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In September, Groupon launched the first phase of Groupon Rewards, a new platform that tries to provide businesses with a way to build customer loyalty. Groupon Rewards’ release comes amid concerns from merchants that Groupon customers demonstrate no loyalty to the businesses offering deals.
What Groupon Rewards Does:
Groupon users who spend a merchant-determined fixed amount (at that same merchant) can earn a Groupon Reward, providing a deeper discount than a regular Groupon deal. For example, after spending $50 or $100 at a business over time, a customer might get a Groupon Reward to spend $4 and get $20 worth of food.
How Groupon Rewards Works:
Groupon Rewards are tracked using user credit cards. Once users have opted in to the program, they would need to consistently use the credit card which is already on file with Groupon in order to build their Groupon Reward. A spending goal, set by the merchant, can be met after multiple visits. Users will receive email or phone notifications after each visit alerting them that they just spent money at a merchant offering a Groupon Reward and indicating how much more they need to spend to unlock their Reward.
Pros & Cons for Businesses & Their Customers
While there is no cost for the Groupon Rewards program itself, TechCrunch indicates that “unlike a regular Groupon deal, the merchant will not keep half of the coupon amount. If the reward is a $4 coupon for $20 worth of goods, that entire $4 will go to Groupon.”
Businesses will now be able to track ROI – a feature that was previously unavailable through Groupon.
As the program is tied to the customer’s credit card, merchants and shoppers wouldn’t have to worry about a loyalty or membership card; however, in order for the program to work at all, customers must only use the credit card they have registered with Groupon.
How effective do you think this new program will be in generating repeat business? In generating loyalty? What is the difference?
How well do you think Groupon Rewards would work for businesses when compared to other loyalty rewards programs?