Online reviews are a double-edged sword for business owners. On the one hand, many consumers rely on positive online reviews to help them choose products and service providers online. However, a negative review can be extremely damaging. A single one-star review can make customers questions the other five-star reviews they saw; especially since some retailers have been known to use fake reviews. A few negative reviews are unavoidable in the world of business (you can't make everyone happy all of the time), but a recent study previewed in the Harvard Business Review revealed a secret to getting better online reviews.

Two professors recently published the results of their analysis of more than tens of thousands hotel reviews and discovered a secret to increasing the average review score of a business. The data is based on reviews from TripAdvisor, but the principles gleaned from the study can be applied anywhere there are reviews online.

Many consumers and business owners tend to think of reviews as a one-way communication. The customer leaves the review, and often, that's the end of it. However, customers have the ability to change their reviews and many platforms allow businesses to communicate with the people who leave reviews. This interaction creates an opportunity to improve review scores by reaching out to dissatisfied patrons.

Most marketers should be aware of the ability to talk to unhappy reviewers, but even professionals can underestimate how effective this sort of communication can be. In the data set Assistant Professors Davide Proserpio (University of Southern California Marshall School of Business) and Giorgos Zervas (Boston University Questrom School of Business) analyzed, roughly one-third of reviews received a response, and nearly half of all hotels respond to reviews. The researchers found that when hotels start responding, they receive 12 percent more reviews and their ratings increase, on average, by 0.12 stars.

While the increase in average star rating may seem small, it's important to keep in mind that it's only a five point scare and TripAdvisor rounds average ratings to the nearest half star. So this small increase can easily mean the difference of half a star on the chart customers see when they first look at a businesses rating.

As the researchers illustrated, "A hotel with a rating of 4.26 stars will be rounded up to a 4.5, while a hotel with 4.24 stars will be rounded down to a 4. Therefore, even small changes can have a significant impact on consumers' perceptions. Approximately one-third of the hotels we studied increased their rounded ratings by half a star or more within six months of their first management response."

To eliminate other possibilities for the increase in review score, the researchers used Expedia ratings as a control group. This showed that when hotels started responding on TripAdvisor, their only TripAdvisor ratings went up; their Expedia ratings stayed the same. If the increase in review score had been due to some other marketing or improvements the Expedia ratings would have improved as well.

Taken together, the data clear suggests that improved ratings can be directly linked to management responses to online reviews. It can even have additional benefits besides improving overall scores. When management started replying to reviews, it led to a sharp decline in negative reviews and more constructive criticism in the situations where reviews were negative.

In their conclusion, the researchers give a good summary of the value of their research. "The rise of review platforms has left firms with a diminished sense of control over their online reputations, leading to questionable practices such as soliciting positive reviews in exchange for perks -- or even writing fake reviews. While negative reviews are unavoidable, our work shows that managers can actively participate in shaping their firms' online reputations. By monitoring and responding to reviews, a manager can make sure that when negative reviews come in -- as they inevitably will -- they can respond constructively and maybe even raise their firm's rating along the way."

This kind of engagement with reviewers takes commitment and time from management, but the results show that it's worth the expense. Online reviews are the cornerstone of a brand's online reputation, and anything that can improve metrics like review score is worth the effort. You won't be able to make everyone happy, but even then, the brand looks better in the eyes of people watching simply by taking the time to reply.

For more recent studies that help business owners and marketers, read this article on the latest data on trends in coupon use.

Published on: Feb 26, 2018