Nasty Online Reviews May Not Hurt Your Business as Much as You Think

Last Updated Jun 3, 2011 11:51 AM EDT

By Zack Anchors
If your business has ever been the victim of a slew of nasty online reviews from customers, take heart: Negative feedback online may not hurt your business nearly as much as you think, according to research coming out of the University of Maryland's business school.

Associate professor Wendy Moe, who specializes in online behavior and early sales forecasting, recently studied the online customer ratings of the 5,000 products offered on a popular beauty products website.

Her findings: Negative reviews might sting a bit but they rarely have a lasting impact on the bottom line. "Customer ratings definitely have an effect on sales, but we found that this impact tends to be limited to the short term," says Moe. What's more, Moe found that while negative reviews may drive sales down in the short term, they actually increased sales for the product category as a whole. "If you have a few one-star ratings, then you encourage customers to search more and look at products they wouldn't have otherwise have looked at," she says.

That doesn't mean you should entirely ignore bad reviews of your business, but Moe's research also suggests a number of reasons why this feedback offers a distorted picture of what most of your customers think of your business.

She argues that online reviews tend to be dominated by:

  • A vocal minority. Only a small segment of all customers that buy a product take the time to provide feedback online.
  • Extreme opinions. Strong opinions -- both positive and negative -- tend to silence more moderate and more common views. "This is sometimes called the bandwagon effect," says Moe. "It's the reason why state election results aren't released until polls close."
  • Reviewers pushing their own agendas. "People who perceive themselves as experts want to stand out, and they do that by providing negative opinions," says Moe. "People who are less involved tend to be more positive."
OK, so bad reviews won't sink your business and you don't necessarily need to overhaul your product or service just because of a few sour reactions on Yelp or other review sites. But still, what's a business owner to do if the negative reviews seem to be getting all of the attention?

Small business owners need to be especially diligent about getting more customers involved in rating their businesses, says Moe. "A small business that has only a few people rating its products is more likely to receive negative and extreme feedback," she says. Send messages to customers reminding them that feedback is always appreciated, or offer incentives for writing a brief review. The more people participating, the more accurate and useful the customer sentiments will be.

If the plague of bad reviews exists on your own website, consider simple ways to make customer reviews more helpful to both you and the potential customer, says Bryan Eisenberg, an expert in online marketing and partner at the consulting firm Eisenberg Associates. "Amazon made a great move by adding a feature to their customer reviews that allowed people to respond to the question, 'Was this review helpful?'" he says. "Now the most helpful reviews move to the top, and that's made more people read them and more people offer feedback."

Readers, how do you respond to negative reviews of your business?

Flickr photo courtesy of CiCCiO.it, CC 2.0.