DISCUSSION

Groupon hopes its rewards program engenders more loyalty

August 22, 2019Written by Tom Ryan

Source: Groupon

Groupon, the beleaguered daily deals website, has officially launched a rewards program to increase engagement and repeat purchase rates. For $4.99 per month, Groupon Select members receive an extra:

Twenty-five percent off local deals, including activities, restaurants and spas;
Fifteen percent off and free shipping off goods orders, such as consumer electronics, home furnishings and apparel;
Ten percent off “Getaways”, such as hotels and weekend excursions;
Ten percent off events and tickets, including concerts and sporting events.

In his letter to shareholders for second-quarter earnings, Rich Williams, CEO, said the program quietly launched over the last few quarters and more than 150,000 members have joined. He said, “Initial indicators are very positive with significantly improved purchase frequency, higher average order value and increased customer propensity to search for things to eat, see, do and buy.” The launch comes as Groupon has shifted its core offering toward “voucherless” deals. The deals are still driven by steep discounts available for a limited time, but Groupon’s card-linked offers reward consumers who repeatedly use the platform when they purchase from certain merchants. Groupon users avoid the chore of printing out vouchers to show to merchants. For merchants, card-linked offers have been found to drive more repeat visits. Recently launched pre-paid versions, where consumers pay ahead for a deeper discount loaded onto their cards, have been gaining traction with merchants. More merchants are also adding loyalty card-linked offers, whereby consumers are typically rewarded with five to ten percent cash-back for repeat visits. Groupon has also been refining its marketing spend toward “higher-value customers” who have the propensity to spend more often. Second-quarter revenue was down 14 percent due to a 6.3 percent year-over-year reduction in active customers as well as reduced traffic due to e-mail and SEO headwinds. Mr. Williams said Groupon still has more than 45 million active customers worldwide and its app this year surpassed 200 million downloads, including adding more than 22 million over the past year. He said “Our opportunity is to convert these mobile and online users into more valuable purchasers.”

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