Maybe the problem is your friends became resentful because they were incapable of handling the promotion, so they blamed the customers to protect their own egos?
Not all of my Groupon experiences have been bad. I did a scuba diving experience, which lead to me doing additional scuba qualifications and experiences with the same group, at full price.
One business I know of had no predisposed opinion of Groupon users (they aren't tech savvy and never heard of it before doing it at the suggestion of a friend) and regularly does discounts for seniors and students as well as deep "first visit" discounts for Yelp users where they ran a promotion. They even did a similar promotion for NYC businesses with a similar deep discount to Groupon. They said that the Groupon users were, without fail, the most demanding of any group of promotion-using customers and some even made it obnoxiously clear that they would never use my friend's services without a similar discount in the future. Of all the Groupon users, not one became a repeat customer. In every other promotion they have run, they have gotten numerous repeat customers, including the similarly deep discount program for NYC businesses. So, they never plan to use Groupon again and have warned their fellow local businesses away from it.
That is to say, the difference between running a promotional discount in a regular magazine, and running a promotional discount in a coupon magazine.
Part of the drop may be due to Groupon inducing
people to visit a business selling something
they otherwise wouldn't be interested in.
E.g., I might check out a Greek restaurant
even though I'm indifferent to Greek food because
of a good deal and curiosity. Given the same
experience as someone who likes the cuisine,
I might then give a lower rating.
But the article suggests a number of very plausible reasons that have nothing to do with bad experiences. Further, as they say, until the compare these effects with any influx of customers, there's absolutely no evidence that Groupon isn't actually performing better with this metric than, say, running an ad in the paper, or getting featured on Oprah.
The volatility/variance comes from the fact that 1. not everyone rates their experience, 2. there's variability in the experience, 3. different people have different expectations or likelihood to rate high/low, etc.
I hope that clarified what I believe was the parent's meaning.
I've thought about how to fund a reverse-Groupon: a service where I can pay places to NOT take part.
You pay more. Sometimes a lot more. Yet you get something extraordinary in return. What would that be? It's up to the vendor.
It'd probably have to work something like Kickstarter if there were different premium perks, or just a one-shot thing. It'd give mid-range restaurants a chance (and budget) to pull out all the stops for a special VIP night, for instance.
Nothing says to your retailer "I hate you and I want you to die" more than using a GroupOn coupon.
An anecdote from my life. I never used to eat uni (sea-urchin) in my local Sushiya here in Tsukiji. However, at some stage the Sushi-chef recommended it to me free of charge since it was season and he wanted to offer me a special treat. Since I liked the taste I regularly add uni to my order. Just by giving me this one uni for free he increased his revenue from me by 10 USD.
[Edit] So the lesson's learned here should be "Know thy customer"
That's why I don't get the Groupon hype. It seems like a way for businesses to pay money to upset customers. Probably a bad idea.
I'm not just talking about the incremental sales<->lower ratings tradeoff, either. According to the paper's abstract, running a groupon ad earns you a significant amount of new reviews - new ratings which tend to be 10% lower on average. But is it more valuable to have a lot of "very good" reviews, or a small number of "excellent" reviews?