Groupon's New Loyalty Program

Last weekend, Groupon Inc. cut its revenue for 2010 by more than half, from $713 million to down to $312.9 million. This is due to Groupon changing what it consider to be profit. Before, it used the amount of money each customer pays for the coupon that they are buying whereas now it is using the monetary amount that it keeps after its merchants receive their share. The company also lost its COO Margo Georgiadis, who has gone back to her former employer Google.

Earlier today, Groupon announced that it would be launching a customer loyalty program. One of the complaints that many merchants had was that users who bought the coupon usually did not buy anything beyond what the coupon allowed and did not becoming returning customers. This customer loyalty program would make it so that users who buy a specific coupon multiple times would eventually receive an even bigger discount to purchase the coupon. With its IPO process still ongoing, Groupon hopes that this program will renew waning interest in the company.

As a Groupon user, I see where the merchants are coming from. While Groupon has helped me get some of my favorite cupcakes for half price and helped me discover a new Jewish deli that I will be frequenting, I have not returned to many of the restaurants that I used a Groupon for. This customer loyalty program would actually give me an incentive to go back to the restaurant and purchase more of their eats after using the initial coupon. I see this program as sort of a much needed "follow-up" for the restaurants to retain its new customers and will hopefully contribute to Groupon becoming successful again.

Cheers,
Diana

Sources: http://www.cnbc.com/id/44647017, http://www.cnbc.com/id/44695944

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