Your reputation precedes you: why online reviews

should be a key focus for business

OCTOBER 2016

We live in a digital age in which the public have a significant opportunity to voice their opinions about products, businesses and brands through online reviews.

While companies may or may not invite their customers to do this by offering the chance to leave reviews on their own websites, there are also a host of websites such as Yelp, Google, TripAdvisor, Twitter and Facebook that give the public a chance to make their views heard whether businesses like it or not.

In our report Tricky Waters: how retailers can safely navigate the world of online consumer reviews we demonstrated the potential of online reviews to impact a business’ sales, but what affect do they have on its reputation?

Based on new Populus research, this follow up to our original report aims to answer this question by taking a look at the extent to which online reviews shape public and consumer opinions of businesses and brands, as well as how their impact stacks up against other key opinion drivers.

We also discuss why businesses should be making online reviews a key focus and how they can use them to improve their products and services.

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Power to the consumer

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Tip one: Invest in online reviewsJust how important are reviews when it comes to forming an opinion about a large business? According to a recent Populus survey that asked 2,028 GB adults (18+) for their views on big business in general, the public trust other consumers more than they trust businesses themselves to give a reliable idea of what a business is like.

Aside from their direct dealings with a business, 43% of people say the opinions of family and friends are vital or very important when forming an opinion of a large business. In terms of importance, this is closely followed by comments about a business and/or its products/services on its website or an online review site (39%).

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1. Populus interviewed 2,028 GB adults 18+ between 7 & 8 September 2016

HOW IMPORTANT, IF AT ALL, ARE THE FOLLOWING TO YOU WHEN FORMING AN OPINION OF A LARGE BUSINESS?

Base: All respondents1

16%

20%

21%

39%

43%

78%

81%The quality of the business’ products or services

Customer service

The opinions of family & friends

Comments about the business and/or its products/services on its website or an online review site

Comments about the business and/or its products/services on social media

Its advertising

The opinion of journalists and other commentators

The fact that word of mouth is rated as being more important than other marketing activities indicates that businesses could be missing a trick by not making reviews a key part of their marketing function.

Our survey shows that just 20% of respondents say that advertising is vital or very important when forming their opinions. Of course, it is important to remember that this is a claimed view and, in our opinion, is not a signal to businesses that they should slash the amount they spend on advertising, especially since we know that it is a powerful vehicle for telling a brand’s story and shifting product. However, when it comes to building brand trust, it is certainly worth dedicating a considerable amount of resource to manging what people are saying about them online.

% of respondents who answered Vital/Very Important

According to a survey carried out by online review site TripAdvisor2, 93% of executives in the hospitality sector consider the improvement and management of online reviews as the most important factor affecting the future of their business. The survey results reveal that as an investment area, a review and reputation management strategy has become a higher priority for hospitality organisations than marketing and advertising, traffic acquisition and staff training.

Findings from our own research into the impact of reviews on fashion consumer behaviour also indicates that this could well apply to other industries. As shown in the chart opposite, we discovered that a considerable proportion of fashion consumers (59%) say their decision to purchase fashion items is influenced by online reviews. In fact, reviews ranked above TV adverts (43%), direct mail from retailers (43%), magazines/magazine articles (40%) and social media (30%).

The results from both studies make a strong case for companies investing in managing reviews, given that they are an influential factor in shaping public and consumer views about a brand. Businesses can take advantage of this and increase trust further by engaging with the views that are being shared about them online.

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2. http://www.reviewtrackers.com/research-shows-impact-responding-reviews-reputation-revenue/

3. Populus interviewed 2,013 GB adults between 6 & 7 July 2016

TO WHAT EXTENT DO YOU THINK EACH OF THE FOLLOWING INFLUENCE YOUR DECISION TO PURCHASE CLOTHES, SHOES, AND ACCESSORIES, IF AT ALL?

Base: All respondents3

15%

15%

27%

27%

30%

40%

43%

43%

59%

70%

78%

82%

88%Browsing in-store

In-store promotions

Online reviews

TV Adverts

Direct mail from retailers

Billboard adverts

Digital adverts

Browsing online

Recommendations from family & friends

Magazines/magazine articles

Social media

Radio adverts

Saw it on a celebrity

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Tip two: Build a reputation for honesty and transparency through reviews

4. http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1010&context=chrreports

Findings from a US study4 on online reviews conducted by Cornell University earlier this year, showed that simply letting customers know that your organisation welcomes their opinions and thoughts on customer experience can give you an edge over your competition. Engaging with reviews publicly may also help businesses to build their reputation for honesty, an attribute valued by the public, especially in a climate in which examples of businesses partaking in shady, underhand conduct often surface in the media.

Our research indicates that where honesty is concerned, these is considerable disparity in how the public would like big business to behave and how they are perceived to conduct themselves. The findings show that 56% of people think operating in an honest and transparent manner should be viewed by big businesses as one of their top three most important roles. In fact, it is deemed by the public to be more important than providing the service people need (46%) and paying tax (45%). However, just 28% of people think that large UK businesses currently think that operating in an honest and transparent manner is one of their top three most important roles.

Engaging directly and effectively with the public and consumers through online reviews could be an effective way for businesses to close this gap and align their behaviour with public expectation. Indeed, 64% of people support companies including consumer reviews on their websites and/or linking to independent review websites from their own website or apps. Businesses that do so, and do it well, could find themselves viewed in a more favourable light than their competitors, having shown that they value their customers’ feedback and are willing to acknowledge it out in the open.

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Tip three: Make the most of feedback

Whilst our research shows that word of mouth is influential in shaping public and consumer attitudes towards businesses, other factors come out on top as the key drivers of opinion. In fact 81% say the quality of a business’ products or services is vital or very important when forming an opinion of a business and 78% say the same of customer service. These are both areas that could benefit from the effective management of online reviews.

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IN THE LAST REVIEW YOU WROTE ON A FASHION RETAILER’S WEBSITE, WHAT DID YOUR REVIEW FOCUS ON?

Base: All respondents who have written a review of an item of clothing, pair of shoes or accessory they have purchased on a clothing retailer’s website

13%

16%

27%

29%

32%

34%

58%

84%Quality

Fit

Likeness to online description

Ordering process

Price

Delivery

Customer service

Care

Reviews are an excellent source of feedback which, if properly monitored, could alert businesses to issues with the products or service that customers are dissatisfied with. This is certainly the case in the fashion industry; according to our study over a quarter (27%) of fashion consumers said the last review they wrote was on customer service, while even more consumers wrote reviews about the product itself (quality, 84%, fit, 58%).

Businesses can use this valuable insight to shape strategies for improving areas that are key opinion drivers, such as product quality and customer service. This in turn will help to build a reputation as a business that not only values the opinion of its customers but also uses feedback to inform a consumer-driven approach.

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Tip four: Respond to reviews

As well as carefully monitoring reviews and using the information provided by customers to make improvements, responding to reviews in the right way – especially the negative ones – is essential.

We are not advocating that businesses respond to every review posted about them. In fact this is not advisable. This is according to results from Cornell’s study on hospitality reviews, which indicates that once businesses start to respond to more than 40% of reviews, revenues actually started to decrease. The researchers suggest that it is best to avoid template responses and focus on giving substantive, meaningful responses to negative feedback.

Our study on online fashion reviews reveals that this is extremely important to fashion consumers, 70% of whom say they’d be reluctant to shop with a retailer that handles negative reviews badly. According to the results 68% of consumers advise responding quickly, showing that you value the customer and that you care about the experience they have had of your business. 48% of consumers also recommend responding publicly, which is advisable as a means of demonstrating to other customers that you care about providing the best possible customer service, a key driver of reputation. However, when responding to reviews it is important to remember that revealing too much could have serious consequences. Be sure to have a clear policy in place for responding to reviews, for example you may choose to move the conversation offline after one or two public interactions.

Another said:

If responding quickly and publicly was enough to avoid the reputational disaster that might have resulted from an accident that resulted in some very serious injuries, surely a similar approach should be applied to responding to negative online reviews in order to prevent the public and consumers from forming a negative view of businesses.

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Effectively, negative reviews are a corporate reputation crisis on a miniature scale. When a scandal breaks, any comms team worth their salt will have a strategy for managing the crisis effectively enough so that the organisation in question can emerge with its reputation as unscathed as possible. Take the Alton Towers’ Smiler crash that left four riders with life threatening injuries. Nine months later the reopening of the ride was met with far less negativity than one would have expected. Why? Because Alton Towers’ parent company, and its CEO Nick Varney, did everything right when it came to communicating its way out of the crisis.

In fact, according to Populus research, it is considered by business journalists to be the best example of a corporate crisis that was well handled by the organisation, ranking above the likes of the Talk Talk data hack and Volkswagen’s emissions scandal.

When asked why the scandal was so well handled, one business journalist said:

“They acted quickly saying that they would do whatever it takes and provide compensation without quibbling.”

“They [Merlin Entertainments] put their hands up and apologised and were seen to wring their hands publically and be genuinely sorry.”

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Tip five: Size mattersCan reviews be relied on if there are only five of them and they’re 3 years out of date? No matter how glowing they are, we would suggest not. In fact where business’ online reputation is concerned, size is key in making the public and consumers feel they are basing their opinion on a trustworthy source. Businesses should therefore look to increase their number of online reviews by prompting people via email or offering encouragement in the form of incentives such as money off next purchase or entry into a prize draw.

Of course, businesses may feel concerned that by encouraging people to leave reviews they are increasing the risk of being publicly criticised. However, the odds are that reviews will in fact be more positive in sentiment as, according to our survey, people are more likely to praise businesses via online reviews than they are to complain about them (46% compared to 30%).

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What you need to remember about online reviews

According to Populus reputation expert David Racadio:

“Online reviews are important because they demonstrate that your business cares. As people feel increasingly isolated, disoriented and cast adrift in the vast economic currents driving globalisation, they are becoming more and more critical towards the multinationals which propel these currents. In a world where people are becoming hostile toward big business because they feel insignificant, a good online review programme is both a personal and a public way of rebuilding reputation by re-connecting with customers who feel unloved.”

Having explored online reviews, both from a sales and now a reputation perspective, we have uncovered three key themes that businesses and brands should keep in mind when dealing with online reviews.

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Invest

According to the public, word of mouth is more important than traditional marketing activities such as advertising when forming an opinion of a business. If they haven’t already, businesses should be considering dedicating more budget and resource to managing and perhaps even incentivising online reviews.

1 2 3Engage Learn

Companies that engage with online reviews demonstrate to customers and the public that they welcome and value their opinions and feedback. It is especially important for businesses to engage with negative reviews. Responses should be quick but also carefully considered and regulates so as not to cause further problems down the line.

Online reviews are a valuable source of insight that could be used to inform strategic and operational changes design to improve key drivers of reputation such as product quality and customer service.

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