Groupon CEO admits business rocky since IPO, experts predict more loyalty programs to keep customers on board

The longevity of the group buying industry has once again been called into question after Groupon chief executive Andrew Mason admitted last night the six months since the company’s IPO have been “rocky”.

Local experts have been saying for some time the industry is losing its heat, as customers back off from the initial craze for group buying and online deals, and now predict they will attempt to re-ignite the sector by appealing to consumer loyalty.

“It’s really time to knuckle down,” Telsyte senior research manager Sam Yip told SmartCompany this morning. “It’s really about consumer loyalty now, and we expect to see more loyalty programs in group buying sites in Australia soon.”

Mason said in a statement last night the six months since its IPO have been “rocky to say the least”.

The business had been probed by the Securities and Exchange Commission before listing due to comments made by an executive that the business would be “wildly profitable”. It has since been forced to revise statements made in its regulatory filings that affect its revenue and profit figures.

The business also lost its chief operating officer just before its IPO, after only five months in the job. Shares remain at just over $US10 – about half their price at the time of its IPO.

Another accounting error last month caused shares to fall again.

However, Mason said yesterday that he warned shareholders the first few months might be bumpy, and reaffirmed his commitment to developing a long-term strategy for the company.

“Why move so fast? We believe that Groupon is standing before an enormous opportunity, one that hundreds of competitors large and small have seen,” he wrote. “Although there are risks in moving too fast, companies often don’t survive long enough to apologize for moving too slow.”

Mason also said the company is going to be focusing a lot more on personalisation in the future, emphasising its “SmartDeals” program much more in the future.

“It has taken time to get deal relevance right, but progress has begun to accelerate, and we believe that we’re still in the early stages. We’re excited to finally have begun rolling out SmartDeals outside of the US, and we are targeting a broad international rollout by the end of 2012.”

Yip says he expects to see this type of personalised targeting in Australia very soon. But it’s not just being done as a marketing push, but also partly out of necessity.

“Group buying grew at a rate we’ve never before seen out of any industry. But we’ve sort of hit a peak now, and the market is beginning to stabilise.”

“I think in the past 12 months we’ve seen a lot of spikes happening in the market, but it’s time for sites to knuckle down and look at the databases they’ve built and start to offer more targeted deals.”

Yip says the next phase of this business will be all about customer loyalty.”

“Businesses overseas have flagged the loyalty programs, but they’ve yet to come to Australia yet. We think they will soon.”