Groupon Goes National With A Loyalty Rewards Program To Woo Merchants

Groupon is on a quest to woo merchants and consumers alike with a loyalty program that is now going nationwide. It started the initiative last fall in select markets, in an attempt to try and help local businesses hold on to some of those new customers who come calling as a result of daily deal promotions.

According to the Chicago Tribune, Groupon Rewards began in Philadelphia late last year. The plan aims to help address a problem that local merchants have had a tough time with — a flood of one-time customers who are cashing in on a Groupon deal.

Often those customers overwhelm the business all at once, and then don’t ever come back after that first experience. Such a deluge of one-time patronage can cause a lot of issues, including, claim some merchants, a loss of money for the business because consumers don’t come back to pay the full price.

Groupon Rewards will allow a customer who spends a certain amount of money at a store, restaurant or other businesses to unlock a special Groupon that can be spent at that store. The business sets the spending goal as well as the value of the voucher.

Customers opt in one time and save a debit or credit card online with Groupon. The system then tracks that card’s spending and alerts the consumer when they hit the reward voucher goal.

The program is free for both merchants and consumers, and Groupon takes a commission from the rewards vouchers.

“We believe this is the easiest Rewards program in the world for both merchants and consumers,” said Jay Hoffmann, general manager of Groupon Rewards.

Groupon Rewards expanding to become national [Chicago Tribune]

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  1. Blueskylaw says:

    “It started the initiative last fall in select markets, in an attempt to try and help local businesses hold on to some of those new customers who come calling as a result of daily deal promotions.”

    There is no more loyalty to businesses. Groupon will learn that people will take the deal then move on to the next deal. Unfortunately, corporations brought this behaviour upon themselves when they nickle and dimed us which led us to always search out the best deal. Unfortunately, this trickled down to small businesses where some may actually care about us.

    • Loias supports harsher punishments against corporations says:

      I agree, they caused this situation for themselves by gradually creating a society where price was the ultimate factor rather than your overall experience.

    • webwbr says:

      I’ll also agree.

      Insult to injury, if Groupon is the first experience the customer has with a brand, then that subconsciously (or not) establishes the product/service’s value with the discount. Add to that the perpetual discounting by retailers then undermines the ‘value’ of the product in the long run.

      While the loyalty program is a good idea, some products/services just don’t have enough frequency. Family photography for instance. At most you’ll do that once a year. A ‘buy 5 and get a Groupon for the 6th would take half a decade for some to ‘earn’. (I know I’m over simplifying in this example.)

      In the end, the customer is never willing to pay full-freight.

  2. There's room to move as a fry cook says:

    “Consumers participate in the program by opting in once and putting a debit or credit card on file with Groupon. An automated system tracks spending on that card and unlocks the reward voucher when the goal is hit.”

    Groupon can track spending on my credit card? How does that work?

  3. Loias supports harsher punishments against corporations says:

    This actually sounds complicated. I get a separate rewards account/point tally for every location I get a groupon for?

  4. John says:

    Groupon has proven to be an EXCELLENT indicator as to what restaurants will soon be out of business in Los Angeles. That’s the extent to which I use them.

    • Kahlidan says:

      I find restaurant.com acceptance often times is also an indicator of impending failure, or just being overpriced to begin with.

  5. DrPizza says:

    I can’t believe how many people actually thought there was long term value to groupon. How many large, successful companies do you see using groupon? None. Why? Because successful companies are a little smarter about how they offer discounts.

    Who uses groupon? New companies or companies desperate for more business. Why? Because they think they can generate loyal customers. Why doesn’t this work? Because the demographic of people using groupon are people who are NOT loyal customers – they’re the type of people who simply rely on coupons for their purchases and are only looking for a good deal.

    Of course, they *may* make a few loyal customers. However, the future value of such loyal customers is dwarfed by the value lost through all the coupons.

    • RandomHookup says:

      One area where I’ve seen it done successfully with Groupon (or equivalent) is with event tickets. There are several one-time events where the initial ticket price might be a bit too high but they can generate a lot of late interest by discounting through Groupon. It’s viewed as more above-board than the ticket resellers and it doesn’t conflict with the resellers’ main business. Events want to get people in seats where resellers want to maximize their profits.