Groupon Closes the Redemption Loop With Loyalty Rewards | Hacker News Reader

Groupon Closes the Redemption Loop With Loyalty Rewards

techcrunch.com

17 pointsbsmith16 comments

This is Groupon's best product to date. I don't know about everyone else on HN, but I feel like a good majority of people I know have at least bought one Groupon by now, where their credit card is stored. To take that major advantage and apply frictionless rewards for users, is recipe for major disruption.

Checking in to a place on Facebook and FSQ is almost entirely useless for a small business. They need $$$, not someone looking to get 10% off for letting their friends know they are at a place they probably are all well aware of. I hope Grocery stores sign up for this, so for once in their history they can make use of their 'loyalty program', which probably has over 10,000 purchases tied to my phone number for almost no purpose at all.

I'm not saying this is perfect, but this is the first product i've seen in a while that seems like useful software.

Just as all roads in the enterprise lead to email clients, all roads in daily deals lead to loyalty programs. Forgive me for being blunt, but Groupon's move into loyalty programs was basically inevitable, if you really think about their business model. In fact, every merchant-middle-man-operation of any kind will eventually adopt (or join) a loyalty program. That's why you see them at grocery stores, pharmacies, credit card companies, online retailers, etc., etc., etc.

Can you expand on why you think that is? (not arguing, just curious as to your reasoning)

It's structural; a middle-man in the merchant sales cycle presents two fundamental value-add propositions:

1. Eliminate the hassle of finding and dealing with prospective customers,

2. Educate the merchant about customer demographics and preferences.

That latter point is why all "sales broker" business models eventually lead to loyalty programs (which is a euphemism for data collection, volume incentives, and targeted advertising).

Why is it their best product? Applying an idea at scale is strategic, not necessarily innovative. For example:

- Bloomspot's $40M raise and accompanying shift in focus (http://www.bloomspot.com/media/assets/Bloomspot_Marketing_Ki...)

- Swipely, Offermatic, etc.

- GRS, a vendor of this data (http://www.grsgroup.com/)

- Also, dozens of similar ideas such as Amex using FB data: http://www.forbes.com/sites/moneybuilder/2011/07/20/link-lik...

The pricing on this is not particularly attractive to merchants, especially small ones.

That article was a little lite on details, does anyone have any idea how groupon will get the details about when you spend money at the merchant? Obviously it's not from the banks, so they must have a deal with merchants. But that deal would require them to modify their point of sale software to support phoning home to groupon. That seems like a tall order for places which have, say, an old filemaker database holding their sales records.

As an aside: Would a merchant really want to turn over all its sales data to groupon?

I'm guessing but it could be similar to Square's card case

https://squareup.com/cardcase

May answer your question: http://www.quora.com/How-does-Bloomspot-Prime-aggregate-POS-...

Great idea, but the biggest problem is that it incentivizes users to pay only with credit cards. For a small restaurant owner or retailer, those bills can go upwards of $10,000-20,000/month, and could be incredibly detrimental for, say a frozen yogurt shop.

Now, the ease of use will be a big part of this (just using your own credit card), and may alleviate some of these troubles for the retailer from a training perspective, but this is yet another potential for business owners to make bad decisions sacrificing long-term profit in exchange for short-term growth.

It was interesting to note that Groupon thinks Foursquare check-in's is a "necessary evil"..

This could actually save their business model. Merchant churn is really their biggest problem. Becoming their "loyalty solution provider" could help re-engage the merchants. The only puzzling thing is why Groupon has not done it earlier.

I completely agree. In the same vein, Scoutmob allows merchants to offer their customers "return perks" for visiting their store a second time, and I think this has been a very effective strategy for them business-wise.

The only puzzling thing is why Groupon has not done it earlier.

They were milking it?

Think they will compete with google wallet and the other mobile payment platforms?

If they can reign in costs (by many magnitudes) I would go long on them. Scale and size make them a quite formidable player in retail.

Am I the only one who sees a huge problem with opting into having Groupon track my purchases? I'd definitely rather carry around a paper card that gets holes punched in it than have a company like Groupon track my purchases.

It's not a novel idea, RewardsNetwork awards miles for dining with merchants they have signed up http://skymiles.rewardsnetwork.com/

UPromise has had a similar program tracking not just restaurants, but all sorts of shopping venues http://www.upromise.com/welcome

American Express will also track your Amex purchases and assign loyalty rewards based on their Link, Like, Love Facebook promotion https://www.facebook.com/americanexpress

Are you not okay with an idea? Or not okay with Groupon, Inc. being another company to implement this fairly commoditized loyalty program?

Reply on news.ycombinator.com