Online consumer reviews mean a lot to us today. They help us gain insight into the quality and performance of a product or service that we have little information about. While some people admit that they don't check consumer reviews, 90% of consumers agree that online reviews impact their buying decisions. In addition, 86% of consumers admit that they hesitate to make a purchase from a company that has negative online reviews.
Given these statistics, we can only imagine how desperately negative online reviews affect business revenue and client volume. It's no wonder why some business owners find solace in online review platform hate groups and forums.
It's fair to say that business owners have mixed feelings about online reviews. Some believe that reviews are beneficial and others disagree. While both camps argue about the value of online reviews, one question is lost in the noise: are all consumer reviews created equal? If we can answer that question, we must also ask what sets consumer reviews apart from one another, and if consumers should re-evaluate their approach come time to write their next online review.
A Numbers Game
There is a good reason why today's consumers rely on online reviews. Harvard business professor Michael Luca found that 70% of Seattle restaurants had been rated on Yelp. In comparison, The Seattle Times had only rated 5% of Seattle restaurants. Online review platforms are helpful because they leverage consumer volume within a city to provide us with comprehensive information about goods and services.
But, any business owner knows that the power to leverage consumers is a blessing and a curse. A large or small client base can help a business gain positive reviews and up its reputation. But, the exact opposite can happen too, which could allow consumers to destroy a business. Despite this, we hypothesize that the impact that a negative review has may differ according to industry.
For example, a restaurant may have tens to hundreds of patrons in one day or one week. Even if the restaurant received a few negative reviews in one night, they may also receive some positive reviews in that week. There is a much wider opportunity window for a restaurant to collect reviews because they have a high client turnover. This could reduce the impact of a few negative reviews as they appear on the company listing.
One California restaurant owner, Andrew Gruel, underlines this point. Gruel believes that one-star reviews helped shift his restaurant's reputation to a consistent four to five-star eatery. He says you can get buried by bad reviews, so it's a race to stop the bleeding. He stopped the bleeding' by improving the service and food. After he made certain changes, positive reviews came pouring in and they covered up issues from the past. Several restaurant owners can agree that although negative reviews are annoying, they can provide constructive criticism to help management improve food and service.
Another company chose to stop the bleeding' in a very different way. One Chicago renovation firm, Airoom, sent a legal notice to a past client demanding that they take down a negative review posted on Angie's List. Airoom was at liberty to revoke their warranty and sue their client if the client failed to remove the review, as stipulated in the fine print on the contract. Alas, Airoom revoked their 10-year warranty from the client.
Why are these two reactions to negative reviews so drastically different from each other?
Different Reactions, Different Industries.
It's difficult to predict how people will react when it comes to negative feedback. However, we think that a few conditions in each industry may have fostered these different reactions displayed by a restaurant owner and a building firm.
1. Client volume
Various industries experience different amounts of client volume. Take the home improvement industry, for example. A building or construction company may service fewer clients in one year (maybe 5 to 20). They may complete fewer annual projects because the projects have a longer timeline. They may provide very expensive services that few consumers can afford. And, they tend to offer one-time services per client (i.e. a kitchen renovation). Thus, home improvement professionals draw from a small client base to collect company reviews. In contrast, a spa, boutique, or restaurant may service tens to hundreds of customers in one day.
2. Price point
Home renovations are expensive. Some people may only be able to afford one a home renovation in their lifetime. This reduces the pool of clients able to afford home improvement company services. It also reduces the opportunity for returning customers. In contrast, consumers are likely to go to dine out in the same restaurant or others multiple times in one month. Renovation companies only get one shot with most of their customers, and it can be very difficult to redeem themselves if something goes wrong. A restaurant can easily offer a grumpy patron a "meal free on us" coupon and get them to come back for another experience.
3. High consumer expectations and high stakes
There is a lot at stake during a home renovation: time, money, assets, expectations, and emotions. One small mistake could put a client's assets on the line. Conversely, the chef at a restaurant can easily replace a meal if something goes wrong with little lost.
Homeowners must invest thousands of dollars into one project that could be a bust. They might not like the final product for subjective reasons, for example. On top of this, homeowners are emotionally involved in their homes. Homeowners may get exceptionally picky over small details that would otherwise be unimportant in other service industries. Because projects are so costly, homeowners may demand top-notch service across the board (which isn't an unreasonable request). Finally, reality TV shows on HGTV have created unrealistic consumer expectations that are easy to buy into, which makes for more disappointment when things fail to meet these (sometimes unreasonable) expectations.
Less Overall Client Reviews Influence Consumer Decisions
Fox News investigated how low client review numbers impact consumer behavior. They found that businesses with a small number of reviews (11-20) had a poorer rating in comparison to businesses with a high number of reviews (101 or more). Although businesses with high client volume may collect more negative reviews, they can still receive a higher average rating than a company that receives a smaller number of reviews.
Home improvement companies already have a smaller opportunity to collect client reviews compared to other industries, such as retail and restaurants. When you take into account that 40% of consumers form an opinion by reading between one and three reviews, it's easy to see how a single negative review can cripple a builder or construction company.
What do Industry Professionals have to Say?
We asked contractors who are listed on TrustedPros.ca about their opinions on this matter. They agree that negative reviews are crippling, and are easier to come by than positive reviews.
Eric Lavoie from Seven Pillars Custom Building Inc. explains how the home building sector is affected by online company reviews or a lack thereof. Eric says:
"Low client volume is definitely difficult for us. In addition, we have lots of customers that just won't write a review it's not their thing'. This creates challenges for us online. For example, we can have 3-4 projects that will carry us for 3-4 months of the year. But if no reviews are written, we have lost half a year of potentially positive referrals. So, when one bad review is posted online that year it will appear as though nearly 50% of our client experiences were negative, even if it's not an accurate representation of our services."
Another contractor on TrustedPros, Andrew Butler from Kerr Construction, explained how the home improvement industry has difficulty recovering from being dealt a bad hand of cards. Andrew says:
"The construction industry is full of crooks, so homeowners are ready to pounce on the keyboard at the first sign of trouble. I only wish as many clients were so quick to offer a kind word when the job was done well. In fact, less than 10% of our happy clientele are willing to share their thoughts on our workmanship. In sharp contrast, I would estimate, more than 50% of unhappy clients would be willing to share negative feedback. The deck is severely stacked against us in this industry. One bad review can hobble a company, even if they have done very good work for years. Sadly, it takes one review to ruin all of that good work.
What does this Imply for Homeowners and Contractors?
Consumers have every right to write a fair, comprehensive review about their skilled tradesperson, contractor, or builder. The hypothesis that consumer reviews impact industries differently should not push consumers away from voicing their feedback online. If anything, this information should prompt consumers to post more online reviews than ever before. Here's why:
- Home improvement companies tend to receive fewer consumer reviews. Less reviewed businesses have a poorer overall rating in comparison to more reviewed businesses. Thus, consumers can improve the review sample size that determines a company's reputation by submitting a performance review.
- Writing a consumer review may help good home improvement companies recover after one single negative review. Especially if the company has a history of doing amazing work.
- Writing more contractor reviews will also help their community identify the experts and make the best hiring decisions.
Despite the consensus that negative consumer reviews can cripple a home improvement business, consumers should still write negative reviews when they are warranted. It is extremely important to share negative experiences with the entire community.
Consumers must be mindful and honest when writing a negative review. Before blasting a contractor for their faults, try approaching them one-on-one about an issue. If you chose to write a negative review, make sure to focus on the contractor's work instead of them as an individual to avoid a libel lawsuit. Although businesses can sue for factually incorrect statements, defamation lawsuits that attempt to silence consumers (SLAPPs) do exist in America.
Negative reviews may be a nuisance for contractors, but 26% of consumers believe that it's important for a business to respond to its reviews. If done efficiently and effectively, 95% of those unhappy customers say that they might return to that business. And, if all else fails, bear in mind that 95% of consumers assume that a business is censoring or faking their reviews if it lacks some negative reviews.Posted by: Nicole Silver