Groupon rewards loyalty to boost traffic

Groupon is set to introduce a rewards scheme to encourage users to redeem deals from their merchants more than once.

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Through the scheme, users can unlock extra rewards if they spend a certain amount of money with merchants offering a regular Groupon deal.

The launch of Groupon Rewards is likely to please merchants, who were complaining to the company that once Groupon customers redeemed their deals, they rarely returned again.

Groupon will also hope the new scheme will help revive traffic, which has fallen since May, according to analysis by search and social agency iCrossing.

The daily deals site also slashed cut its reported revenues by half for 2010, down to $312.9m (£200.2m) from $714.5m (£457.3m). It was told to change its accounting practices by the US Securities and Exchange Commission, which found Groupon was reporting its revenue as the full-price of a daily deal, without disclosing the 50% revenue share with merchants.

The company has also lost its COO, Margo Georgiadis, this week who is returning to her previous employer Google to become president for the Americas. Sales, channels, international and marketing executives will now report directly in to CEO Andrew Mason.

Groupon still intends to raise finance for an IPO worth up to $750m (£480m) despite its mistake in revenue filings and the loss of one of its most senior executives.

Groupon Rewards is set to be unveiled in the US today (28 September), although Europe is likely to follow, in a similar way to its Getaways holiday deals and its FourSquare tie-up.

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