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Groupon Rewards Hopes Its Program Engenders More Loyalty

Groupon, the beleaguered daily deals website, has officially launched a rewards program to increase engagement and repeat purchase rates. 

by Tom Ryan

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.

Also Read: Seven Proven Loyalty Mechanics from the Top 100 Loyalty Programs Report

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.”


DISCUSSION QUESTIONS: Are Groupon’s loyalty program and card-linked deals an improvement over its traditional voucher-driven offerings from merchants? What’s the best way for Groupon to monetize its still large, active user base?

Comments from the RetailWire Brain Trust:

Michael La Kier
Principal, What Brands Want, LLC

Numbers from mobile apps and loyalty programs are hard to read. 150,000 members out of 45,000,000 active. Not as strong a start as one would think. Depends on their definition of active. For Groupon to best monetize their audience – with vouchers or otherwise – will require a highly active, frequent touch model with higher spend. Using card-linked offers vs vouchers may help, but as a shopper do I turn to Groupon for this or my credit card?

Joan Treistman
President, The Treistman Group LLC

The article doesn’t address the “why.” I’m recalling the years of cutting out coupons from Sunday paper inserts. And then loyalty programs began and then they had to be juiced and there was the discovery of limitations to juicing. Groupon is trying to juice up its active user base with the launch of its rewards program. How much can any one person buy or be incentivized to buy? Does someone on this thread have the answer?


This article originally appeared in RetailWire. Read the entire RetailWire discussion here.

Groupon Rewards Hopes Its Program Engenders More Loyalty
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