Common Issues & Your Ideas

March 05, 2012

Written by: Erick Rodriguez

In September 2011 ,BU and Harvard students released a study suggesting that running a Groupon promotion lowers a merchant’s Yelp rating.

Their finding left us wondering two things: why does this relationship exist, and what, if anything, can restaurants do to minimize these negative effects? To address this, we researched why by analyzing 736 Yelp restaurant reviews across 75 restaurants where the reviewer cited using a deal voucher.
Our findings were consistent with the above study in that Yelp ratings suffer when merchants run “daily deal” promotions:

                               Deal Review Ratings vs. Overall Ratings
                         On average, deal-reviews are .5 stars below the restaurant’s overall Yelp rating.

                               Overall Impact of Deal Reviews on Restaurants

                         77% of deal-restaurants suffer an overall negative impact on their Yelp rating.

Two theories could explain why deal-diners write harsher Yelp reviews:

  1. Deal-diners are more demanding (and troll-like) than normal diners.
  2. The circumstances of running a “daily deal” promotion creates potential customer experience problems that otherwise would not exist.

While theory #1 may contribute to some degree, our research found theory #2 to be most convincing. We analyzed deal-customer complaints in reviews and identified two primary deal-specific problems:

Redemption Issues – The deal voucher was denied (in violation of deal terms or not found on the merchant’s voucher list) or improperly applied to the check.

Perceived Discrimination – The deal-diner felt that they received inferior service (or smaller portions) because they used a deal voucher.

“our server made such a big deal out of us having a Groupon … that it was uncomfortable. She acted like we wouldn’t tip her or something…” 

Note: preliminary data from our point-of-sale tracking of deals suggests that the average deal-diner tips as well as a non-deal diner.

                               Deal Review Complaints
16% of complaints in deal-reviews are a direct result of the deal itself. "Standard Issues" are complaints in deal-reviews that are independent of the deal (e.g. "the food was too salty.")

In other words, the circumstances of running a deal created 16/84 = 19% more undesirable experiences than what a non-deal diners would have experienced. When there’s increased potential for things to go wrong, Murphy’s Law tends to take over.

There are certainly other variables involved to explain why deal-reviews are on average .5 stars lower than non-deal reviews, but a 19% increase in bad experiences for deal-diners must be a primary explanation.

The good news is that restaurant operators can take proactive steps to address these deal-specific issues:

Redemption – Simple Terms & Seamless Process

Keep the terms and restrictions of the promotion as simple and clear as possible. Any complexity or ambiguity will result in the lose-lose situation of either denying a voucher or accepting a voucher in violation of its terms. If you deny a voucher for any reason, a bad Yelp review could follow.

Consider technology to make the redemption process as seamless as possible (like point-of-sale voucher redemption). Remind waitstaff on how vouchers should be applied to the check.

Perceived Discrimination – Consider the Diner

Deal-diners can feel insecure and hypersensitive to the idea that a server may be judging them as “cheap.” Even if your waitstaff are genuinely not judging, it’s all a matter of the diner’s perception. If the server makes any gesture that can be perceived by the diner as judgmental, then confirmation bias kicks in and the diner’s fears and insecurities are realized. Bad tips and Yelp reviews ensue (oh, and losing the customer for good). Ensuring that waitstaff understands and respects these sensitivities can make a huge difference not only in protecting your Yelp rating, but in impacting the overall success of the promotion.

Have your own theories to why deal promotions often lead to bad Yelp reviews? We’d leave to hear about it in the comments!

This article was originally posted on blog.launchcopilot.com.

My interest is in bringing transparency to restaurant marketing practices, so I write here to share findings. I am a co-founder at Copilot. We enable restaurant operators to track the results of their promotional activity through the point-of-sale. With better information on how promotions perform in terms of customer spending, tipping, purchase behavior, and more, restaurant operators can make better decisions in designing future promotions.



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