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CASE STUDIES

Capterra Soldiers On
 

An online directory’s new strategy works—sort of.
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THE PROBLEM

In our September 2010 issue, we wrote about Capterra, an online directory of business software vendors. Company co-founders Michael Ortner and Rakesh Chilakapati faced a dilemma: whether to include reviews of their vendors' software on their website. Users of Capterra's online directory were clamoring for reviews to help them assess the software products listed. Ortner believed reviews would also help promote the directory. Chilakapati wasn't convinced. Capterra's revenue came from vendors that paid to be in the directory. Bad reviews could prompt vendors to pull their listings. Yet without some critical reviews, the founders agreed, the site's credibility would suffer. They decided to go ahead with reviews but put controls in place, such as allowing software vendors to verify that individuals submitting reviews were in fact customers who had purchased the software. That safeguard, they figured, would prevent rivals from posting anonymous negative reviews. At the time our story was published, Capterra's directory contained 2,000 reviews.

WHAT THE EXPERTS SAID

Patricia Seybold, CEO of Patricia Seybold Group, said Capterra had gotten off to a good start but needed to expand its reviews. Gene Alvarez, a vice president at Gartner, warned that Capterra's decision to let software vendors vet reviews would have a chilling effect on the willingness of users to post negative reviews. And Lane Becker, president of Get Satisfaction, argued Capterra should encourage customer discussion groups to share their thoughts and to offer tips on software purchased through Capterra.

WHAT'S HAPPENED SINCE

Capterra has seen the number of reviews on its website grow to 3,000. The share of negative reviews, about 15 percent, hasn't changed. Vendors with listings that now include reviews report higher sales via Capterra's directory than before the reviews were launched. There has been one disappointment, though. The founders were hoping the reviews might increase traffic to the Capterra site. But so far, traffic has remained more or less unchanged.

WHAT'S NEXT

Capterra recently created a badge that vendors can post on their websites that redirects visitors to Capterra's directory and its reviews. Soon, the company will let vendors carry full Capterra reviews on their websites. The founders hope that will promote Capterra's brand and bring more visitors to their website.

From the April 2011 issue of Inc. magazine




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