When deciding whether or not to offer a Groupon, many merchants struggle with wondering if they will gain repeat business or simply offer deeply discounted products or services to one time customers. In order to combat this fear, the daily deal giant launched Groupon Rewards as a way to allow merchants to track deal redemption and ROI and incentivize customers to do repeat business at their favorite merchants.
Groupon’s Wednesday blog post described the new program:
“Consumers earn rewards at participating merchants simply by paying with the credit or debit card they have on file at Groupon.com. After spending an amount set by the merchant, the consumer unlocks the ability to purchase a special Groupon for that business.”
Currently, merchants face the challenge of many customers spending very little over the face value of the Groupon. Because receiving the special Groupon is directly tied to spend, not number of visits, customers are likely to purchase more when returning to the local merchant. When customers reach a certain spend threshold with the local merchant, the Groupon rewards program kicks in and offers the customer a bonus discount of up to 80 percent off, which is higher than the typical 50 percent discount.
Recently cutting its reported 2010 revenue from $713.4 million to $312.9 million following prompting from SEC to revise its accounting method, Groupon is looking for ways to increase interest in its IPO, which is currently on hold. Groupon is hoping that its new offerings will quell investors’ fears and demonstrate that the daily deal site is capable of attracting repeat customers and high quality merchants.
Beginning October 14, Philadelphia will be the test city for Groupon Rewards. Wondering when this program will be offered in your metro area? Join Groupon Rewards to be notified you’re your city becomes available.