February 22, 2011, 12:16 PM

Groupon launches features to keep merchants happy—and away from rivals

One program offers a set number of Groupon deals if merchants avoid competitors.

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In the face of growing competition from LivingSocial.com and other online daily-deal companies, Groupon is rapidly introducing services and features aimed at pleasing its merchant participants, still mostly local businesses, although a few national retailers like Gap and American Apparel have tested Groupon offers as well.

Among these features is the merchant-facing hub called GrouponWorks.com that helps business owners calculate how many vouchers they should offer based on their capacity, industry and such specialized data as a restaurant’s table turn rate or the number of sales clerks on staff.

If a manicurist with a small shop wanted to offer 3,000 vouchers, Groupon likely would advise against it. “We want merchants to have a good experience,”says Rob Solomon, the daily-deal site’s president and chief operating officer.

Cynthia Bruce, operator of the Highland Meadows Vineyard Inn, a seven-room hostelry in Virginia, says she was well prepped by Groupon for her deal. She was told up front that she needed to be online to respond to customer questions about the deal on Groupon.com. A chart from Groupon based on similar merchants’ experiences gave her an idea of what to plan for.

“It gave me benchmarks like 25% will use it within first 30 days,” says Bruce, whose Groupon deal doesn’t expire until the end of April. “The first week was crazy. Groupon can easily overwhelm a business if you are not well educated. But they were right on the money.”

In a sign that it’s feeling the heat from rivals, Groupon has created the Groupon Merchant Partner program that guarantees businesses a certain number of voucher slots per year if they agree not to work with Groupon competitors. Bruce, who had been considering trying out Groupon’s closest competitor, LivingSocial, and another deal site called Twongo, joined after she was guaranteed three deals for the year. That’s an attractive offer because more businesses are clamoring to work with Groupon than the deal marketer can accommodate. In Chicago, for instance, the backlog has run as long as eight months, Solomon says.

The number of deal openings will increase since Groupon launched Personalized Deals last summer, which tailors offers to buyers’ preferences and buying history. Instead of every Groupon subscriber in a city getting the same offers each day, now, for example, there can be some deals aimed at young sports enthusiasts and others to wine lovers based on information Groupon acquires from surveying consumers and compiling their buying history.

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