The challenges continued for District-based LivingSocial in 2013 as the company looked for alternative sources of revenue beyond daily deals. That led the business to some dead-end ideas and to others that executives say show initial signs of promise.

In a recent interview, chief executive Tim O’Shaughnessy outlined five things he believes the company needs to do in the new year as it looks to recapture the positive trajectory experienced in LivingSocial’s early days.

To be clear, LivingSocial executives have been fixated on rapid growth since the firm’s inception, with mixed results along the way. There’s no guarantee these ideas will bear the fruit executives hope for. Nevertheless, O’Shaughnessy asserts the company is better positioned to make them a reality now than just a year ago.

‘Get back to growth’

LivingSocial had a meteoric rise on the back of its initial daily deals, adding new markets and dozens of employees with each passing week. Then, the growth slowed significantly. The company pulled out of some foreign markets and trimmed its head count.

“I think that this business had a lot of growth, and then we had to spend a year, year-and-a-half figuring out ... what was core [to the business], what was not core, and doing a lot of that work to get the business repositioned again for growth,” O’Shaughnessy said.

“I feel like we’re in a pretty good spot for that.”

Growth will come from offering merchants more ways to advertise to local audiences, O’Shaughnessy said. In September, the company began promoting online coupons for retailers and listing many deals on its Web site for longer than just a day at a time.

BIA/Kelsey analyst Peter Krasilovsky has been following LivingSocial through its rise and fall. The growth of high-margin deal categories, such as travel, would be an encouraging sign that the company has found new strengths, he said.

‘Interesting investments in the business’

Reaching a large number of consumers and merchants remains important to the company’s longevity, O’Shaughnessy said, so the new year will bring investments aimed at expanding parts of the company that generate revenue.

The company sold its largest overseas operation, South Korea-based Ticket Monster, to Groupon in November for $260 million. Once the deal closes early next year, LivingSocial will have more money to make those investments, O’Shaughnessy said.

“We had capital before, but we’re about to add another quarter billion dollars to the balance sheet, so our ability to look at doing some pretty interesting investments in the business is higher than it has been for some period of time,” he said.

That investment will likely include the development of additional products for merchants as well as re-upping LivingSocial’s own marketing to consumers, which O’Shaughnessy said was scaled back earlier this year. Both of those efforts could mean hiring staff, a spokeswoman said.

Krasilovsky offers up another, more controversial suggestion: “Perhaps a rebranding or merger. It isn’t clear that LivingSocial has a positive branding impression on the market at this point. But its assets remain enviable in many capacities, and the company is cognizant of what it needs to do.”

‘Communicate with [consumers] in the ways they want to be communicated with’

When LivingSocial began serving up daily deals to customers, e-mail was its most critical form of communication. In fact, just about 100 percent of deals were distributed that way, O’Shaughnessy said.

That portion is far smaller today.

“When we have those great offers for consumers, how do we communicate with them in the ways they want to be communicated with?” O’Shaughnessy asked.

Increasingly, the answer is mobile. LivingSocial has come of age in the era of smartphones, and the company now completes nearly 40 percent of sales through its mobile applications.

But mobile customers have different expectations. They’re often looking at the deals for short spurts of time, and the app needs to be simple to navigate as a result. O’Shaughnessy said the company needs to better capture the attention of those transient consumers, who have no shortage of apps to thumb through in their down time.

Krasilovsky said the creation of dedicated mobile services for payments and deals, something the company has tried in the past with real-time offers, would promote greater usage of its mobile platform.

‘Expanding the marketing solutions that we offer to merchants’

The daily deals business model gives merchants just one marketing option: They sell vouchers for their business during a 24-hour period, then experience a crush of customers over a short period of time.

That approach didn’t appeal to some merchants. In that vein, O’Shaughnessy said the company developed a marketing platform this year that allows merchants to offer deals on its Web site as they see fit.

Those deals no longer require shoppers to expend money up front, such as spending $25 to buy $50 worth of spa services. Instead, they can receive discounts on items ordered online or bought in stores using LivingSocial coupons. The company makes money on each transaction.

Why can LivingSocial sell coupons more effectively than the merchants themselves? The company reaches a wider swath of consumers and can amplify a retailer’s own marketing efforts, a spokeswoman said.

Krasilovsky said that’s particularly true for national retailers that want to target local audiences. LivingSocial has offered daily deals in the past in partnership with investor, and its coupon product features discounts for brands such as Pier 1 Imports, Macy’s, Reebok and OfficeMax, among others.

“It’s expanding the marketing solutions that we offer to merchants to not just offer one type of flavor, but multiple flavors they can work from,” O’Shaughnessy said.

‘Grow our holiday percentage of our revenue share’

Retailers rake in a disproportionate amount of their annual revenue in the final months of the year as consumers crack open their wallets during the holiday season.

“There is an opportunity for us to grow our holiday percentage of our revenue share and percentage of consumer spend significantly beyond where it is at,”O’Shaughnessy said.

This year marked the first time LivingSocial treated Black Friday and Cyber Monday as major shopping events, coordinating promotions accordingly, he said. It paid dividends.

The firm saw its best week of net revenue ever from Thanksgiving through the following Friday. That includes a 57 percent increase in sales on Black Friday over last year and a 69 percent rise in sales on Cyber Monday.

The company’s retail segment, which sells such goods as household items, gadgets and fashion accessories, as well as health and beauty deals, performed particularly well, a spokeswoman said.

“Consumers view us as a retailer, and there are many retail events that can occur throughout the course of the year. We should incorporate that into how we view our business,” O’Shaughnessy said.