24

The Brainzooming Group helped shape an intriguing project featuring two graduate level marketing communications classes at the University of Kansas. Students in Max Utsler’s “Innovations in Marketing Communications” class and Barrett Sydnor’s “Integrated Marketing Communications and Sales Strategy” class are writing blog posts during the semester on topics related to the classes, including branding, marketing, social media, experience marketing, and innovation.

Working with a number of Brainzooming friends who publish popular blogs in these areas, we’ll be running a number of blogs from students in these two classes. Max Utsler dubbed the project “Blogapalooza,” and today, we’re publishing the first guest Blogapalozza post on Brainzooming.

Today’s author, Patrick Kerr, lives and works in the Kansas City area. His interests include good food, fishing, and finding new hobbies to take his mind off the Kansas City Chiefs and Royals. Today he takes up the question of the impact Groupon has on customer service – both for the provider and the customer:

 

My wife and I recently spent our wedding anniversary at an upscale restaurant hailed by critics for its outstanding food and ambience. The owner of the establishment is a highly accomplished chef who enjoys a stellar reputation in local and national culinary circles. He is one of a few true culinary celebrities who live in our area and has won numerous accolades for his cooking skills. As self-proclaimed “foodies,” we couldn’t wait to celebrate the occasion over a gourmet meal and fine wine. Even better, my wife purchased a Groupon for the restaurant so we felt like we could splurge without feeling too guilty.

The day of our reservation, I checked out the restaurant’s ratings on Yelp and was surprised to find so many negative reviews. The reviews spanned from mildly critical to downright nasty. Not exactly what you’d expect from a four-star restaurant. Of the bad write-ups, there were two common denominators: poor service and Groupon. Prior to the Groupon introduction, the marks were consistently positive if not gushing with praise. It was only in retrospect that I made the connection.

So how did our dining experience turn out? The food lived up to its excellent reputation, but the only way to get our server’s attention was to flail my arms about like some over-eager 2nd grader dying to be called on by the teacher. If anything, service at a four-star restaurant should border on hovering. This felt more as if we were being quarantined for some highly contagious virus. I’ve had better service at Waffle House. At least they refill your drinks once in a while. We couldn’t help but think that our early admission of using the Groupon had an overall negative impact on service. It turns out we were in good company. Apparently, Groupon and poor customer service go hand-in-hand.

Customer Service Rating of Groupon Users

Additional research revealed a direct link between the use of Groupon and a negative service experience. The above graph is from a study conducted by Cornell researchers who studied over 16,000 Groupon Deals in 20 US cities between January and July this year. The study found, among other things, that Groupon users averaged a 10% lower rating than those who didn’t use Groupon.

So why does Groupon promote bad customer service? From the merchant’s perspective, Groupon often means more trouble than it’s worth. The servers I’ve spoken with all complain that users frequently tip on the discounted amount, and not on the actual amount of the food. For expensive restaurants like the one we went to, that could mean the difference of $100 – $200.  In fact, our receipt clearly read what the amount would have been prior to the discount. Obviously, that is a sore point that needs addressed.

If Groupon wants to establish a loyal following, they need to make it clear to partners that they must uphold a certain standard of service and refuse to do business with those restaurants that won’t commit to those terms. Perhaps establish a “code of excellence” that becomes synonymous with their brand.  Groupon’s reputation and the reputation of the restaurants they do business with depend on it.

Have you had a negative Groupon experience? If so, please share it in the comments below. -Patrick Kerr 

If you enjoyed this post, make sure you subscribe to my RSS feed!

Mike Brown

Founder of The Brainzooming Group, and an expert on strategy, creativity, and innovation. Mike is a frequent speaker on innovation, strategic thinking, and social media.

More Posts - Website

Follow Me:
TwitterFacebookLinkedInPinterestGoogle Plus

24 Responses to “Does Groupon Promote Bad Customer Service?”

  1. Jnading says:

    My wife has mentioned Groupon to me before, but we’ve never used it.  Mostly due to the fact that the few things I’ve read about them have not been on the positive side.  Sorry to hear you had a bad experience on such a special occasion…but thanks for taking a bullet for the rest of us.

  2. Chris Ronan says:

    As an unabashed couponer, I’m a huge fan of the Groupon. However, I’ve never presented a Groupon (or any coupon, for that matter) to the waiter before receiving the bill. So I can’t speak to any poor service experiences directly related to the Groupon. But I also tip 20 percent on the pre-discounted amount.

    I’m fascinated by how many businesses have adopted Groupon, Muncharoo, Living Social and other social discount tools. While I’m sure the ROI is positive for a lot of business owners, I spoken to more than a few who wish they’d not gotten involved with discounting. Yes, it helps bring in customers who may not otherwise have tried their product. But it also trains those customers to think the product value is half of list price.

    Anyway, Patrick, next time keep that Groupon in your pocket until you get the check!

    • Aaron Patch says:

      Chris, I too share the sentiment of brand devaluation. I
      think many business owners should avoid the coupons strategy. My biggest gripe
      with offering coupons is that you are essentially training a coupon culture. I
      certainly don’t fault those who use coupons…it is a fantastic way to save a
      great deal of money.

      Here’s a for instance… I love Jazz Louisiana Kitchen in
      Kansas City. They frequently offer Groupons… Why then as a rational consumer
      would I go to Jazz without a Groupon? You are essentially turning many of your
      most loyal customers in to discount buyers. Then to sustain business levels you
      have to offer more Groupons, and the business falls in to a vicious cycle of
      discounting. That is probably not the most effective strategy for long-term
      success.

      • Patrick says:

        Aaron, you bring up some very relevant points that were mentioned in some of the links I provided in my blog. You are exactly right – Groupon alters the expectations of diners at certain establishments. Restaurants need to make sure they are finding alternative ways to lure customers in without necessarily discounting their food. That, or focus on ways to keep those customers who were initially brought in by Groupon. If customers are only coming in because the food is below a certain price threshold, then the restaurant is doing something wrong. Price shouldn’t be the only deterrent.

    • Patrick says:

      It’s funny you mention that, Chris. We usually don’t offer our Groupon up front either, but in this case it just slipped out. Regardless, you should never have to HIDE the fact that you are using a Groupon in any restaurant. It’s not as if it should be a secret. Diners deserve the same level of service with or without a Groupon.

    • Sunshine32sunshine says:

      I though one must mention the groupon and present the printout before being service.  I think that’s what it said on the printout. 

  3. JJ says:

    I like your idea of Groupon only partnering with restaurants that vow to maintain a high level of service.  Perhaps, they should enlist some ‘secret shoppers’ to experience first-hand, the type of service their users are experiencing.  However, it is a shame that restaurants would participate in Groupon and then offer mediocre service to those who wish to take advantage of a great deal.  

    On the flip side, there are those consumers who only go to certain restaurants because they have a coupon, they drink water or tea, and split an entree for dinner, leaving the server a meager tip on an already discounted check.  

    • Kerrpb says:

      Love the idea of Secret Shoppers. Maybe they’re doing that already. But I’ve talked to many people in the service industry who swear it makes a huge difference in the quality of customer service provided.

  4. Carrie says:

    I have not used Groupon, but have been a waiter subject to 50 percent discount offers and found that guests who have not worked in the industry do not understand how tips affect the server.
    Waiters make less than $3 per hour typically and tips are the income they keep. Hourly wages go to taxes.
    That said, there is rarely an excuse to not do the job.
    Good waiters know there is no guarantee, no matter how high the tab. Some guests just don’t understand or care.
    And many guests tip extremy well regardless of the tab. Good servers know to always give 100 percent.
    In any event, the server must support promotions that may be difficult in the short term to grow customer lifetime value in the long term.
    Management must collaborate with the front line for the best solution for all parties, before the Groupon offer is redeemed; if they expect the first taste of the business to not be the last.

    • Patrick says:

      I spent many years in the restaurant industry too. Faced the same thing on discounted checks. It was very frustrating.

      Groupon should add a very clear disclaimer on their print out that the amount the user is paying is less than the amount they should leave gratuity on. That might help clear up any confusion associated with their product. 

  5. es says:

    Interesting observations, Patrick. I have my own Groupon gripes, and I think this Chicago Tribune article hits on some of the underlying issues. It seems both Groupon and the (generally smaller, local) businesses who use its services are, in some cases, victims of the model’s success and rapid growth. Merchants get overwhelmed by the influx of one-time customers, loyal customers get frustrated when local businesses are too busy dealing with Groupon users to provide the service they expect, and overworked, underpaid employees become bitter and resentful. Small businesses lose out when they can’t keep up with demand and don’t enjoy increased profits or expand their customer base as a result of the promotion. At the end of the evening the restaurant manager is frazzled, your waiter is disgruntled, and your anniversary dinner is ruined.

    Plus–and this is a pet peeve–I’m appalled by the horrible writing I read in Groupon ads and marketing plugs! I’ve seen Groupon’s countless near-desperate pleas for freelance copywriters on various job searching sites. Given their low pay rates, only the desperate must apply. Seems like the company is using an army of inexperienced, underpaid copywriters, and doesn’t have any interest in developing their skills or grooming them for richer roles. Instead, Groupon seems focused on keeping costs down so they can rake in the profits. 

    We all love a good deal, but is it really worth it in the end?

    http://articles.chicagotribune.com/2010-08-16/business/ct-biz-0816-groupon-20100816_1_groupon-businesses-chairs

  6. Rebecca Goering says:

    I am a huge fan of coupons, Groupons, and the like! They are a reason for me to go out to a restaurant, as it is expensive to do so. Having said that, I, too, have been a server in the restaurant business. I also know how it is to have customers that don’t have any idea that they should tip on the amount of their meals prior to any discounts. However, I NEVER gave bad service because of a coupon. I graciously took their coupon and gave them the same outstanding service I gave every customer. In today’s society, I believe people have short memories. If a server knows you have a coupon/Groupon and then provides bad service, why would that customer return to that place for more bad service? I think coupons of any sort are a risk by any business. Groupon seems to have taken the coupon to a new level. By the same token, for whatever reason, bad service has risen as well. It will be interesting to see how long Groupon stays afloat if something doesn’t change. I like your idea, Patrick, of implementing some kind of “code of excellence.” Hopefully, servers will understand that good service equals good tips, while bad service equals bad tips….regardless of coupons/Groupons!

  7. Rebecca Goering says:

    I am an avid coupon/Groupon user. I usually don’t go out to eat unless I do have a coupon. I, too, have been a server in the restaurant business. So, I am fully aware that people don’t understand how to tip when they use a coupon. However, when I, as a server, was presented with a coupon, the customers always got the best service. It is interesting that today’s servers don’t understand that their service (or lack thereof) is their livelihood. How is it that they don’t understand that bad service equals bad tips, while good service equals good tips? It isn’t brain science, afterall! Bad service also means the customer will probably not return, thus more loss in tips. I like your idea, Patrick, of having a “code of excellence” for places that use Groupon. I feel that many places should adopt that philosophy anyway!

    • Kerrpb says:

      I totally agree, Reba. Regardless of the means of payment, customer service should be the same. It is presumptuous of servers to assume that just because someone is using a coupon that person will automatically be a bad tipper. Conversely, diners need to have better awareness going in that they should tip on the FULL amount of the meal, and not the discounted amount. What it boils down to is better awareness/education on both sides of the equation.

  8. allie says:

    Great article! I have only used Groupon a handful of times but never at a restaurant. I have had positive experiences in my usage, and I think it’s because I’ve dealt with the owners of the business. One time stands out and that was when I used a Groupon for a massage. The massage was excellent and as I was leaving I noticed a sign on the door that said “Groupon Customers: Purchase additional massages today at 20 percent off.” I thought that was a good idea.

    I have used my Passport card at restaurants, and that’s a similar idea – buy one meal, get one free. At one particular restaurant in Lee’s Summit, I had a conversation with the owner about the card. He mentioned that servers don’t like the card because it usually means less tips but as an owner he loves the card because it brings in new business. I admitted to him that the only reason we were there was because of the card and that I had never been there before. This seems to be what Groupon is facing – owners know it’s a great marketing tool but the employees are the ones who are short-changed. Maybe it would help if the owners gave a bonus of some sort to the wait staff who serves Groupon or other “discount” tables.

  9. C348p396 says:

    Seems very true, Pat. I’ve heard rumblings about these scenarios before, and even talked with store owners who say it’s difficult to get return customers to pay full retail price. We’ll see if Groupon makes the jump to a public company…

  10. DD says:

    Great article.  While I’m sure there are plenty of positive and beneficial experiences with Groupon, it’s stories like yours that remind me of why I’m not a Grouponer.
    I will say, any time I do use a coupon at a restaurant, I do not reveal it until presented with the check.  Whether Groupon or any other discount source, I’m hesitant to make it known upfront out of fear it will affect the service experience.
    I wonder if it’s just Groupon that leads to a negative experience, or if other coupons or discounts produce similar results.

  11. Really interesting, Patrick. Normally companies use Groupon as a form of publicity, as most companies tend to LOSE money by offering a Groupon. It’s to bolster word-of-mouth. With that, you think the Groupon customers would be treated BETTER, if anything, because the goal is to get you to come back (and pay full price) or tell your friends. I question why a four-star restaurant would offer a Groupon in the first place – it seems odd and a bit out of place.

    I’ve only used it for a facial, and like Allie, I was dealing directly with the owner of the business who was very gracious. She got the point that I would return or tell my friends if I liked her service. We moved shortly thereafter, but I gave her a great review online and told all my friends…!

  12. Patti says:

    I had a 9am appointment to have my son’s car detailed for his birthday while he is in Afghanistan.At 9:50 a.m. I started calling the company. After phoning the company 3 times in the last 3 hours, I got nowhere.The operator reassured me she’s was contacting  Vinny, the owner. I also purchased another car detail package for my own car, which is scheduled to be done in 3 days. I’m waiting to hear back from Groupon to have my money refunded for lack of service.

  13. Erin Pursel says:

    Interesting article! I’ve never tried Groupon, but have always wondered what peoples’ experiences were with it.

    I actually came across this infographic (http://dailyinfographic.com/groupon-vs-living-social-vs-facebook-deals-infographic) awhile back and thought it was an interesting way to look at the different deal sites out there. I have to wonder if other companies such as Living Social are experiencing the same effects Groupon users are experiencing when it comes to customer service prior to, during, and after the offer. 

  14. sunshine says:

    I went to Lafayette Grill  & Bar last night using Groupon and was disappointed at the food, although the staff was okay. I seriously think the food we got was not their usual  full size portions.  The desert was definitely not a full size.  The cost of their desert is averaged seven dollars. The tiny slice of carrot cake served was probably not even one ounce, it was the smallest slice of cake I ever had. If the restaurant wanted me to come back, shouldn’t they serve full portion food or desert for that matter?

  15. Saint William says:

    I purchased a NFL mat with Groupon and contacted them to get the shipping status via email.  I waited 3 business days and still no reply.  Therefore, I decided to contact them by phone.  Waited like 3 minutes and finally a girl picked up the phone.  She was not friendly at all and told me we had no information about your order, you had to wait for it to arrive.  

Trackbacks/Pingbacks

  1. Innovation in Life and Death | The Brainzooming Group | Strategy Consulting and Strategic Planning - October 15, 2011

    […] the latest Blogapalooza post, this one on two individuals known for innovation in life and, in one case, an unusual recognition […]

  2. From restaurant-snobbery to racism: some perils of data driven decision-making | Dabbling with Data - June 19, 2015

    […] The Brainzooming Group summarises some more formal research: […]