Groupon Damages Businesses Reputations

September 13, 2011

While daily deals on sites like Groupon and Living Social may offer businesses a temporary boost in traffic and online reviews, a new study shows that offering discounts actually generates lower reviews of the business in the long-term. 

John Byers and Georgia Zervas from Boston University and Michael Mitzenmacher from Harvard University looked at approximately 16,000 daily deals across 20 cities offered between January and June of this year. They then collected some 56,000 Yelp reviews from 2,332 merchants who ran 2,496 deals. After analyzing the reviews, the researchers found that reviews that mentioned the coupons were 10 percent lower on average. 

Reviews that mentioned both "Groupon" and "coupon" were 20 percent lower on average. The daily deals did increase reviews overall for the businesses. 

What do you make of those findings? Do you agree with the study? 

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paloma's picture

Sites like groupon and living social fail to provide an accurate profile of the vendors and the product. I myself have purchased several deals and about 60% of them turned to be bad deals. The price did not match the experience and or the product was not exactly what the profile had described it to be.

Anonymous's picture

They only have a limited amount of space to describe the business. Do your own research and stop passing the buck to others to make your decisions.

Man, I am saddened by this response. Make a phone call to the business, asks questions, research the website....There are a lot of ways to ensure a better buying decision. But those unwilling or lazy will just pass the blame onto others.

Helena's picture

Interesting. Maybe it has something to do with the type of people who buy Groupon-type deals, or with their expectations for those deals, or both. Like paloma said, sometimes the deals misrepresent themselves (I almost always Google a business before buying a deal, and sometimes what I find talks me out of it rather quickly).

I think also it has to do with the risks associated with expanding a business' market. A yoga studio that is usually filled with a handful of loyal practitioners might suddenly get mobbed with Groupon holders who have never tried yoga before. The previously intimate, intense classes might suffer with the flood of new people, and those people might not have as positive an experience as a result.

Anonymous's picture

I have been using Groupon for the last year or so and I have had nothing but success. The buyer needs to do a little research on the company and/or product before just buying blind. I check it out and look at costs and information prior to making a purchase. It's our responsibility as buyers to do the research and obtain the necessary information needed in order to make an sound buying decision. For those just clicking and hoping for the best, it's a gamble. There are great businesses on Groupon and some that are not as reputable. The ultimate decision is ours to make. We can't blame the business nor the Groupon site. Nobody is forcing you to purchase. So stop whining and accept some accountability and be responsible for your decisions.

Kathleen Noonan
Groupon's #1 FAN

Christine Chen 's picture

The good and the bad of daily deals has led to a deals 2.0 with Pirq, an iPhone and Android app that is set up to: ) not crush businesses during peak hours, 2) prevent false coupons, 3) avoid pre-payment/approval/wasted coupons, and 4) allow the company to give 10% of its fees to United Way to feed the homeless. (Full disclosure, I am a consultant for Pirq.) Please take the time to read it... a different take on daily deals that doesn't leave a bad taste in your mouth. Then, download and start saving.