodlee's new free whitepaper on how Personal Financial Management can be a platform for customer engagement. Download it now!
  

Thanks for taking a moment to check out our sponsors. Please let us know if you ever have any feedback on these companies or our blogging.

P.S. If you want to join these companies in supporting NetBanker, please drop me an email at eric@netbanker.com.We've almost sold out of advertising space for 2010 and will soon open the doors for 2011 space.

The coffee shop where I do much of my writing held a huge sale yesterday. But you wouldn't have known it from the sparse late-July mid-day crowd. The event took place entirely online through local deal-of-the-day marketer, Groupon.

The day-long sale resulted in nearly 3,000 half-price $10 coupons being sold, a huge influx of customers for a 3-location coffee shop (see screenshot below). I'm working somewhere else tomorrow when the coupon buyers start coming in. 

Groupon is the leader in the burgeoning field of localized flash marketing (aka social/group buying) having taken more than $170 million in VC funding to expand to more than 150 cities.

The other major player is Living Social, which I've successfully used a few times to buy gifts. LivingSocial has raised $50 million and recently expanded to 52 cities. Both companies have nearly 5 million unique monthly U.S. visitors (see below). And with minimal barriers to entry, there are dozens of copycat sites in operation.

There's another sub-category in flash marketing, companies that specialize in certain types of merchandise. The pioneer here is the geeky and irreverent gadget and T-shirt marketer, Woot with 2.3 million monthly visitors. The site was scooped up by Amazon for $170 million last month. In women's fashion, Gilt Groupe has a cult following and nearly 1 million monthly visitors.

U.S. traffic at Groupon (blue), Living Social (green), Woot (orange), Gilt Groupe (red)

Source: Compete (link)

Flash marketing is not a new concept, and it's not much different than the $299 laptop on the cover of the Best Buy circular. Savvy shoppers know to show up early at the store if they want to claim one of the few loss leaders in stock.  

Web-based flash marketers use email, Facebook and Twitter to inform potential customers of the latest deal. There is usually a time limit, typically a single day, and/or a limited number for sale. All the Groupon deals expire at midnight local time. Woot runs all its deals for 24 hours, or until they sell out, beginning at midnight Central Time.

Opportunity for Netbankers
While I haven't seen a financial product sold on Groupon or LivingSocial yet, there's no reason it wouldn't work. In a quick search, the only financial institution participant I found was First Tech Credit Union, a recent recipient of sponsorship recognition in a LivingSocial deal for half-off tickets to the 2010 Bellevue (WA) Jazz Festival (see second screenshot).

But the promotions can be costly. The flash marketing companies typically take 50% of the sales price and require a deep discount, usually 50% or more off list prices. So retailers are getting as little as 25 cents on the dollar in the promotions (see note 1). Quantities can be limited to protect against too many takers.

While financial services don't lend themselves to online flash sales as well as spa visits or fine dining, there are fee-based services that could work. For example: 

• Checking account: $15 annual fee (first year) instead of $96 list price (note 2)
• Credit monitoring: One year for $50 instead of the $150 list
• Credit report: One 3-bureau report for $10 instead of the $30 list
• Financial plan: $50 instead of $200 list
• Prepaid MasterCard/Visa: One $25 card for $15 instead of the $29.95 list (assuming $4.95 issuing fee)
• Savings account: $50 initial deposit for $15 fee (note 2)
• VIP banking package: $25 annual fee instead of more than $100 if bought separately (rewards card, premium service, free VIP online banking, credit report, rate discount, etc.)

Or FIs could go the First Tech route and work with local restaurants, theatres, or nonprofits to sell a product bundle. For instance, a $20 dining certificate, 50% off on theatre tickets and a $10 Visa card for $20. 

Groupon Seattle deal-of-the-day at Zoka Coffee Roasters (26 July 2010)

First Tech Credit Union gets top billing on recent LivingSocial deal (link)

Notes:
1. That assumes all coupons are redeemed. But typically a large portion, as much as 50%, go unredeemed. That means fewer new customers in the door, but it also helps limit the amount of discounts that must be honored.
2. The problem with many financial product offers is that not all customers will be approved. But you could offer refunds for anyone declined for a checking account.
3. For more info on selling online, see our Online Banking Report on Lead Generation.

HelloWallet, an online personal financial management (OFM/PFM) provider that launched in March, sent customers an email today (second screenshot below) announcing several product enhancements including:

• To-Do List: Added to the dashboard to help you keep track of upcoming bills, goal progress, new savings ideas and so on. Users can manually add any item and receive email reminders. 
• Progress Charts: Helps monitor progress on savings and debt-reduction goals.
• Split Transactions: Ability to split transactions into two or more budget categories.
• More Deals: My Deals database expanded to more than 130,000 financial products.

These are solid enhancements and signal that HelloWallet will be a viable competitor in the OFM/PFM space (see previous post; note 1). I especially like the To-Do list, a relatively simple enhancement that helps increase the utility of the application. The company has attracted a steady flow of visitors, averaging about 25,000 unique visitors per month in May and June (see Compete chart below).

HelloWallet.com traffic estimates (U.S. only)

Source: Compete (link)

But the main reason for today's post is to highlight the design of HelloWallet's new blog at <hellowallet.com/blog>. The layout is visually appealing, incorporates social media sharing tools (Facebook, Twitter, RSS), and does a great job showcasing the company's Twitter updates in the right-hand column (see first screenshot). This gives the whole blog a vibrant, up-to-the-minute feel, without burdening readers (and staff writers) with too many blog entries.

So far in July, HelloWallet posted four blog entries and tweeted 53 times (2x per day), a good pace. Both the blog posts and Tweets contain a good mix of personal finance material, general info, and company news. 

HelloWallet blog front page (link; 26 July 2010)

Email message announcing new features (26 July 2010)

Note:
1. For more on the OFM/PFM market, see our recent Online Banking Report. 

Some of the best innovations come from inventors that develop a solution to a personal pet peeve, then commercialize it. In financial service, Aaron Patzer has told the story many times about how he developed Mint to solve his own needs for a better financial management tool.

If I had Aaron Patzer's drive, or funds, I'd be working on a solution to digitize point-of-sale receipts. In our household, none of us can keep track of a receipt past the first 24 hours. Someone or some thing must come into our house during the night and make off with all paper receipts.

So when it comes to returning something to a store, we usually end up replaying this sad process:

1. Try to remember where the receipt is
2. Look for it
3. Ask spouse if they've seen it
4. Look again
5. Curse bad memory (of spouse) and give up for the day
6. Repeat above steps the next day
7. Curse bad memory (of self and spouse) and give up for good
8. Rehearse story to tell store on why you don't have receipt
9. Return item to store without receipt
10. Receive gift card instead of cash refund (because there's no receipt)
11. Forget/lose gift card
12. Curse paper receipts and vow to better organized

That's why I was excited to hear Square founder Jack Dorsey tell the audience at NACHA Payments in April that one of startup's key strategies was "focusing on the receipt" (see my Tweet right).

Shortly thereafter I met David Crossett at FinovateSpring 2010 who shared his vision of how his startup, ReadyReceipts (note 1) is gearing up to solve this very problem. The product, still in development, uses a unique approach that doesn't rely on the end-user carrying another loyalty card (thank goodness).

If you've ever bought something in an Apple Store (in the USA at least), you can see what he has in mind. Mobile POS systems that email you the receipt and skip the easy-to-lose paper altogether.

In addition to Ready Receipts and Square, a number of other companies are working on solutions including:

• Afterbot, which is working with Intuit QuickReceipts (see below)
• allEtronic
• Intuit QuickReceipts (see first screenshot below) which is piloting with Phoenix-area Best Buys and also has an interesting Twitter linkage for spurring grass roots demand for digital receipts (second screenshot)
• MyReceipts.com from Third Solutions which is piloting with Whole Foods (third screenshot)
• Receipt-Free.com (see image at top of post)
• Transaction Tree
• 3SecondReceipts

Relevance for Netbankers: Receipt management is a very real pain-point that costs consumers millions of dollars and millions of hours of frustration every year. Financial institutions, retailers, and/or direct online financial management (OFM) providers that solve this problem stand to gain market share and/or profitable fee income (see our recent Online Banking Report on OFM features for more info).

Intuit's QuickReceipts is tackling the lost receipt problem (22 July 2010)

Intuit is spurring grass roots support by enabling visitors to send a Tweet requesting their favorite store adopt QuickReceipts (link)

MyReceipts.com from Third Solutions promotes Whole Foods participation (22 July 2010)

Note:
1. ReadyReceipts.com is currently under construction as they build out the company and product.