Yep. I think the reason this works is threefold; 1. Expanded (geographically targetted) reach for participating companies. 2. Increased chance of full sales

Yep. I think the reason this works is threefold; 1. Expanded (geographically targetted) reach for participating companies. 2. Increased chance of full sales conversion (via money up front) - participating companies are better off even if full conversion doesn't take place. 3. Financial incentives turn Groupon's users into a sales team.