Share this content

Groupon shifts from customer acquisition to retention to solve ills

13th Feb 2012
Share this content

Groupon has blamed rapid expansion into new markets for an unexpected loss in its first end of year results since going public last year. 

In the final quarter of last year, the company slashed its marketing spend as it shifted focus from acquisition to retention to address its challenges.  

Groupon  more than doubled its revenues to $506.5m (£319.7m) in the three months to 31 December compared to $172.2m (£108.7) in the same period in the previous year, but made an operating loss of $42.3m (£26.7m).
Marketing spend in the final quarter of 2011 was $156.5m (£98.8m) down 22% on the same period of the previous year as the company shifted towards a retention-based model and increase the number of repeat customers using its services regularly.
The company says the loss comes from one off investments as part of the company establishing an international office in Switzerland. Groupon also claims to have increased active customers by 275% year on year to 33 million. CEO Andrew Mason said: “We will continue to invest in new services and tools that help our merchant partners be more successful and drive local commerce around the world.”
But Daniel Nugent, Head of Entice at marketing services agency P&MM, has questioned the logic of Groupon's shift in strategy, however.
He said: “Groupon may be re-focusing its marketing efforts from customer recruitment to retention, but will this really help in its efforts to shore up future custom? With consumers continuing to tighten the purse strings, the brands that are successful will be those offering discounts that are relevant in terms of product, brand and timing.
“In this economic climate, it is no surprise that the most popular offers on many of the schemes we operate are those that enable consumers to make real savings while shopping for their usual brands, where and when they normally do it. This delivers real value, creates positive brand associations, and ensures that the customer returns again and again,” Nugent added.

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.