Tag Archives: Groupon

Groupon Seeks Industry Partners; Wants to Close the Loop for Merchants

Forty percent of merchants run some kind of “special” sales or promotions according to a Groupon survey of 25,000+ merchants. Half of the specials are offline, “trapped” on chalkboards and menus, noted Groupon VP of Marketplacest Dan Roarty, who was speaking at Money2020. “There is no aggregate source for them.”

Roarty said that the company, as part of its Local Operating System, has been working “to close the loop” via its G.Nome payments and loyalty system. Among other things, G. Nome provides a seamless redemption of deals, specials, coupons; automatic requests to leave feedback; and “automatic goodies” for being a great customer.

Many other elements are required to really close the loop, however, said Roarty. Groupon is currently soliciting help from partners who can enhance its efforts to provide payments, Point of Sales info, Geo Fencing, Wifi and Beacons. “Groupon can uniquely blend all these signals and put customers in control,” said Roarty.

All Roads Lead to Groceries: Groupon Adds ‘Snap’ Loyalty Program

When it comes to local commerce and loyalty programs, all roads lead to groceries. That’s the feeling of key companies in the space, including WalMart, Amazon, Google and eBay. Groupon this week announced Snap, a grocery coupon and loyalty program that gets it into groceries in a more meaningful way than prior efforts to go in via daily deals – where the discounts were not sustainable in an industry that is more dependent on “cents off” than “55 percent” off.

As reported in Chicago Business, Snap replaces Freebies, a coupon program launched in 2013 that has attracted 30,000 coupons from 7,000 retailers. Users of Snap receive offers and get money back after they aggregate $20 of discounts — if they upload photos of receipts showing the goods that were promoted. (This validation effort could prove a little klugey.)

While a robust grocery and delivery program has its own value, it may also lead to a key gateway into women shoppers; strong user behavior analytics; and peripheral deliveries or transactions with other goods such as electronics, etc. Groceries are also used more often than other key anchor promotion verticals, such as restaurants and services. Google similarly entered the grocery coupon business last year with the rollout of Zavers.

In Groupon’s case, the Snap program also supports its broader Marketplace effort, which allows advertisers to participate in many different channels (deals, coupons, ads). Seventy-five percent of Groupon business advertisers currently use Groupon for at least one feature in addition to the one-off deals. One of the key issues with Marketplace has been to provide a volume of listings so that searchers will always find things when they search for them. Currently, 9 percent of Groupon’s transactions emanate from Marketplace.

The Snap program does not get Groupon into dedicated home delivery — yet — but it does build out the marketplace, and could serve as an effective building block.

Groupon’s Sean Smyth on the new ‘Partner Network’

Groupon has been pushing hard to upgrade its merchant base from one-time partners to permanent clients with monthly sales goals. The latest initiative? A “Partner Network” for publishers willing to highlight Groupon deals in return for a piece of the action (10-12 percent for local deals, and lower amounts for Getaways and Goods). Partners get access to Groupon’s Open APIs and full reporting.

The way Groupon sees The Net is as “the first proprietary local e-commerce affiliate marketing platform designed to help online publishers better monetize their online presence.” Initial publishers include a number of mid-level traffic sites, including Ebates, Upromise by Sallie Mae, Dealnews, Fat Wallet, ShopAtHome.com and Slickdeals.net.

Groupon has previously worked with newspapers to flesh out their deals network. There are also other deals networks that let partners pick and choose deals, such as Local Offer Network, Analog Analytics and 8Coupons. But VP of Global Partner Marketing Sean Smyth says the primary difference here is that the syndication of deals represents a Groupon-branded experience. It’s also integrated throughout Groupon’s international marketplace, which now includes 30 countries.

Smyth says the Network represents a “pull” strategy with many opportunities for larger media companies, as well as small publishers, such as bloggers. “It is one common API for everyone to go to,” he notes It also enables deals to be retargeted. Consumers might pick up a deal on a restaurant blog, for instance, after ignoring it the first time on Groupon.

“We are using our data for 10,000 partners today,” says Smyth. “Next year, we’ll have 100,000.”

Groupon ‘Pauses’ its Rewards Program

The transition from one-off daily deals to an “always on” loyalty/rewards platform that keeps merchants in the fold has been a Holy Grail of sorts for the deals companies. This was the case for Groupon Rewards, which launched in May 2012. Using Groupon Rewards, consumers could link the same credit card they use for Groupon to make purchases with merchants and spend enough at the merchant to unlock attractive discounts.

But in a letter to customers and merchants, Groupon has now announced that it is temporarily suspending the Rewards program on Sept.1. It told us that the program needs to be reworked to bring in state of the art technology, mostly incorporated into its Breadcrumb point of sales system, which has its own loyalty features and its own payment processing efforts. Any credit earned between now and Sept. 1 won’t be carried over past the cut-off date, but existing customers are being given a $10 certificate to use for a Groupon purchase.

The new version of Rewards is being designed to work across Groupon’s new Breadcrumb-branded products; enable a wide range of credit cards, not just those attached to the Groupon account; and also enable an international footprint. Rewards is currently limited to the U.S. Outside vendors are possibly involved in the upgrade, although they are not being announced.

“By making this change, we have an opportunity to build an even better Rewards program that enables deeper and long-lasting interactions between merchants and their customers, as well as providing a more comprehensive view of customer spending habits and repeat purchase behavior,” said the company.

Next Steps For Groupon As Andrew Mason Departs

It was just a matter of “when,” but Groupon has finally relieved Andrew Mason of his CEO duties after a quarter in which Groupon widely missed its mark because of its very high expenses and serious international issues, despite growing 30 percent year over year. Vice Chair Ted Leonsis and Executive Chair Eric Lefkofsky will run the company until they find a new CEO for Groupon or perhaps, even sell it.

Groupon, of course, has been written off in some circles as a big fad that ultimately dis-served its SMB merchants– something we have never totally accepted. But the ongoing possibilities for Groupon are wide ranging.

The company isn’t currently sustainable, with its heavy sales-laden staffing (whoever said local is scaleable?) But just as #2 Living Social’s investors saw that it was more prudent to inject $110 million to keep it going for its next stage, Groupon, which is at least three times larger, is better off staying juiced for now.

It has massive merchant and consumer email lists, and a wide selection of B2B, scheduling, processing, mobile and loyalty technologies – plus a growing travel business, as well as a lower margin, Groupon Goods business. If its investors wanted to stay the course, it could certainly continue its march into Amazon-like ecommerce territory.

The elevation of Leonsis and Lefkofsky to acting co-chiefs has a lot of possibilities in itself. How about a couple of interesting, not-so-crazy scenarios? One is that Lekofsky could finally merge Groupon with his newer investment in Belly, the Groupon-like, Chicago-based loyalty play that has just celebrated its one millionth member.

More enticingly, in terms of scale, Leonsis could influence an acquisition of Groupon by American Express, which he serves as a board member. Amex has just opened up an ecommerce store as part of Amex Sync and needs to feed it.

Or Groupon could be sold to Amazon, which is investing heavily in the local deals space; or it could even be sold to Google, which had once offered $5 Billion for it. Perhaps Marissa Mayer at Yahoo will make a run for it. She was a major instigator of the Groupon negotiations as a Google exec.

As for Mason, he may not have been the ideal CEO of the relatively soul-less, deals department store that is currently Groupon. But he’s funny, and authentic, and has been a great spokesman for the “What do we do this weekend that is wild and offbeat” lifestyle that catapulted Groupon –and the deals space — into local’s biggest phenomenon ever.

Sometimes, Mason, reminds us, business isn’t merely about business. It’s about helping people live their lives. This is especially true at the local level in which Groupon has been a shining star.

Andrew Mason after his groundbreaking BIA/Kelsey Marketplaces keynote in March 2008

Groupon Rewards Rolls Out Nationally

Groupon Rewards — “the easiest rewards program in the world” — rolled out nationally this week after tests in 36 markets that began in October. The product is Groupon’s answer to the emerging “transaction marketing” space that many believe will be the natural successor to the daily deals business. BIA/Kelsey Marketplaces has counted more than 24 vendors vying in this segment, with solutions ranging from Cartera to Swipely.

In Groupon’s model, consumers register a credit or debit card with Groupon. Every time they shop at a participating merchant, they can get points that can be applied to a Groupon at the merchant. Spending is automatically tracked, and reward vouchers are unlocked when goals are hit.

Merchants set reward terms, such as free deserts or spa treatments after a certain number of trips or dollars spent. They don’t need to participate in Groupon’s voucher business, but Groupon gets a commission based on the value of the reward when it is redeemed. As part of Rewards, merchants receive reports assessing the profitability of their Groupon campaigns.

A full report is being issued for our Marketplaces clients.

ILM East: Ted Leonsis – Local’s All About Scale, ‘New Currencies’

Ted Leonsis, Groupon Vice Chair, American Express Board Member and Internet Pioneer , emphasized the importance of scaling for local in a global economy during a keynote at ILM East yesterday. “Indiana really matters. India matters more,” said Leonsis, pointing out that for larger companies, most growth will come from outside the U.S.

The way that growth is measured, however, is rapidly changing. “I try to follow the new currencies: time, attention and clickstreams,” he noted. “Now you see payments in pixels, facebook newsfeeds, or points and rewards. Amex has trillions of points.

While growth for “the biggest companies” comes from serving the entire international marketplaces, local needs are universal.

“I love local; we built Internet on businesss created about ‘you,’ said Leonsis. There is no bigger business imagineable. He noted special opportunities in “MoSoLo….the convergence of mobile, social, video.” Mobile will make up 88 percent of digital advertising, he suggested, citing analyst projections. “One thousand cities are ready for MoSoLo.”

Leonsis believes that the largest companies will soon be making spending sprees in the local arena. Local entrepreneurs should realistically shoot for selling their companies because only a couple of companies end up IPO’ing in the public market, added Leonsis, who is, of course, a major investor.

Leonsis noted that the largest companies such as Google, Microsoft and Cisco are sitting on almost a trillion dollars of retained earnings. “That’s pent-up cash. They will want to fill in their value chains.”

Channels are also changing, and quickly. Email usage is way down and has “become a deliverer for ecommerce push. Email is for manicure or pedicure deals,” said Leonsis, noting that Groupon and Facebook are really poised to leverage this with their massive email lists. Phones, meanwhile, are for texting. The average teen sends 70 texts a day and barely use any minutes to talk.

But Leonsis predicts that video will emerge as the new killer app as it becomes the core medium for self expression and sharing. “The YouTube phenomenon is truly amazing. We’re all become Cable MSOs.”

Video also will be key to the future of retail and education. Retail site visitors who view video are likely to stay on site two minutes longer on average and are 64 percent more likely to purchase than other site visitors, says Leonsis. Video is a foundation for “next generation commerce.”

The pursuit of closed loop network is the really big game here, Leonsis noted. Amazon has made everyone an affiliate and a reseller. Similarly, PayPal made made everyone a small business with 100 million plus accounts for money transfers and payments. eBay has made everyone an entrepreneur.

Moreover, Google has eight million advertisers on file, and invoices 20,000 advertisers. Amex has developed a closed loop system of its own, and Groupon has created “curated local commerce.”

But Leonsis is skeptical that the world of interactive local commerce is something that startups can gain traction in. “No one will give an eight person startup their social security number. Payments are not for the faint-hearted. Startups are better off looking for margin opportunities.

“I don’t want to see any business plan saying ‘I’ll be the next Groupon.’ Verticalization happens.”

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