Management

What Do Your Customers Think?

Why online business reviews matter and how to respond

Managing the reputation of a business is one of the more difficult tasks in the digital age. Reputation risk has been studied and analyzed for decades, both commercially and academically. But today, easy access to information, coupled with fickle consumer feedback and the fast pace of transactions present a disaster waiting to happen for any business that is not actively managing its reputation.

Second Most Important Factor

In today’s world, consumers expect to have access to reviews when shopping for products. They routinely compare and analyze various purchase options before deciding where to spend their money. Over the past decade, consumers have become increasingly more dependent on what others have to say, specifically those who have previously purchased the same brand of product or experienced a particular service offering. Power Reviews, a provider of user-content management strategies, found in a 2018 survey that consumers rely more on reviews by other consumers than from their own personal inner circles. The study found that 97% of online purchasers read through product reviews before deciding whether to buy. Of interest, 85% of those surveyed said they regularly scan through negative reviews before purchasing. More than a third of survey participants reported regularly perusing online reviews while standing in a store and making a purchase decision. The Power Reviews survey found that consumers consider online reviews as the second-most important factor in their purchase decision, with price being the first. Data show that websites that facilitate and display reviews are more likely to attract consumers and earn sales. The inverse also bears out, as 70% of consumers reported they won’t buy without first reading reviews. A similar study by Findstack found the average consumer reads between four and six reviews before deciding whether to make a purchase. The study also found that 58% of consumers are willing to pay a bit more to support a business with positive reviews.

Opinion Spam

At first glance, managing the content of consumer reviews seems beyond the business’s control. Of course, providing quality products with exceptional service should make for happy consumers who will share their satisfaction with others. Perhaps the best method for generating positive reviews is to simply ask for them. BrightLocal, a search engine optimization company, reports that 72% of consumers will leave online feedback when asked. Negative reviews about a business or its products can have a swift and direct impact on revenue. Unsurprisingly, mul-

tiple surveys show that consumers avoid spending money on products and businesses with bad consumer reviews. Even for businesses with a balance of good and negative feedback, those who ignore negative feedback tend to lose consumer trust. Research shows, however, that consumers view business responses to bad reviews as a favorable practice, provided the response is respectful and fact based. In other words, a polite and wellsupported response to a negative review can go a long way toward neutralizing the negative. Some business owners have resorted to posting fabricated feedback. They follow the temptation to counter negative reviews with positive ones, giving priority on their website to the latter. The term for this is ‘opinion spamming,’ the practice of creating undeserving reviews about a product or ...consumers consider service. It is certainly unethical, whether employees of the business write and post the online reviews as review or whether others are asked to create fake reviews. the second-most Companies like Fakespot offer artificial intelligence softimportant factor ware to identify fake reviews. Walmart, eBay and Amazon all in their purchase use the company’s service to monitor consumer reviews to detect and flag suspicious activdecision, with price ity. In all, such companies monitor billions of consumer posts being the first. in nearly real-time. Numerous companies like this offer an array of monitoring services to businesses of all sizes and even to consumers. Opinion spamming is also an unfair trade practice under the regulations of the U.S. Federal Trade Commission. A fake positive review generated by the business would fall within the definition of ‘advertisement’ under the Truth in Advertising requirements. Under those rules, advertisements of any kind are re-

quired to be truthful and not misleading. As promoted on its website, the FTC focuses its efforts on practices that affect consumers’ pocketbooks.

Neutralize Criticism

Unfortunately, some bad actors have resorted to posting fake negative reviews about competitors’ products and services. Opinion spamming a competitor is also an unfair trade practice under FTC rules. Moreover, false statements about a competitor likely constitute defamation— making public statements that are false and harmful to one’s reputation. So this risky practice could lead to a business answering to the federal government for trade violations while also facing the expense of defending itself in a lawsuit by the wronged competitor. Last October, the FTC published a special notice to U.S. businesses warning of the consequences of using fake reviews to bolster sales. As part of this effort, the FTC sent notices to more than 700 companies warning them of significant penalties if found using fake consumer reviews. The list of companies that received the special notice includes large online retailers, notable top consumer brands, food companies and service

companies. Under FTC rules, penalties can extend to $43,792 per violation, with each use of a fake review considEven for businesses ered to be a separate violation. with a balance of Ultimately, monitoring and responding to online reviews of a business has become an inescapable necessity good and negative for reputation management. Like all public presentations of a company, a feedback, those who measured, honest and considerate response to negative (or even positive) ignore negative reviews can go a long way toward neutralizing criticism and presenting a relatable impression to consumfeedback tend to lose ers. By avoiding any temptation to opinion spam, companies can create consumer trust. an approachable and genuine experience with potential customers. HCBM

Judith Wright is a clinical assistant professor of business law at Indiana University Kelley School of Business at IUPUI.

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