Groupon CEO says replacing 10 pct of sales staff

Wed Oct 26, 2011 7:35pm EDT

* Groupon to replace bottom 10 pct of sales staff-CEO

* Signing new merchants preferable to keeping old ones-CEO

* IPO expected to price Nov. 3, begin trading Nov. 4

BOSTON, Oct 26 (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 Sept. 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 Nov. 3, and the shares are expected to begin trading on the Nasdaq on Nov. 4 under the ticker "GRPN".

Underwriters on the IPO are being led by Morgan Stanley , Goldman Sachs & Co and Credit Suisse .

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
Drummer80 wrote:
Is Groupon serious? The Groupon CEO says it’s preferable to acquire new customers than to keep old customers. Which introductory-level sales class did he fail?
Groupon is a big Groupoff, run away as fast as possible from this dud.

Oct 26, 2011 8:15pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.