The goal of any business is to generate revenue. In order to make a profit, businesses need customers, preferably happy ones. If these customers are satisfied, then they are likely to return and spread the word to family, friends, neighbors, and co-workers.
History of Customer Feedback
At one point in time, the best ways for a customer to leave feedback about a service or product included anonymously placing a note in a comment box onsite or calling a customer service number. While some of these options for customer reviews still exist, people now primarily leave feedback online. It is easier than ever before for a customer to predict an outcome from a company before entering a credit card number.
In 1999, Epinions developed one of the first review websites of the dotcom era. Customers could leave and read opinions about various products. Additional customer review sites developed soon after. Some well-known examples that help with people’s travel, contractor, restaurant, and employment decisions include TripAdvisor, Angie’s List, Yelp!, and Glassdoor. Two types of customer review sites exist. They include those found on a business’s actual website (internal word of mouth), e.g., Amazon, and those located on a third-party site (external word of mouth), e.g., Yelp!. In a year or even six months from now, additional sites are likely to develop as the numbers of people shopping on the Internet continues to increase all over the world.
Why Are Customer Reviews Important?
A survey found that 88% of customers trust online reviews as they do recommendations from a friend or family member. An additional study discovered that 9 out of 10 customers use online reviews to help them make buying decisions. These relatively high numbers suggest that consumers want to hear from other consumers, even if they are strangers, about what they are buying and why they are buying it. The written commentary of customers is just as vital as the actual numerical score. What the manufacturers or business owners have to say about their products or services appears less trustworthy to customers.
Obviously, customer service ratings financially affect businesses in direct proportions. Generally, positive reviews increase revenues, and negative reviews decrease revenues. According to a 2009 study, one negative review is equal to approximately 30 lost customers. Most reviews fall in the very positive or very negative category, as most people do not leave feedback if they have just an ordinary or neutral experience with a business. And more often than not, customers feel most compelled to leave feedback after a negative experience.
Both internal and external word of mouth are important factors in gaining a complete picture of a business. For example, if restaurants think Yelp! is solely going to take care of the customer reviews for them, they might consider the increased value of appealing directly for customer feedback. In order to achieve and display online seller ratings, businesses also need to consider hiring a third-party reviewer site, such as eKomi, to aggregate their customer feedback.
The Complications of Customer Reviews
In the expansive world of the Internet, customer reviews are much more complex than “good reviews mean good business.”
Not just quality but quantity of feedback is helpful. Having balanced, wide-reaching reviews can help a customer make an informed decision. But, the reviews can also help businesses in a couple of ways. Every time a customer leaves a review on a business’s website, it increases web content and, therefore, the business’s ranking in terms of searches on Google, Yahoo, etc. The good news is that the business may start to outrank any competitors. Moreover, one study found that at least 50 reviews of a product can increase a business’s conversion rate, or the number of customers who visit the site and purchase products.
Because of the competitive nature of Google rankings, businesses may feel encouraged to write fake positive reviews. They may ask employees or acquaintances to spend an extra minute creating a fake account. These fake positive reviews, if undetected, can influence a customer’s purchasing decisions, just as real positive reviews do. But, if detected, due to typos and other noticeable factors, businesses can face devastating results, including high fines and loss of credibility with existing and potential customers. For example, in 2013, the New York Attorney General found 19 businesses guilty of fake reviews and fined them more than $350,000.
Higher quantity also means a higher chance of a negative review. Often, feedback is arranged chronologically, with the most recent first. This may mean a negative piece of feedback pops up before the others and is the first one customers see. Is this negative feedback a trend or an outlier? What kind of negative review is it—a deficiency in the company or a misunderstanding? How much will a customer scroll through the site to view all of the feedback?
Solving the Complications
Businesses can take control of their reviews in a number of ways and, therefore, appear more transparent to their customers wary of fraudulent behavior:
- Thoroughly vet before publishing reviews.
- Directly respond to negative feedback and address and/or rectify the customer’s issue. This can take place through a private messaging system. Keep in mind that negative feedback can be helpful, as it shows customers that your reviews are authentic.
- Encourage more feedback from real customers who otherwise might forget or not take the time to write a review by sending an automated email reminder after a completed transaction.
- If a lack of time and technology prevents the above, hire a third-party company. For example, eKomi has a customer feedback management team that moderates the reviews of businesses to make sure they are authentic and legally third-party compliant. Additionally, eKomi can aggregate the many reviews of a business, resulting in the seller rating, e.g., four out of five stars, that appears alongside business names when customers search online.
At the end of the day, customer reviews help a business improve its service and/or products, get to know and expand its customer base, and bridge the gap between business owners’ mission and customers’ actual experiences.