Groupon Plans Layoff For Worst 10 Percent Of Sales Staff

(Reuters) - Daily deals site Groupon is replacing the worst 10 percent of its sales staff as it pushes to win stronger deals from merchants and ensure it can keep growing, the company's chief executive told potential IPO investors on Wednesday.
Andrew Mason told investors who had gathered in Boston that the action was designed to improve the quality of the deals being offered.
Groupon currently has a salesforce of over 4,800, according to its IPO prospectus.
As of September 30, Groupon had 143 million subscribers, but in the third quarter only 30 million of them bought Groupons.
Repeat customers increased from the second quarter but only numbered 16 million, according to a regulatory filing with the U.S. Securities and Exchange Commission.
Failing to win enough repeat customers may dampen the rapid growth that currently supports the company's roughly $11 billion valuation.
Some merchants have complained that Groupon did not help them win permanent customers, and instead delivered bargain seekers taking advantage of price cuts. A portfolio manager at the roadshow said these complaints raised doubts about Groupon's ability to keep growing.
"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.
But Mason does not see it that way. On Wednesday, he described Groupon's approach as "risk-free performance marketing" for businesses.
"They pay for customers (coming through) the door," Mason explained. "You're not going to get this from the Yellow Pages."
Mason also said that a steady stream of deals from new merchants makes for a better customer experience, and there is some bias toward signing up new merchants rather than keeping old ones.
A spokesman for Groupon declined to comment.
In the online version of Groupon's roadshow, the company said that about half of the businesses offering Groupons in the third quarter had previously done so.
Groupon's IPO is scheduled to price on November 3, and the shares are expected to begin trading on the Nasdaq on November 4 under the ticker "GRPN".
Underwriters on the IPO are being led by Morgan Stanley, Goldman Sachs & Co and Credit Suisse.
(Reporting by Tim McLaughlin in Boston; Additional reporting by Liana B. Baker in New York and Alistair Barr in San Francisco; Writing by Clare Baldwin in New York)
Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[TheEnlightenedOne]

07:39 PM on 10/28/2011

remember the 6B Google offered you? you should've taken it ;)

[RaceCondition]

03:22 PM on 10/27/2011

Groupon is a doomed, unsustainable business model. Businesses are discovering that they're not getting repeat business, which is what they need to make money.

[TechNerd415]

02:48 PM on 10/27/2011

This is sad. I had high hopes for Groupon and was really excited for their IPO. Now..... Not so much. It seems everyday there is something negative written about Groupon and it all started with the Super Bowl Ads. Once that received the public attention the eyes were locked and the media has since unloaded on them. Then you read that they lose two COO's in less that a year, followed up by the founders pulling out 450 million ( not an exact quote) off the table to load their personal pockets. That is a huge no no and would make any investor weary. Then you read they tried to pull a fast one on the SEC, leaking emails, etc claiming they were worth way more than they are. Then its followed by Groupon getting sued by thousands of sales reps in two class action law suits for not paying them overtime. Followed by them suing two reps for going to google, and finally they decide to fire the bottom 10%. They went from being a poster child to a case study on what not to do when running a business and this will be a study that will most likely taught in business schools for many years to come. Sorry guys, you really blew this. Fast growing company ever.. ya i guess so.

[Enid]

01:09 PM on 10/27/2011

this is a company that will die in three years

[Vic22]

12:52 PM on 10/27/2011

Lipstick, meet pig

[Dumminic Voidel]

12:10 PM on 10/27/2011

Starting to lay off people already? Oh boy. Seems like things are turning south for Groupon. Or are they just trying to get their act together. We are now going to start to see how Amazon, www.couponmat.com, Living Social, and Google will start fighting over these guys that Groupon decided to get rid off.

[Phlan]

09:50 AM on 10/27/2011

And suddenly, things turned ugly.

[French Toast]

11:35 AM on 10/27/2011

That workplace is going to turn into Alec Baldwin's speech from Glengary Glenn Ross REAL quick.

http://www.youtube.com/watch?v=y-AXTx4PcKI