Groupon’s Hidden Cost: Your Reputation?

If you’ve ever considered doing a Groupon or other daily-discount offer, you already know that it can do some serious damage to your bottom line. That’s because such sites typically demand discounts of around 50% and then take half of what’s left.

But did you know your reputation could also take a hit?

That’s among the intriguing results of a study conducted by researchers at Harvard and Boston University. Starting with a sample population of 16,000 Groupon deals, they correlated the data with Yelp reviews — 56,000 reviews on almost 2,500 deals — and found that business’ average-rating scores dropped in the months after the deals were redeemed.

Specifically, they found that reviews that mentioned either “Groupon” or “coupon” were 10% lower on average than reviews that didn’t and that reviews that mentioned both terms were more than 20% lower.

Groupon deals Yelp ratings

The lower-on-average rating scores in those reviews mentioning Groupon provides a cautionary note, wrote the researchers. This could indicate that a more critical audience is being reached or that the fit between the merchant and these new customers is more tenuous than with existing customers.

Either way, the research suggests that the deals that are so great for consumers may be as bad for your online reputation as they are for your bottom line.

Does that mean you should avoid daily-deal sites altogether? Not necessarily as the research also showed a significant increase in the overall number of post-deal reviews, suggesting increased exposure and interest from consumers. (Exposure was further enhanced as people shared deals via Facebook “likes,” although there was no evidence that that expanded audience translated into increased sales.)

Instead, doctors should approach Groupon and similar sites with caution and eyes wide open as to the pros and cons. On the one hand, they can bring lots of new visitors to your website andGroupon Botox deal to your practice. On the other, they can also attract a clientele that comes for that one-time deal and never returns.

As we’ve said before, if you’re going to offer a Groupon or other daily-deal, you need to have a plan in place to turn deal-seekers into regular customers. At the same time, based on the above research, it may be even more important to consistently monitor your online reputation and engage with reviewers, wherever they are and whether their reviews are good, bad or otherwise.

About Rob Lovitt

Rob Lovitt is a longtime writer and editor who believes every good business has a great story to tell. He has written for dozens of magazines and websites, including NBCnews.com, Expedia.com and the inflight magazines of Alaska, Horizon and Frontier airlines.

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