Using Groupon Deals? Your Yelp Rating May Suffer

Could a Groupon deal ruin your business's reputation online?

Three computer scientists from Boston University and Harvard set out to shed light on that question last fall. They found that businesses tend to see their Yelp rankings decrease after offering a Groupon deal. That's because Groupon subscribers give businesses on average a 12 percent lower Yelp score than non-Groupon reviewers, an analysis of over 7 million Yelp posts showed.

The findings have fanned the anti-Groupon fire. Critics allege that online coupons attract easily dissatisfied bargain hunters who not only fail to return to local businesses after redeeming discounts, but also bad-mouth the businesses on the Web.

But a report released in February by the same researchers who authored last fall's study found that Groupon subscribers are actually more moderate reviewers on Yelp than the average consumer. In fact, they give out fewer 1 and 5-star ratings and more 3 and 4-star ratings than their non-Groupon counterparts.

So if Groupon subscribers aren't inherently fussy than what's driving the sour scores?

"We found strong evidence that suggests Groupon users often give lower Yelp ratings because the businesses they patronize aren't prepared for the flood of customers that Groupon deals tend to attract," said John Byers, a Boston University professor, who co-authored the study. As a result, the overwhelmed merchants give below-average service, Byers noted, leading to below-average reviews, which can eventually have a marked effect on a business's bottom line.

"Our study also suggests that ratings by Groupon users seem low because other Yelp ratings are artificially high," Byers added. Previous reports have shown that some positive Yelp reviews are posted fraudulently, or come as a result of merchants encouraging reviews from obviously enthusiastic customers.

In their most recent study, Byers and his co-authors, Michael Mitzenmacher and Giorgos Zervas, theorize that "reviews from Groupon subscribers are lower on average because such reviews correspond to real, unbiased customers, while the body of reviews on Yelp contain some fraction of reviews from biased or even potentially fake sources."

The study's statistics also reveal that Groupon subscribers tend to make more noise on Yelp, amplifying their effect on a business's online reputation.

"Groupon subscribers write significantly more Yelp posts than non-Groupon reviewers," Mitzenmacher said. "They also have significantly more friends on Yelp and they tend to write longer reviews that are more often voted by other Yelp users as being funny, useful or cool."

All this seems to imply that business owners who are wary of their Yelp ranking should either avoid offering Groupon deals or be sure, ahead of time, that they have the capacity to roll out the red carpet when customers flash coupons.

Comments

[joearls]

11:40 AM on 01/27/2013

Does anyone realize that these business are trying to bring in new customers. Groupon promises new customers that spend over thier deal amount. Groupon works on a 50/50 split. If you buy 20 for 40 dollar groupon. Groupon takes 10 of the 20 and merchant has to give up 40 dollars worth of food. i can tell you most of them do not spend over the groupon amount and a lot of them not all treat judge the places they eat at like they work on chopped. have a little compassion for the merchant redeeming these coupon. Most of them are small business that are trying to stay in business

[happyguy22]

01:47 PM on 01/21/2013

Groupon will ruin your business no matter what. Groupon customers have a real sense of entitlement. They know if you dont give them what they want and what they want is the free service, meal or what ever, if they dont get what they want they will jump on YELP the second they are unhappy and even write fake reviews under other emails to bring you down. I have found groupon people to be very vengeful hateful people who want free and cheap service.
Do not let Groupon people into you place of business. They will lie to get their money back from groupon. The will lie on YELP to help get their money from Groupon. The Groupon custimer holds everyone hostage so they can get what they want.
We who own a business have no Yelp for customers but if we did I would put every Groupon person on the list with a "one star".
Avoid Groupon like the plague.

[HerbyBCN1976]

05:23 PM on 09/09/2012

Groupon didn't launch until the 2008 when the economic recession started. Its business model is based on selling people things they don't need at a discounted rate. Getting 70% off a mani/pedi when you can't pay your mortgage isn't very smart. So customers slow spending and business owners get desperate. Most of us have a comfort level at which we are acustomed to and aren't willing to sacrifice anything when the economy falls over the cliff. Its also a lot easier to leave nasty online comments and hide behind a computer instead of speaking to a business owner face to face and having your doubts or problems resolved.

Speaking from my own experience, restaurant staff are people too but are not always treated that way. A customer expects perfection from a chef or waitress and anything less breaks some cardinal hospitality rule. Truth be told, its impossible to not have a bad day/week/month. We are held to some higher standard. I am sure if we visited people who were nasty online at their jobs, we would receive outstanding, perfect service too. Or maybe not.

[careyta]

03:18 PM on 09/09/2012

I'm both a Yelper and a couponer. I love saving money trying new things whenever I can.

There have been businesses I've tried that I won't return to based upon the service/food quality I received. There are others that I will make an hour drive in rush hour traffic to return to because it was fantastic and never would have heard of it hadn't it been for the coupon I came across.

Not all of us couponers are poor, low-class, jerkfaces. We know value when we see it. If I get a Groupon for 1/2 off a $30 steak dinner and ask for it med-rare and I receive a med-well, there is no way I'll come back to that restaurant and pay the full $30 in the future for it.

[HerbyBCN1976]

04:32 PM on 09/09/2012

Why wouldn't you just send the steak back and have them redo it? If someone sends something back to my kitchen, I would cut it up and give it to my dog and remake the customers order. Win-win.

Imagine if your boss sent you home without pay everytime you made a mistake. They happen. Apologize and correct it.

[careyta]

06:10 PM on 09/09/2012

Because I know how much it sucks to have to remake a ticket based on my mistake or someone else's.  I won't send food back ever.

[Rdhdstpchld]

12:33 AM on 09/09/2012

Did anyone consider that a lot of businesses offering groupon deals are doing so because they aren't attracting enough business? And that maybe they aren't attracting enough business because they have problems that keep customers from returning?

[joe1964]

01:23 PM on 09/08/2012

Sorry, I work at a high end steak house. We have a wide range of prices on our menu and I feel we can accommodate any guest who walks in at just about any REASONABLE price range. I define that as 60 to 100 per person. Hey, you aren't getting a prime steak and a glass of good wine for 30.00 a person!
I do not want Groupon. If you are that worried about the price you are paying and you want a good deal go to Houston's or Outback. They provide an absolutely wonderful product that would better suit you.

[Jolene Callen-Sliwka]

02:08 PM on 09/07/2012

My own experience as a business owner has taught me to be cautious of all on-line reviews.

I have had reviews left that weren't even for a product that I sold; been slammed for a shipping price that the customer thought was outrageous when the customer shipping charge was less than it cost to actually ship the item; for something being "smaller than expected" when the size of then item was explicitly stated, etc.

As a reader of a review who was not party to the transaction, you are often only get a part of the story when what was left out may alter your opinion of whether the review had merit or not. And of course some reviews are phony altogether and reflect personal grudges or unscrupulous competitors looking to do harm.

Don't get me wrong - I am a supporter of customer reviews and think they have value to me as a business person. I can see what I am doing right and learn how to improve things from valid reviews. It's just important to remember how they are sometimes abused and to look for patterns of issues when using them to form an opinion about a business you are unfamiliar with.

[sc1980]

09:04 AM on 08/18/2012

I think part of the reason why Groupon users post bad reviews of the businesses is because they get horrible services from them!

My experience with most of the businesses I've purchased Groupons from has been awful! For example, I made an appointment at one spa and they never showed up to the for it. One employee called me back an hour later to ask if we could re-schedule. I told her the only day I could come in was that same day. She said she would talk to the owner and call me back. I never got a call back!

Is it any wonder why these companies get bad reviews from Groupon users? My horrible experience with these companies has led me to not want to use Groupon anymore - I'm done!

[happyguy22]

01:40 PM on 01/21/2013

you are not there to get a free service. Your groupon is to show the business and have you book another service, maybe buy some product and for sure leave a tip.
How would you like it if I came to your place of business and left you a bad review for any little thing you did? It effects everything you do the rest of the day!
we are humans, we need your money to survive that is why we invited you in with a groupon. You want the service for the cheap price and not the real price and you do not want to come back or tip no matter how we kiss your butt!
So dont pretend you drove out of your way by many miles for the deal and will ever be back. You come in and do a hit and run and then complain on yelp when we do not give you everything for free.
Keep up your part of the deal: be our customer by buying product and services that are not cheeeeeply discounted and then maybe you will get treated the way you want. Oh by the way every time you complain to groupon we get less money from our last part of money they keep from us, so your whining only hurts you by giving us no incentive to serve.

[hardtohandle]

10:07 AM on 06/19/2012

I am an active Yelper/customer (not a business owner).

I refuse to use Groupon or other deep discount coupons like them, because I think they are bad for businesses.

I also think Yelp is needlessly skewed against businesses, and they should stop filtering which doesn't work as they think and say it does. Yelp users can read the filtered reviews by clicking certain links, but few bother or know how to do so.

[Michelle Sternberg]

09:29 AM on 04/20/2012

Hi I own a small business in Aventura Fl.I agree with your article completely.The only other point I would like to express is that the Groupon or any social media client most of the time wants more then they paid for and after trying your best to satisfy them they know they can go to Groupon and get a refund and the to proceed to YELP to kill your reputation.The worst part of it is they do it anonymously so we do not even know if they have really ever been to our business.For $5.00 on Fiver they advertise we will give any business a Positive or Negative Review your choice. When I contacted YELP they said if you advertise with Yelp for $300.00 a month we can help you.I have over 100 reviews over 70 are 4 ad 5 Star those are FILTERED yet the 1 Stars are all on view. Very sad as I have been in business over 30 years and there is no way to remove this.

[joe1964]

01:29 PM on 09/08/2012

Aventura? South Florida? Are you near Boca Raton?
Oh, you poor thing! Defrauding a business by fraudulently claiming bad products and poor service is a hobby in South Florida. Evil old ladies will tell you their steak was so tough they almost couldn't finish it and what are you going to do for them. I have brought a bottle of vodka to the table, measured three ounces into a drink and been told, "what, that's all I get?"
Anyone who pays attention to YELP in that environment needs to have his head examined. The sample bias is enormous.

[BeachWar]

02:48 PM on 04/13/2012

Groupon, half-off depot and any other type of service like those bring in the worst non-returning customers. Horrible for all businesses.

[OwnerListens]

09:03 PM on 04/12/2012

Businesses need to provide customers with an alternative to Yelp in order to avoid damage to their online reputation, especially during a groupon promotion. At Oren's Hummus Shop, we dealt with this by creating a solution called OwnerListens (www.ownerlistens.com) - it allows customers to privately message the owner/manager from their phones - the owner/manager can then respond directly, resolve the issue in real-time, and prevent the negative review in the first place. Oren's Hummus Shop now has a 4-star rating on Yelp.

This has worked so well at Oren's Hummus (last few months) that we have decided to open OwnerListens up to all businesses for free. Owners/Managers can sign up at www.ownerlistens.com - let us know what you think!

[Lauren Rossnan]

01:56 PM on 04/12/2012

yelp is so skewed in general.

[Jenny Bdoll Kim]

10:08 AM on 04/12/2012

It's all bout the price. If groupon special priced customers were treated equally as the regular paying customers (as in service manner), maybe the yelp ratings won't go down. people still paid money regardless and when you go to the place to either dine out or to get yourself pampered. they rush you, treat you as if you have owe them something. I'm a HUGE mani/pedi goer and if you tell the spa that you have this coupon from groupon, they finish your mani/pedi within 30-40 mins. especially, if you not get any other extra services. Why would anyone want to pay money to be not treated well? Isn't groupon deal suppose to do like a sampler style of their venue to show the public of how GREAT they are? I blame it on the employees of the venues than groupon.

[muggly]

12:59 PM on 04/12/2012

Jenny, in one-on-one services, please understand that the business gets paid at most, 25% of their regular rate. That means either the staff or the business are taking a huge cut in pay in order to accomodate you. If you consistently expect quality service, I would suggest not using daily deals. Now that I understand how they work, I no longer buy the deals for one-on-one services because I know the business and most likely the employee is not looking forward to my business as a coupon customer.

[Harold Saxon]

01:02 PM on 04/12/2012

Agreed. The quality of service often suffers when the employees know you'll be using a Groupon. That's why, when dining, we present the Groupon at the end of the meal. Not sure if some bad apples have ruined it for the rest of us (other users not giving good tips, perhaps) or if the proprietors just don't see Groupon users as equally valuable customers.

[claymation123]

01:08 PM on 04/12/2012

nonsense, most of the time the business doesn't even know about the groupon until the bill is being paid after services are rendered

[adamben]

08:26 AM on 04/12/2012

i only use yelp if i can't find any other review. with that said, i still don't trust yelp but will avoid a place with god-awful reviews, as i would a place with nothing but rave reviews.