Will Groupon’s Loyalty Programs Retain the Right Customers?


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Groupon is the US-based company that defined the “daily deals” category in this country and has superimposed its brand on pre-existing group deal buying sites in many countries. After a controversial IPO in early November 2011, Groupon has continued its rapid expansion, both globally [Groupon sells daily deals in 48 countries] and to beef up its high tech talent pool in Palo Alto.

According to Tricia Duryee’s tour of Groupon’s Palo Alto facility, the company is focusing on developing tools that will be most useful to small local businesses—the merchants who are critical to the company’s growth strategy.

There are two kinds of customer loyalty that matter to Groupon:

1. Consumers who are looking for good deals on things and services they need, want to gift, and/or are willing to try.

2. Merchants who are looking for good ways to attract and retain loyal customers.

DEAL-CONSCIOUS CONSUMERS. Many critics have suggested that this group of deal-conscious consumers are not the ones you want to attract. They are fickle, always shopping for the best deal and moving on. Yet there are many cultures around the world in which getting the best deal is the way everyone shops. People expect to bargain and get discounts. They enjoy the process, and they still come back to the same merchants as long as they feel their custom is being rewarded. They aren’t necessarily fickle shoppers—just bargain-conscious shoppers.

So the answer to the question: are these the customers you really want to attract in a loyalty program? We say, “yes!” The company that learns how to win the hearts and minds of bargain-conscious shoppers around the world and to deliver those consumers to local merchants who learn how to serve these customers (and their friends and family members) profitably over and over again will be successful. Hunting for bargains is a strong social drive!

LOCAL MERCHANTS. Many big companies have tried to provide valuable services to the hundreds of millions (probably billions) of local businesses around the world. It’s an expensive proposition. Microsoft, eBay, Google, Yahoo!, and Facebook are among the firms that have all had big initiatives designed to provide valuable tools to help local merchants build their businesses through smart use of online and mobile tools. Both Yahoo! and Google reportedly tried to buy Groupon for an amount rumored to be up to $6 billion before its IPO (which valued the company at $12.7 billion).

Ronni Marshak reviews Groupon’s newest loyalty programs and provides some recommendations to make them more attractive to both consumers and merchants.

Republished with author's permission from original post.

Patricia Seybold
With 30 years of experience consulting to customer-centric executives in technology-aggressive businesses across many industries, Patricia Seybold is a visionary thought leader with the unique ability to spot the impact that technology enablement and customer behavior will have on business trends very early. Seybold provides customer-centric executives within Fortune 1 companies with strategic insights, technology guidance, and best practices.


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