Groupon replacing lackluster sales staff
No slacking allowed if you’re on the sales staff at Groupon. The daily deals giant is replacing the 
bottom 10% of its sales staff as it attempts to procure more lucrative deals from merchants to assure its continued growth. This is a step they hope potential investors will see as positive, in their mission to sell their IPO.
CEO Andrew Mason told investors in Boston that the action was designed to improve the quality of the deals, which would ultimately lead to Groupon’s profitability.
Groupon’s current sales force tops 4,800 according to the IPO prospectus.
As of the end of the 3rd fiscal quarter, Groupon had 143 million subscribers, but in that same quarter, only 30 million bought Groupons. The number of repeat customers from the second quarter increased
but the total was just 16 million. Merchants have also complained that Groupon didn’t help them maintain new customers. Instead the only provided one time bargain seeking customers that didn’t come back.
If Groupon doesn’t work on maintaining its repeat customers and pleasing and maintaining relationships with its merchants, it may make investors wary of diving into the IPO, and effect the company’s long term value.
“At the end of the day all they’re offering the merchant is the ability to cut price … you can cut price any time you want. You don’t need Groupon to do it,” said a portfolio manager whose firm manages more than $20 billion and who attended the presentation in Boston.
Mason doesn’t see it from that point of view. According to him, the merchants are paying for “risk free performance marketing.” He explains “They pay for customers through the door. You’re not going to get this from the yellow pages”.
He also stated that deals from new merchants make for a better experience, and there is some bias towards signing up new merchants versus repeat business with old ones. As part of their online IPO Road show, they say that only half the businesses that participated in the 3rd quarter, had done some previously.
Will the replacing of the sales staff help Groupon’s IPO cause? I supposed we’ll see when they price on November 3rd and hopefully start trading on the 4th.
Read more about this here and keep up with everything “Groupon IPO” here at Daily Deal Media
