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The Good News About Bad Reviews

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Posted October 17, 2007 By James A. Martin     Feedback

Customer reviews are becoming a must-have to stay competitive. We explain why, show you how to set them up, what it costs and how to manage unflattering feedback.

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.
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