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.