June 13, 2012

Chicago Transit to offer fare passes on Groupon

The Chicago Transit Authority (CTA) partnered with Groupon to offer discounted 3-Day passes to riders, marking the first-ever partnership between the Chicago-based daily deal site and a U.S. transit agency to sell fare media. The discount will be offered as early as the end of June.

Groupon will purchase a total of 250,000 3-Day passes for $1.882 million. Each pass will be sold for $7.53 wholesale and offered to Groupon members for $9 instead of $14, the current price of a 3-Day pass. The offer will have a limit of four per person Groupon will own the cards it purchases until they are sold.

CTA will receive an upfront payment for the fare cards. As such, the agency has a chance for a win-win; an immediate influx of capital and hundreds of thousands of potential new riders over the summer.

“This is a great way to unite two highly visible and respected brands,” said CTA President Forrest Claypool. “This unique offer is an innovative way for the CTA to cultivate new, local customers and tourists in a way we’ve never done before. This is an innovative partnership, as this is the first time Groupon has partnered with a transit agency.”

Groupon has 36.9 million active customers and close to 900,000 daily page views, allowing CTA an opportunity to advertise to a national and international audience. Emails will appear in a member’s daily deal for Chicago and when visitors search for travel deals on the internet retailer.

The discounted rate will encourage more people to use CTA’s 3-Day pass, which offers a better value than the pay-as-you-go option. The CTA Groupon will also cultivate new riders and eventually capture permanent local customers, expanding the current ridership base.

Groupon will also reach out-of-towners through the company’s Getaways section that offers deals on hotels and travel. CTA’s 3-Day passes are heavily used by tourists and this deal will help expand that market even more, particularly for festivals and weekend activities that draw huge numbers of out of town guests, like the Air and Water Show, or Lollapalooza.

Groupon’s expansive reach will increase the number of sales and put the CTA fare cards in the hands of tourists via postal mail before visitors even arrive in Chicago, making it easier for them to use CTA trains and buses.

In addition to gaining additional ridership, CTA will receive customer information that will help CTA reach out to customers to help encourage further use of the system. Per the terms of the agreement, Groupon and CTA can agree to offer an additional 250,000 passes for the same price within the next 12 months.

This agreement does not affect the availability or price of 3-Day passes at existing sales locations.

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