CEO Andrew Mason
Groupon reportedly has a number of measures in the works to help it tap the swathes of users who have signed up to its emails, but are yet to purchase a deal, reports StrategyEye. According to sources speaking to Reuters, Groupon CEO Andrew Mason told employees that these untapped customers number 11 million and represent a potential USD400 million in annual revenue. In its Q1 earnings report, Groupon claimed it had 33 million active users, which it defined as customers who have bought at least one deal in the last year. Historically, Groupon has been slated for the costs it racks up to win customers, with Mason’s comments suggesting that the firm may finally look to convert its existing user base more cheaply.
According to Reuters, Groupon is looking to tweak its email offers to show these 11 million inactive subscribers more deals that are closer to where they live, in a bid to persuade them of the service’s relevance. The firm will also reportedly make a greater push on its restaurant deals, with the number of offers dropping as it focuses on highly priced and luxury offers. Although such offers may keep existing users loyal and help Groupon’s brand, bread-and-butter restaurant deals are more likely to get inactive subscribers purchasing. Groupon will also bolster its sales teams with better customer relations tools.
In spite of low-cost measures to persuade more customers to jump onto the deals bandwagon, Groupon is likely to remain embattled for the time being. In its first earnings report since becoming a public company, Groupon misreported the depth of its losses by some USD22.6 million, eventually revising its filing to show a USD64.9 million loss, rather than the USD42.7 million it first claimed. This was just the latest in a series of reporting errors and has reportedly led the SEC to consider a probe into the firm’s financials. It has also cost the firm in terms of share price, which has more than halved since the firm went public in June, dropping steadily from a high of USD30 per share to USD11.75. Investor scepticism about the accuracy of Groupon’s reporting, plus wider concerns about the future of the deals market in general, is clouding opinion.
“This is a business model where [the company] is making it up or proceeding along a plan as we are following them as a public company,” Stifel Nicolaus analyst Jordan Rohan tells MSNBC. “If the addressable market isn’t as big as they said it was we will find that out in an unglamorous fashion over the next few years.”
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