Relationships Among Minimum Requirements, Facebook Likes, and Groupon Deal Outcomes

Abstract

Daily deal coupons have gained a prominent foothold on the web. The earliest and largest player is Groupon. Originally, Groupon deals were a mix of deals with a minimum requirement ( MR ) of coupon sales before a deal became effective and of deals without a minimum requirement ( NMR ). Eventually, Groupon stopped using MR deals. For Groupon and its retailer customers, might this decision have actually resulted in negative impacts for both parties (fewer coupons sold and lower revenue)? The structure of Groupon deals (including a “Facebook like” option) together with electronic access to the necessary data offered the opportunity to empirically investigate these questions. We analyzed relationships among MR , Facebook likes ( FL ), quantity of coupons sold, and total revenue, performing the analysis across the four largest retail categories. Using timestamped empirical data, we completed a propensity score analysis of causal effects. We find that the presence of MR increases Facebook likes, quantity of coupons sold, and total revenue at the time point when the MR is met and at subsequent 2-hour intervals over the horizon of deals. A key finding is that the initial differences observed when MR is met not only continue but also actually increase over the life of the deals.