FreshNetworks Blog

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In a world of perfect information, why should anyone trust adverts?

If you can uncover the experiences of real buyers before you make a purchase, then it would be crazy to ignore them.

That’s why ratings and reviews have become the no-brainer of social media for retailers. And it’s also why they are a key element in the social media strategy of other brands and companies.

I’ve just been reading the most recent report by TrendWatching (the same people who create the excellent Springwise newsletter) and it’s focussed on the rise of reviews and their displacement of the power of advertising. There’s little especially new in the report, but it has a few good reminders of the importance and power of this trend and a couple of points towards the future:

• 70% of online consumers trust opinions posted online [Neilsen]
• For the generation growing up with the web “reviewing will be a way of life forever“
• Real time reviews will grow in importance (Twitter and Google’s new search point to that)
• Reviewers like me – it will become easier to find people whose opinions are likely to match your own

And there was also a healthy wake-up call for those who are anxious of allowing review for fear of negativity: “bad reviews are not the problem, but a symptom”. If people are saying negative things, you probably need to listen, or your business will suffer.

Another reason not to worry about bad reviews is that most people are generous reviewers.  See this previous post for more on Why Reviews Lie.

If you need help implementing ratings and reviews on your site, then do get in touch with FreshNetworks. Ratings and reviews are just one of the many social media tools in our software platform.

Ratings and reviews lie. Simple, subtle lies, but lies all the same. And I suspect most people will never know.

This is Part2 in a series about Ratings and Reviews. To read Part1 click on: Introduction to Ratings and Reviews

“Professional” reviews

The first time I realized what a con ratings could be was when I visited Dubai. I was travelling with a group of friends and one of them booked the hotels. It was quite a surprise to hear we’d booked into a 5-star hotel for what seemed like a 3-star price. It transpired that this was not because my friend had negotiated a great deal, but because hotel stars in Dubai are dispersed as liberally as banking bonuses. Dubai is the land of the 7-star hotel and I’m afraid that has nothing to do with the Burj Al Arab being better than the 5-star Carlyle in New York or Cipriani in Venice.

Thankfully, one of the great things about online consumer-generated Ratings and Reviews is their potential to overwhelm organisational bias assuming a large number of “real people” comment. However even apparently unbiased people give biased reviews. Alongside a trick of averages, these biases help cloud the validity of ratings and reviews. 

So how do online ratings and reviews lie?

There are four key ways in which ratings and reviews lie. There may be more but these are the ones that jump out at me.

1. There is no “zero” score.
Ask most people “When is a product good or bad?” and they’ll say above 2.5 is good and below 2.5 is bad. The assumption is that 2.5 is the mean average score that can be awarded. However that’s simply not the case. The vast majority of five-point scales force you to allocate 1,2,3,4,or 5 stars. If you thought a product or service was rubbish, you cannot give it zero; that does not count as a rating. As a result the mean score that can be awarded is 3 not 2.5. This is great for retailers who have ratings and reviews on their site as most items will appear to be better than average even when they are not.

2. Self-selection bias in ratings and reviews
There are three kinds of purchase bias that add to “the lie”. The first is self-selection bias. Ask me to rate the restaurant behind my office and I won’t. I’ve never eaten there because I don’t like the way it looks. As a result I have selected myself out of being able to review its food or service.

Thus, ratings and reviews’ second lie comes from the self-selection bias inherent in the need for people to have experienced a product or service before rating it. I know that restaurants which sell all you can eat buffets for £3.50 serve poor quality meat, so I’m not going to buy and I’m not going to review. The people who do review are those who for a given product or service had a reasonable expectation that it would fulfill their needs when making the purchase. Hence the group of potential reviewers is biased from the outset.

3. Choice-supportive bias
The second type of purchase bias comes post-purchase. Choice-supportive bias describes our tendency to recall positive feelings or memories to the choice we made. We tend to remember the positive things about the options we chose more than we remember the positive attributes of the alternatives we did not select.

4. Post-purchase rationalization
The third and final purchase bias is post-purchase rationalisation. This bias comes from our tendency to retrospectively justify our decisions as rational ones. We humans prefer to feel that we made good selections not poor ones. So if you ask me whether or not I liked a product that I just spent my hard earned money on, you’re going to get a positive review more frequently than you get a negative one – we like to feel our past choices have been rational and well made.

It is the sum of these biases that results in an average five-star review of 4.3. That’s a long distance from 2.5.

Despite the lies, Ratings and Reviews are great

I’ve had a bit of a go at Ratings and Reviews, but that does not stop me from liking them. They are excellent tools for online retailers and they do a great service to customers. Just like a review on the back-cover of a book or a politician’s statistics, we should always treat claims with care. And so long as that’s done everyone still stands to benefit. For one thing, if ratings and reviews are considered on a relative basis (as is often the case) then the absolute number does not matter in the least.

And let’s be honest, right now, anything that encourages people to buy more is a good thing for the economy and for all of us.

What do you think?

Ratings and reviews are having a massive impact on our online behaviour. They are great for shoppers and great for retailers. But they are also a little bit evil. This is the first of a two-part blog about ratings and reviews (a general introduction). Click to read part 2: The lies behind online ratings and reviews.

The Growth of online ratings and reviews

There has been explosive growth in sites offering customer ratings and reviews across the web. Ratings and reviews are an excellent way to build a sense of community on a website, to improve customer service and increase loyalty. They have also proven to be a great way for retailers to increase sales.

A key part of their growth stems from the escalating importance of Word-of-Mouth (WOM):

• Trust in a “person like me” tripled to 68% in 2008 v’s 2004 (Edelman, 2008)
• 84% of consumers now trust user reviews more than critics’ reviews (MarketingSherpa, 2007)
  

Furthermore, their presence has driven a significant change in behaviour – Most of us are now using online ratings and reviews before making purchasing decisions:

• “76% use online reviews to help make purchase decisions” (Forrester Research, 2007).
  
• 78% say consumer recommendations are the most credible form of advertising (Nielsen, 2007),
  

What retailers have come to realise is that their customers trust each other more than they trust the brand. So providing that your products aren’t junk, it’s far better to let consumers advocate your products to one another than to attempt to persuade them by shoving marketing messages down their throats.

The result? Retailers have been adding ratings and reviews to their websites. and they have:

• helped customers make better decisions
• increased sales
• reduced the number of returns because consumers were able to make a better buying decision

Concerns about negative ratings and reviews

Despite all the evidence, we at FreshNetworks still run into uncertainty when discussing ratings and reviews with online retailers. Especially amoung UK-based retailers, there first reaction is often nervousness.

“Surely people only write a review when they’re really annoyed about something. So if we allow reviews we’ll end up with loads of nasty comments…”

It’s an understandable concern, however it’s baseless. When it comes to online reviews for products consumers are far more generous than you might think. Assuming ratings are on a scale from 1 to 5, we’d expect 2.5 to be the average score for reviews. With this in mind, it’s rather impressive that the average score across the web is actually more like 4.3 (BazaarVoice, 2008).

Even if you do get negative reviews, there is strong evidence that negative reviews are good for retailers – preventing returns and giving more credibility to websites. Woot is a great example of this.

Ratings and reviews in the transaction process

Ratings and reviews are often the best way to incorporate the benefits of the social web into transactional websites. If you’re moving consumers towards a purchase then you want to keep them focused and on the critical path. Offering user videos or photos or support conversations could provide a potential disruption.

Ratings and reviews however, offer a neat way of incorporating social elements into a transaction whilst supporting the desire to buy without taking consumers off the critical path.

Ratings and reviews are also a quick and simple way to entice customers into engaging with your brand online with minimal effort.  As a result they can act as a great way to start building a sense of online community around your brand or e-commerce offering.

However they really are only the start of a thriving community. Beyond reviews and comments you can build deeper engagement if customers are talking about how they use products, or about the features or innovations they’d like to see in future products (MyStarbucksIdea.com sinnovation community is a great example of this).

That’s the brief introduction. Read more in part 2: The lies behind online ratings and reviews