The Good News About Bad Reviews

by James A. Martin

The Good News About Bad Reviews

Many small e-tailers worry bad reviews posted online by unhappy customers will seriously hurt their business. The truth is, negative reviews don't happen that often. And even when they do, they can actually be a good thing for e-tailers — and their customers alike.

Only 25 percent of online retailers have incorporated customer reviews on their e-commerce sites, according to a January 2007 Forrester Research report. The low adoption is because many e-tailers fear losing control over their marketing messages, said Sucharita Mulpuru, senior analyst with Forrester Research. E-tailers are concerned negative reviews of one product will hurt sales of other products they offer, damage their brand and reputation, or both.

In reality, bad reviews are infrequent, said Andy Chen, founder and chief executive officer of PowerReviews Inc., which provides customer review services to its e-tailer clients. The average star rating among PowerReviews clients is 4.2 stars out of five, Chen said, with 5 being the best. Eighty-eight percent of all customer reviews are 4 or 5 stars.

Similarly, at Bazaarvoice, which also provides a customer review system for e-tailers, the average customer review is 4.3 stars out of 5, said Brett Hurt, founder and CEO.

And in the Forrester Research survey, in which 4,368 customer reviews were evaluated, only 16 percent were negative, said Mulpuru. Even then, the negative reviews were generally considered helpful to consumers.

At the same time, consumers increasingly rely on reviews posted by other buyers. According to an August 2006 Jupiter Research study, 77 percent of online shoppers use reviews when making purchasing decisions. As a result, consumers have grown to expect reviews on e-tail sites.

The bottom line: E-tailers who don't encourage customer reviews because they fear negative comments are missing out on a number of potential benefits. They include:
  • Useful feedback. "Reviews can provide valuable feedback that e-tailers should listen to," said Mulpuru. Reviews are an easy, affordable way to find out what your customers really think, which can enable you to spot problems with products, shipping, or customer service before they get out of hand.

  • Increase sales. Online shoppers are notorious for returning products, noted Hurt. The reason: Shopping online doesn't provide the same tactile experience consumers get in brick-and-mortar stores. Sophisticated tools such as 3D product views help enhance online shopping, but customer reviews help close the gap too. "There is nothing more powerful than being able to learn about a product through someone else's experience with it," said Hurt. In turn, this helps e-tailers increase sales.

  • Decrease returns. Reviews can help set customer expectations properly, which results in fewer returns. For example, a client of PowerReviews sells a compact, portable air conditioner on its site, said Chen. Initially, the air conditioner earned positive reviews. But soon, negative reviews began appearing, in which customers complained the air conditioner couldn't cool a room below 63 degrees. Another reviewer responded that the air conditioners ship from the factory in safety mode, which prevents cooling below 63 degrees — a fact that wasn't clearly mentioned in the product's manual.

    The reviewer told others how to turn off the safety mode. "After that, the air conditioner received only positive reviews," Chen said. "If that negative review and the response to it hadn't appeared, the e-tailer would have faced a lot of returns from unhappy customers and wouldn't have sold as many of those air conditioners."

  • Increase credibility and customer loyalty. Having negative reviews sprinkled among positive ones gives your company credibility among consumers. "If all your reviews are positive, consumers will think they're fake or biased," said Chen.

The ability to read positive and negative reviews from other consumers helps customers make more informed buying decisions, and that, in turn, will help keep shoppers returning to your site, Chen added.
How to Get Customer Reviews
Yelp.com, Citysearch.com, and other sites provide a forum for consumer reviews of local retailers, service firms and other companies. Small e-tailers selling through Amazon.com or eBay receive feedback from customers. In addition, small e-tailers can also devote space on their own Web sites for customer reviews.

Facilitating and managing reviews on your site can be time-consuming. Third-party services can take the pain out of the process. PowerReviews provides its product-review technology to merchants at no cost. (The company makes money by driving consumers to its Web shopping portal, Buzillions.com, where it receives a sales commission.) PowerReviews' target customers sell $5 million or more per year or about 4,000 orders monthly, Chen said. While that might seem to eliminate smaller e-tailers, Chen said Mom & Pop shops still have low-cost options for getting product reviews on their sites.

Many product manufacturers are willing to share their product reviews with small authorized e-tailers, Chen explained. PowerReviews will facilitate the sharing between the manufacturer and e-tailer at no cost to the e-tailer, he added. However, the e-tailer will need to build a link to the PowerReviews system and add space to its existing Web site to accommodate the reviews, which is often about 20 hours of a Web developers' time, according to Chen.

Also, you may be able to share reviews with other e-tailers who sell similar products. For example, PowerReviews aggregates user reviews from a variety of small bicycle shops, so that each can share their customer product reviews to have a wealth of reviews posted on their own sites.

Bazaarvoice Inc. charges a minimum of $2,000 a month for its customer review technology services, which is targeted at retailers with $5 million or more per year in sales, said Hurt. Bazaarvoice reads every review at least twice to filter out those that focus on customer service rather than on the products themselves, he explained. Customer service-related reviews represent a small minority — less than 10 percent — he added. Those reviews are forwarded to the appropriate Bazaarvoice e-tailer client, so the client can reach out to the unhappy customer and make amends, if possible.

What to Do About Bad Reviews
What should you to do to reduce the chance of a bad review, or, help minimize the damage when it appears?
  • Proactively solicit reviews from all customers. Unhappy customers tend to be the most vocal. Encourage all customers to post reviews. That way, any negative comments will be balanced with positive ones, said Chen.

    Listen with an open mind and use the opportunity to turn an unhappy customer into a happy one. "Some retailers will offer customers free products if they retract their negative reviews," said Mulpuru. Of course, the danger is that you will inadvertently provide customers with an incentive to complain, so don't go overboard.

  • Set boundaries. If you invite customer reviews on your site, set up rules that define what is acceptable and what isn't, advised Hurt. For example, let consumers know that comments including profanity, personal attacks, sexist statements and such aren't allowed.

  • Go for quantity. Not having enough customer reviews can be a problem, warned Chen. "The consumer may feel that because there aren't many reviews on your site, other people aren't buying your products for some reason," he explained. If you're only getting one or two reviews a month, Chen said, it's probably better not to even offer reviews.

But there's a risk to this strategy. If your site doesn't offer reviews, consumers may "go to your competition, because it will look like you have something to hide," said Hurt.

The Best Defense
Above all, Mulpuru said the best defense against negative reviews is to consistently "offer good products, good service, and a full disclosure of a product's details during the selling process."

San Francisco-based James A. Martin has decades of experience covering technology and is a frequent contributor to ECommerce-Guide.com.

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  This article was originally published on Wednesday Oct 17th 2007
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