October 27, 2011, 12:47 PM

Groupon looks to streamline its sales staff

The daily deal operator plans to replace low-performing sales staff members.

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Groupon Inc. CEO Andrew Mason yesterday told potential IPO investors the company will replace the worst-performing members of its sales staff to streamline its operations and spur growth.

However, a Groupon spokeswoman says the daily deal operator is not planning layoffs. Rather, Mason was discussing a performance review process that it will use to manage and replace poor performers. Those types of processes are “common among the most efficient sales organizations,” she says.

Groupon had 4,853 sales representatives as of Sept. 30. Of those, 1,004 are U.S.-based.

Discussion of staff reductions is uncommon in the lead-up to an initial public offering—in fact, companies often expand their staff in advance of, and after, going public, says Josef Schuster, founder of IPO research and investment house IPOX Schuster.

However, in the case of Groupon, trimming its sales staff probably makes sense. “Groupon took on so many staff members that it now probably makes sense to streamline those operations,” he says.

Part of the reason that Groupon added so many staff members was to help it expand the number and variety of its products, such as its flash-sale site Groupon Goods.

Still, streamlining its staff could bolster the daily deal operator’s bottom line. Groupon's third quarter net loss was $10.6 million, compared with $101.2 million in the second quarter and $49.0 million during the same period a year earlier.

Groupon decreased its loss, in part, by cutting back on its marketing expenses. It spent $181 million in the third quarter, compared to $432 million in the first half of the year, an average of $216 million per quarter.

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