Groupon CEO: How We’re Improving Our Marketplace Experience

During Groupon’s latest earnings call on August 9th, CEO Kedar Deshpande outlined how we’re enhancing our core marketplace experience to drive purchase frequency and customer retention for our merchants:

1. Optimising supply density,
2. Building a more trusted and personalised customer experience,
3. Differentiating our inventory, and
4. Increasing strategic marketing investments.

With this four-prong approach, Groupon seeks to better meet customer intent every time they visit the platform, so your Groupon customers keep coming back again and again.

1. Optimising Inventory Density

 

For customers to make more purchases and keep coming back to Groupon, the platform has to reliably show them offers they’re actually interested in, and that means having the right supply available where there’s demand for it.

“We have to be able to surface inventory that is engaging and meets the needs of customers every single time they come to our marketplace,” stated Kedar. “Our current priorities include creating more opportunities for our customers to buy from Groupon by giving them a broader and better selection of everyday services and experiences that they’re looking for.”

In practice, this means refocusing the criteria for adding deals to the platform so that customers have a more complete and balanced selection of deals in their area.

“We are working to make sure that we have breadth and depth of inventory for our local experiences and services in any given geography, so customers know to come to Groupon first, that we will have what they want. Going forward, our supply acquisition efforts will be focused on building a supply coverage across all of our verticals.

Our inventory density efforts will be led by a focus on giving customers what they are looking for more frequently and not just generating margin growth. For example, we won’t direct our sales team to add a fourth or fifth massage in any given area, but instead have them focused on acquiring inventory where we don’t have adequate coverage. This may be inventory that customers use in their daily life such as haircuts, car washes, or even a trampoline park. And this is how we will round out the breadth of our inventory selection.”

Several other initiatives are underway as part of these efforts to optimise Groupon’s inventory density in specific industries. To boost high-frequency dining inventory, Groupon has partnered with a leading provider to test a fresh approach to card-linked offers. We’re also experimenting with partnerships to add more market-rate inventory for things like movie and concert tickets, as well as algorithm changes to better surface those deals when we know it’ll satisfy customer intent.

2. Creating a Better Customer Experience

 

The second prong of Groupon’s marketplace improvements is to create a better customer experience. This mainly comes down to two things: trust, and personalisation.

Fostering Consumer Trust

To encourage customers to shop on Groupon more frequently, it’s up to us to make sure they can trust the platform to consistently provide what they want, which is a great experience at a great value. Every time a customer gets on Groupon, they should be able to expect transparent pricing and reliable service, so Groupon has undertaken several initiatives in service of this goal.

To ensure customers can assess the real value of their purchase, we’ve implemented price monitoring processes so that the base price and discount accurately reflect the merchant’s standard prices. However, customers also want to know they’ll actually be able to redeem their Groupon and have a positive experience. That’s why we’re also tackling high-refund deals on the platform: high refund rates mean customers aren’t getting the product or service they expected, whether due to unavailability, inaccurate product details, or something else. A new pilot program will help us identify merchants with growing refund rates and help them course-correct before it becomes an issue.

Altogether, we expect these initiatives to elevate trust in Groupon offerings across the site, helping customers get more comfortable with Groupon purchases so we can send more business your way.

Providing Personalised Suggestions

In addition to trust, we’re working to enhance our marketplace’s personalisation, so that our platform is better able to proactively suggest compelling deals for each customer that they wouldn’t have found otherwise.

“We have also done a lot of testing to figure out how we can increase purchase frequency by making existing customers aware of what else they can buy on Groupon,” Kedar elaborated. “In our experiments to encourage cross-vertical purchases, we leveraged personalised promotions to entice customers who bought within the dining vertical to make a purchase of various Beauty & Wellness experiences and vice versa. Early results were exciting. In a test with 5,000 customers, we were able to grow cross-vertical purchases by more than 150% versus a controlled group.”

These sorts of personalised promotions will encourage more customers who usually shop for beauty products to try your restaurant, more customers who usually shop for restaurant deals to try your salon, etc. By increasing customer awareness of other categories and driving more cross-vertical purchases, we hope to get customers to consider Groupon their go-to for a wider variety of situations, resulting in higher purchase frequencies and more sales for our merchants.

3. Differentiating Our Inventory

 

As Kedar discussed last quarter, Groupon is pursuing two initiatives to differentiate its inventory from other marketplaces: curated deal collections, and a standalone app for premium Beauty & Wellness experiences that aren’t necessarily discounted. This quarter, Kedar was able to share updates on how these initiatives are progressing.

“First, we are launching curated inventory collections. We are creating uniquely packaged deals that offer customers solutions for everyday occasions and will drive engagement, encourage cross-vertical shopping, and remove friction for customers looking for complementary services and experiences.

In late July, we started with two small tests of this concept in the Chicago and UK markets. We have launched several date night and weekend adventure deal duos. The goal of this test is to learn how users engage with this inventory and, going forward, we will continue to refine and begin marketing these collections.

As we discussed last quarter, we are also planning to launch a stand-alone marketplace for Beauty & Wellness experiences… We intend to launch a test of this concept by the end of 2022.”

4. Leaning Into Strategic Marketing

 

Finally, to maximise the impact of these other initiatives, Groupon is also increasing strategic investments in performance marketing channels. This will bring in more site traffic, entice customers to try our improved marketplace, and generate more sales for our merchants.

“Since the end of July, we have more than doubled our budget for search engine marketing, and while it is incredibly early, we have seen more than 80% returns on this incremental spend.

In addition, we are also seeing a positive impact on local customer acquisitions and reactivations. And we also expect to spend to help drive improvements in marketplace awareness and traffic trends. Based on this signal, we will be investing in a new performance channel marketing strategy to improve traffic trends.”

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Kedar’s complete remarks can be found in the earnings call transcript. To receive updates on these and other initiatives we’re developing for Groupon merchants, as well as weekly insights into building and running a successful business, sign up for the Groupon merchant newsletter!