Harnessing Facebook as the primary channel to recruit customers paying online for services could be a double-edged sword for certain startups.
UrbanSitter.com, a San Francisco-based babysitter-referral site, is one such company relying heavily on Facebook to generate business. The firm on April 24 announced it is adding online payment card acceptance to boost its growth.
Launched last fall, UrbanSitter boasts 10,000 users in 10 U.S. cities where parents can use its services to find, schedule and pay for babysitting, a spokesperson for the firm tells PaymentsSource.
Parents and babysitters are required to sign up for UrbanSitter using Facebook. After joining, sitters may post their credentials for UrbanSitter via Facebook Connect. Parents also may review, rate and recommend specific babysitters with Facebook "Likes" on sitters' profiles.
Until now, customers' primary payment method has been paying with cash, an UrbanSitter spokesperson tells PaymentsSource. But the company expects that adding online acceptance of credit and signature-debit cards will be "a key factor" in the company's bookings growth by adding the convenience of electronic payment.
“The moment when cash changes hands can often be an awkward one for both parents and sitters,” Lynn Perkins, UrbanSitter cofounder, said in the company's press release. “The ability to take the payment process online eliminates those last-minute trips to the ATM machine for parents and helps ensure that sitters aren’t shortchanged, while saving them a trip to the bank to deposit their earnings.”
Sitters must provide a checking account and bank routing number to UrbanSitter to receive payment via the automated clearinghouse system. The first transaction is free, and parents pay $7.50 per transaction for subsequent payments, the firm said.
UrbanSitter also this week introduced a $10 bounty on each successful referral. Each time a parent or sitter refers a friend to become a member of the service, the referrer receives a $10 credit. Credits are deposited into sitters' bank accounts, and parents can apply credits to future sitter payments.
"For now," UrbanSitter's booking services are free, the company states on its website, which says the company eventually plans to add on other fee-based services.
But the growth prospects for businesses that use Facebook as their marketing channel may be at risk because of several factors, one analyst says.
For one, Facebook does not necessarily provide a basis for getting trustworthy referrals for "something as sensitive as caring for kids," says Brian Riley, research director with TowerGroup.
"The promise of Facebook is the deep relationships it can create, but in many ways it has a lot of shallowness; referrals from Facebook are not terribly meaningful," Riley says.
But Facebook also is becoming a heavy-hitter in mobile payments, and startups hitched to it may thrive (
On the other hand, Facebook eventually may increase the barriers to entry for companies relying heavily on its social-media channels, Riley suggests.
"As Facebook looks for more ways to monetize its system, you have to wonder if it will continue to allow other companies like UrbanSitter to lever it without broad changes," he says. "These business models may be forced to change considerably."
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