With Quiznos, Groupon Tries to Prove It Can Spur Repeat Business

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A common complaint among merchants who try promotions with daily deals sites like Groupon or Living Social is that the deal is tremendously successful… once. After surrendering significant discounts to the deal site, most businesses expect the bargain offer to serve as a loss-leader, attracting new customers who then become repeat customers. But many have complained that this conversion is rare.

In an attempt to show its deals aren’t all one-offs, Groupon this week announced a deal with repeat business built in — a punch card for eight sandwiches or salads at Quiznos sub shops worth approximately $50, offered for nearly half price.

For Groupon, the deal is groundbreaking for its size and scope. At 2,100 Quiznos franchise locations, it is the largest nationwide offer it has attempted. Groupon is also hoping to prove “its model can go beyond a single, open-ended discount to create repeat business for a merchant,” according to ChicagoBusiness.

“I don’t think either Groupon or Quiznos was interested in pursuing a flash-in-the-pan,” says Michael Roper, Quiznos’ chief operating officer. “We wanted an opportunity to generate new regular customers. For (Groupon), repeat business is critically important. It gives their business value if they can create more value for a customer like us.”

The goal for Quiznos, meanwhile, is to spread the deal out to encourage new users to explore the menu over the course of several visits, Ellen Kramer, Quiznos’ executive vice president of communications, told Street Fight: “Groupon has an exceptionally large and diverse database, and we wanted to create ‘new regulars’ for Quiznos local restaurants,” she said. “We’re targeting specific markets where individuals receiving this offer, who have not necessarily tried Quiznos before, have an opportunity to try it over time, to try some of our new subs and salads, and to understand the wide range of both healthy and indulgent choices Quiznos has to offer.”

The campaign poses additional obstacles for Groupon. It is nearly twice the size of its first big national deal, an offer last August for the Gap retail clothing chain, which has 1,100 locations in North America. That deal proved so popular it sold 440,000 deals and crashed Groupon’s servers.

The franchise structure of the Quiznos could also pose a problem for the Groupon campaign notes Kris Ashton of Daily Deal Media:

Local individually owned shops, similar to Quiznos, are just the types of places that tend to get inundates with voucher holders and create so many of the nightmare stories we hear about. Image all those same consumers now, not with just one voucher, but with eight (in this case a punch card). How are the individual franchise owners going to deal with this? Some merchants don’t even want to see a voucher holder walk in the door the first time. How are they going to feel when it comes to the sixth, seventh or eighth time? If you buy this deal, we’d like to hear about your experience.

Obstacles indeed, but the campaign is a sign Groupon is aware of its shortcomings regarding hit-and-run promotions and is attempting to fix them. The step into the franchise world is also a brave one and previously the domain of traditional coupon clipping and national television spots. It is a sign Groupon is working out the kinks as the daily-deals model evolves.