Compound that with the fact that it was being applied to the nascent and, I would say, complex daily-deals sector, and I was / am doubly impressed.
According to the Chicago Tribune Groupon began testing its rewards program in Philadelphia late last year in an attempt to turn their notoriously fickle customer base into return & repeats. Although I haven’t seen the statistics, I’m willing to bet that an overwhelming majority of Groupon’s and Living Social’s customers are one-timers who want to cash-in on a one-time deal with no intent to re-patronize that merchant ever again.
Ask any merchant who uses a Groupon-type system and they’ll tell you that kind of business flood can come at a price – especially if the deal is a loss-leader.
So Groupon came up with a brilliantly simple system to encourage repeat purchases.
Groupon Rewards is a points-for-spend model that allows the customer to “unlock” different levels of Groupon deals with that merchant. Sounds simple enough. The brilliant part is that the reward levels are controlled by the merchant and simply administered through Groupon’s system. The business sets the spending goal as well as the value of the unlocked reward.
To play, consumers need to opt-in with one of their Groupon-enabled credit or debit cards. After that, the system tracks spending and sends alerts once thresholds are met and rewards are unlocked. Groupon collects a commission from the rewards vouchers. Simple. Smart.
Groupon announced its nation-wide rollout of the program a couple of days ago – and not a minute too soon. Aside from the well-hyped “skies-are-falling” predictions over the business model itself, both Google and Facebook are taking steps in similar directions.
As Google expands its Google Offers program into Google Maps, and with Facebook’s recent acquisition of TagTile, there’s a new press on to KEEP the social customer.
Sounds like good old-fashioned Loyalty to me.