Recently, Caroline Beaton, writing for the New York Times, explored the topic of whether or not to trust a shopper or user review. While we’ve explored how a small business owner should respond to (or not) reviews, we thought Beaton’s article provides some insight to customers, not just sellers, about who writes reviews and why even the Great Wall of China only receives 4.4 stars. Here are some interesting facts and suggestions from her article.

Reviews are read by a large audience

82% | Percentage of American adults who say they sometimes (or always) read online reviews for new purchases.
66% | Regular review readers who believe reviews are “generally accurate.”

People believe negative reviews more than positive ones (and why)

There are many more positive reviews than negative ones which creates a “scarcity of negative reviews” that we associate with value, according to Duncan Simester, a marketing professor at the M.I.T. Sloan School of Management. “The infrequent nature of negative reviews may help to distinguish them from other reviews,”

According to a study published in 2014 by The Journal of Marketing Research 

4.8% | Percentage of one-star reviews in an analysis of a large-scale database of Amazon reviews with a verified purchase
59% | Percentage of the reviews in the study that had five stars

Reviews are subjective, and the tiny subset of people who write them aren’t average. People who write online reviews are more likely to…

…buy things in unusual sizes
…bake returns
…be married
…have more children
…Be younger and less wealthy
…have more graduate degrees than the average consumer
…are 50 percent more likely to shop sales

How to better understand customer reviews

Weed out the most extreme reviews

It’s better to look for three-star reviews because they tend to be more moderate, detailed and honest. Unfortunately, research suggests that most of us often do just the opposite: We prefer extreme reviews because they’re less ambivalent and therefore easier to process.

Look for reviews from someone that seems like you

A bicycle may be for commuters, off-road biking or a wide range of other types of uses. Look for reviews written by someone who is at your level of experience and needs.

Pay attention to contextual details and specific facts rather than reviewers’ general impressions and ratings.

The number of stars someone selects often has “very little to do with” their review text. People have different rating standards, and written explanations are inherently more nuanced.

Two clues for filtering out fake reviews

1. Look for long reviews. According to research, readers are more accurate about identifying fake reviews the longer the review is.
2. Fake reviewers tend to have a fewer number of total reviews. Why? Someone who’s paid to write reviews probably isn’t doing a lot of writing under the same name.

Photos | Getty Images

On my way to work today, I stopped by my favorite locally-owned, independent coffee shop. In addition to serving great tasting coffee, it’s one of those places like the 1980s sitcom”Cheers” —  everyone knows your name (and order). Everyone, that is, except the barista who was working the morning shift for the first time. When picking up my coffee, I realized there was a mistake. “I’m sorry, I must have forgotten to ask for hot milk.” At that point, I felt as if I had changed channels to the 1995 episode of Seinfeld featuring the Soup Nazi.  “Next time, you need to order your milk when you are supposed to,” he snapped. All I could think was, “Has this guy ever heard of Yelp?” But no, I did not give the shop a bad review. However, I did send a friendly email to the owner, an acquaintance of mine. 

We live in an era of customer reviews. We’ve shared an extreme example of how NOT to handle reviews. And sites like TripAdvisor and Yelp have guidelines for responding to poor reviews.

But do these guidelines for handling negative reviews actually have any impact, positive or negative, on a company’s online reputation? To find out, David Proserpio, an assistant professor of marketing at USC’s Marshall School of Business and Giorgos Zervas, an assistant professor of marketing at Boston University Questrom School of Business, analyzed tens of thousands of hotel reviews and responses from TripAdvisor.

Management responses are common on TripAdvisor

33% | Percentage of reviews that receive a response from the business
50% | Percentage of hotels that respond to review

“On average, the reviews improved by 0.12 stars,” the professors write in a recap of their study that appeared in the Harvard Business Review. (1 star = terrible, 5 star = excellent)

“While these gains may seem modest, TripAdvisor rounds average ratings to the nearest half star: A hotel with a rating of 4.26 stars will be rounded up to a 4.5, while a hotel with 4.24 stars will be rounded down to a 4. Therefore, even small changes can have a significant impact on consumers’ perceptions.”

12% | When hotels start responding, they receive 12% more reviews and their ratings increase by 12%
33% | Percentage of hotels studied that increased their rounded ratings by half a star or more within six months of their first management response

(In their article, the professors explain how they established a causal relationship between responding to reviews and improved ratings.)

The research shows that improved ratings can be directly linked to management responses. And, perhaps surprisingly, they also found that when managers respond to positive reviews, it has the same benefits as when they respond to negative reviews.

Additional findings of the research

• Consumers who read previous management responses are less likely to leave short reviews than consumers who had not.
• Once hotels started responding, they experienced a sharp drop in the rate of short negative reviews.
• While longer negative reviews still cropped up, these reviews often contained constructive feedback that could be useful to managers trying to make changes.

Quote

“While negative reviews are unavoidable, our work shows that managers can actively participate in shaping their firms’ online reputations. By monitoring and responding to reviews, a manager can make sure that when negative reviews come in — as they inevitably will — they can respond constructively and maybe even raise their firm’s rating along the way.”

Davide Proserpio and Giorgos Zervas

istock

Also on SmallBusiness.com

How NOT to Handle Negative Yelp Reviews

“Non-disparagement clauses” designed to prevent customers from writing negative reviews about a business are likely to become a thing of the past, according to The Consumerist. Companies that have such clauses buried in their contracts or terms of usage agreements will have those voided by bipartisan-backed legislation that was passed by voice vote Monday (September 12, 2016) by the U.S. House of Representatives. A version of the legislation was passed unanimously by the Senate last December.

If you haven’t heard of non-disparagement clauses, some business owners have inserted them in customer contracts and website terms of usage (like the ones everyone clicks “I agree” without reading) with the belief they will prevent customers from writing negative reviews about the business. (Here’s an example shared in an article from SmallBusiness.com  about what can go wrong if a business owner tries to extend the non-disparagement agreement to friends of the customer.)

Why Congress took up the issue of non-disparagement clauses

Examples of non-disparagement clauses that were so over-reaching, it has made voiding them easy for lawmakers.

• A Texas pet sitter sued a customer for $1 million over a negative Yelp review.
• Online retailer KlearGear issued a $3,500 penalty after someone wrote a truthful but negative online review
• Cellphone accessory sellers have threatened to fine customers $250 for even threatening they’d post a negative review
• An apartment complex claimed to hold the copyright on all tenants reviews and photos of the property

Status of the legislation

As both the House of Representative and Senate versions of the law have near-identical texts and both chambers passed the bills with unanimous voice votes, a reconciliation of the two should pass easily. At that point, it would go to the White House to be signed into law by the President, who has indicated support.

Why is this good for businesses?

A bad review–especially one that is incorrect–is stinging. But attorney Paul Alan Levy from Public Citizen, who was involved in both the KlearGear and Texas pet sitter cases, told the Consumerist that passage of the legislation is also good news for businesses that do not need to paint a false picture of themselves by suppressing truthful criticisms. Businesses are harmed by competition from those companies that paint a fraudulent picture of themselves by using non-disparagement clauses.”

Also on SmallBusiness.com

How NOT to Handle Negative Yelp Reviews

Yelp Releases Real Time Alert & Response App, Yelp for Business Owners

VIA | The Consumerist

HT | Lifehacker.com

Thinkstock

Amazon is changing the formula that determines the ranking and display of product reviews. According to CNET, the approach includes a new machine-learning platform to surface newer and more helpful reviews. “The system will learn what reviews are most helpful to customers … and it improves over time,” Amazon spokeswoman Julie Law told CNET.

Background

As we’ve explored many, many times, Amazon can be both a friend and foe of small businesses. And it’s often difficult to tell when they are either. For instance, while it may seem counter-intuitive, newly announced changes in the way Amazon ranks and presents reviews can be good for businesses that may compete against Amazon.

Shopper reviews have been one of the most powerful competitive advantages Amazon has had over traditional brick and mortar retailers. Yet with small, local retailers, the knowledge of the staff can often out-rank the opinions of Amazon users. And, as we’ve explored before, there may even be some “common enemy” factors at play. Over the last 15 years, Amazon has provided an opportunity for local, independent retailers to compete against the big box chains.

Here are some reasons that better ranking and relevance to an individual user of Amazon may help a small retailer:

Amazon isn’t just a retailer, it’s a marketplace

One of the practices of Amazon that is perplexing to even savvy followers of the site is the way in which the website provides customers with the option to purchase products from its competitors. In some cases, it even sells the house brands of its competitors. It also serves as a fulfillment service (handling transactions and logistics, including warehousing, packing and shipping) for tens of thousands of businesses, both large and small.

Another way that it is a marketplace is the way in which it sells advertising to its competitors. As companies like Alibaba have shown, selling advertising is a high margin business model for a marketplace.

In other words, having more relevant and reliable reviews can help surface products for a customer who may end up purchasing it from a small business, without ever leaving the Amazon.com website.

Showrooming vs. Webrooming: Some customers use Amazon to research what they buy locally

Showrooming, the customer-practice of using a smart phone to check online prices while in a retail store, can have major negative effects on a small business if it takes place too often. However, there is research that suggests a high percentage of shoppers do the opposite: they use websites like Amazon.com to practice “webrooming,” doing research online and then purchasing the product in-store.

Uncovering fake reviews

Like Google’s efforts to stamp-out the types of SEO practices that are designed to fool its algorithms, Amazon’s new ranking approach is clearly designed, in part, to stamp out the fake reviews that are intended to game Amazon. Amazon, like Yelp, has even sued companies that promise to improve a product’s reviews.

Having honest reviews of products in the database of what has become one of the most influencial shopping tools the world knows, even when shoppers ultimately buy the products elsewhere, is beneficial to the marketplace for any product.

But Amazon is still the competition

But no matter how much the changes in ranking of reviews may help or hurt small businesses, it’s important to remember: Amazon is constantly moving into areas where it competes head-to-head with local, small businesses. And it is constantly looking for other ways to turn small businesses into customers.

Also on SmallBusiness.com: How to Respond to a Negative Review on Yelp | How NOT to Handle Negative Yelp Reviews.

As first reported by ArsTechnica, the company being sued has operated under three names (Revleap, Yelpdirector, RevPlay). According to the lawsuit, the self-described “reputation management” company claims to use software that helps it “proactively generate a large number of 4 and 5 star reviews from your customers in a way that makes them stick to the front page of Yelp.”

“Such claims are scams,” said Yelp’s Vince Sollitto in a post on Yelp’s official blog. “But some business owners unfortunately fall for them and end up paying dearly, both with their bank accounts and their online reputations.”

According to Sollitto, the types of tactics RevLeap says it uses are violations of Yelp’s terms of usage and if used, “can put small businesses at risk with respect to our Consumer Alert program and federal and state regulators who often crack down on businesses that try to artificially inflate their online reputations.”

Yelp’s lawsuit claims that Revleap has engaged in trademark violation, unfair competition, and breach of contract, among other claims.

“We hope that taking action against Revleap will put a stop to their misleading practices and also help businesses distinguish between companies that are playing by the rules and those that are using Yelp’s name to make a dollar by taking advantage of unsuspecting small businesses,” said Sollitto.

(For how you should respond to a negative Yelp review, see the advice we shared earlier.)

In a misguided attempt to prevent negative reviews from the extended guest list of couples who rented the hotel for a wedding, the owners created a policy that required the bride and groom to pay $500 for each negative review anyone in the wedding party may post on the internet.

Until it was taken off their site, the owners even posted their $500 fine warning on their website. (Thanks to Archive.org, the screen grab above still appears here.) From the policy, one can sense the frustration the innkeepers had from getting negative reviews by guests who were staying at the hotel for the wedding, but who may not have been familiar with how real inns are different from Hampton Inns. (We get it as we’ve seen fondue restaurant reviews where customers complain about having to cook their own food.)

Nevertheless, when the internet finally discovered the policy, it responded with hundreds (now over 800) negative reviews and humorous barbs. Of course, this being the internet, the humor quickly devolved into a competition to see who can shame the innkeepers the most. Crude photographs, threats and over-the-top outrage (of the first world kind) ensued.

We really hate to see a small business make such a mistake. We’re imagining someone like Bob and Joanna Loudon from the 1980s TV sitcom, Newhart. People who run guest houses are the last folks we can imagine to draw the ire and outrage of the internet. We know how much the inn must be a labor of love for the owners. Reading a negative review must have been the equivalent of someone calling their baby ugly. They are now getting punished for loving their business so much that they did something stupid (very, very stupid) to say, “our baby’s not ugly…but you are.”

Nevertheless, let’s all take a deep breath and use this event as another chance to learn how not to react to a negative review on Yelp.

Prediction: Yelp will remove many of the reviews that don’t comply with its community guidelines. Friends and fans of the inn will start posting positive reviews. The hotel will start getting bookings from all over the world due to what now seems like horrible publicity.

(Update: Later on Tuesday [the day this was oringinally posted], the hotel owners issued a statement claiming the policy had been a joke and that an employee who tried to enforce it was not clued in on the intended humor. Also, as predicted, Yelp has begun moving reviews [now up to 3,000] to the “not recommended” section of a business entry where it places reviews that don’t meet the criteria of its terms of use.)

(via: BusinessInsider.com)

Turns out, having accurate local business listings is worth billions and billions of dollars.

One of the biggest players in the local listings industrial complex is Yelp.com, the review site that small businesses sometimes love (when they generate lots of new customers for the business) and hate (when someone posts a negative review about them).

Recently, Yelp had the chance to feel the sting of such a negative review when a study claimed that Yellow Page sites related to SuperPages.com (Dex) have more accurate local listing data than Yelp.

Yelp did what it recommends to a business when it gets a negative review: “If you feel a public comment is necessary, present your case as simply and politely as possible.” In other words, they conducted their own research.

(Spoiler alert) The results were precisely the same as when a local business gets its employees to do a study of whether or not a customer was right when he or she posted a negative review. According to research conducted by Yelp employees, Yelp has better local listings than anyone but Google. So, there, Superpages.com.

As I believe in self-serving statistics about as much as I do a Yelp review posted by the daughter of the business owner, I will skip questioning the methodology of Yelp’s study. But I will note they chose establishments from “best of” lists appearing in local publications, skewing the studied group in the direction of companies that have mastered the art of using the internet to vote them on such lists.

Disclosure: I love Yelp. I once even had a review named “review of the day.” Another disclosure: I’ve never used SuperPages.com.