Groupon's recent underperformance

Groupon's recent underperformance has led to a jump in sales

Introduction: Foreign media wrote today that, as competition in the group buying market intensified, Groupon gradually began to adjust its sales strategy and tighten its commission policy. While the move is intended to boost performance, it has put a lot of pressure on salespeople and has led to a large number of employees seeking a job elsewhere.

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A lot of job-hopping

Groupon is facing a new challenge: The sales staff are overworked.

This kind of pressure is a great boon for people like Mike Lajaze (Mike Silagadze). The CEO of top Hat Monocle of the education software company said his Toronto start-up had received hundreds of emails from Groupon sales representatives over the past one months, hoping to move to the company. Tear Lajaze said he would interview a few of these people every day.

A Groupon lawyer sent a letter to Lajaze last month that top hat is recruiting Groupon employees through improper means. Top Hat has a sales team of 25 people, 8 of whom have worked for Groupon.

"Groupon is worse when the best people start to leave." "Tore Lajaze said. He added that it planned to continue recruiting staff from the group buying company.

The experience of tearing Lajaze reflects the great pressure placed on salespeople by this popular group-buying website. This is the latest issue that Groupon faces. The company, which went public last November, is now struggling to recover from its financial failings, and its share price has fallen 63% per cent from its 20-dollar offering. Groupon will release its results in Monday, the third quarterly report after the company's IPO.

Groupoon spokeswoman declined to respond to the comments that tore Lajaze, but said the company "will continue to deploy specialized measures in all areas, from sales to processes, to organization, to technology".

Core Gene

With a strong reliance on salespeople, any problem with the sales team can put Groupon in trouble. Groupon employs more than 12,000 people, about 45% of whom are salespeople, who are responsible for signing deals and other products with local companies.

"You can't just focus on technology and products," said Groupon CEO Mason at an investor conference in February. "You also have to know how to manage a large sales team, which is exactly the core gene of our company." ”

But the company's sales are overwhelmed by growing demand, tighter pay mechanisms and a lack of promotional opportunities, according to former Groupon employees and people familiar with the matter. Before and after Groupon's IPO, the company added new sales executives, in part to build more experienced management. Two former employees said the weakness of the company's share price also led to a sharp drop in morale, although many employees did not hold too many company shares.

It is not yet possible to determine the turnover rate of Groupon's sales staff and the company declined to comment on the recovery plan.

Turnover rates are usually high in a sales company. There are signs that Groupon is also eliminating incompetent salespeople. Some companies want to benefit from Groupon's brain drain, which they see as a "trickle" of current turnover.

Adjust Commission

However, former employees said Groupon's sales team had undergone significant changes. Early on, the company often recruited college graduates and quickly merged them into a fast-paced sales culture. A former employee said that as the company grew, its early employees had reached six-digit salaries and enjoyed a comfortable working environment--as long as they had finished their sales goals, they could get home early.

But a year ago this gradually began to change as Groupon executives noticed a slowdown in revenue growth ahead of the IPO.

Groupon originally paid a few percentage points for salespeople based on gross profits per business, but now, unless it can meet or exceed aggressive monthly profit targets, it can only get a very low commission. Two former Groupon salesman said the company did not explicitly disclose the monthly gross profit target of the methodology, and sometimes unknowingly raised. For those who rely heavily on commissions to earn their income, the change means that their monthly salary is reduced by thousands of dollars.

A former Groupon employee says Groupon salespeople are becoming more and more difficult to meet Commission targets as competition in the group buying industry intensifies. However, Groupon's earnings show that its group-buying profits in recent months have remained almost unchanged.

Groupon wants to solve some of the morale problems. Mason invited more than 20 senior sales representatives to dinner last summer to hear about their dissatisfaction with sales reform, according to people familiar with the matter.

The dinner was held at the 6-storey cafeteria at Groupon headquarters. A few days earlier, the news that Mason would take the opportunity to grant special allowances was rife, and there were even rumours that he would issue a stake. People close to the situation said Mason had forgotten to order and had to buy some pizza temporarily, while the sales rep was not paid.

A Groupon spokeswoman said Mason "has been actively interacting with employees".

Other reforms

Groupon has also adjusted its sales management, including Carl Laman, Kal Raman, a former Amazon executive in May this year to head the Americas. Raman was promoted last week to be responsible for Groupon's global sales and operations.

As Groupon breaks through the traditional realm and advances into the localized services market, the sales team changes. Groupon's new offerings include technologies that help companies accept online bookings and deploy customer loyalty projects.

In addition, a salesperson has been dealing with a single group purchase activity from one vendor to another, and almost all employees are still in Chicago, even if the deal is elsewhere. Today, salespeople are directly responsible for specific responsibilities and specific markets.

At the same time, Groupon faces bearish power in the stock market. Everscore Partner, a consultancy, published an analysis last month saying that although Groupon's first-quarter earnings were better than expected, it was opaque enough. The report also sparked volatility in Groupon's share price.

A Groupon spokeswoman declined to respond to Evercore's report before the results were published in Monday. (PEI)