Everyone’s a Critic: Winning Customers in a Review-Driven World

by Bill Tancer

I must admit that I approached this book with a certain bias.  Having read a lot of Amazon reviews, it becomes apparent there are a lot of games being played in the world of online reviews. Bill Tancer acknowledges the shenanigans, but focuses on using customer reviews to drive revenue and to provide competitive intelligence.

Tancer interviewed a locksmith in New York City who holds the highest rating on Angie’s List and Yelp. “Jay says that almost all his business comes from online reviews. While he is a paid advertiser on Yelp, he doesn’t engage in any other forms of advertising. He tried buying keywords on Google, but found that the online review business was more targeted and resulted in a far greater return on investment.”  The owner of an eyeglass store in San Francisco reports a similar story. “James confides that online reviews can have a massive impact on revenue and that Yelp is Veo’s most significant channel for the acquisition of new customers.”

Beyond these anecdotes, research finds a correlation between reviews and revenue. Harvard Business School professor Michael Luca “demonstrated that every one-star increase in rating led to a 5 to 9 percent increase in revenue for independent restaurants.” A team led by UC Berkeley professor Michael Anderson “analyzed 148,000 Yelp reviews and reservation data from 328 restaurants gathered from an online restaurant reservation system. Their analysis found that a ‘half-star rating increase on Yelp translates to a 19% greater likelihood that a restaurant’s seats will be full during peak dining times.’”

Even negative reviews can drive business. “According to a research study conducted by UK software company Reevoo, consumers actively seek out negative reviews…  The study also finds that consumers spend four times as long on sites when they read bad reviews, and purchase 67 percent more than the population as a whole. The study also found that 68 percent of consumers trust the reviews that they read when they see both good and bad reviews for a business or product. Conversely, the study also found that 95 percent of consumers suspect censorship or faked reviews when they don’t see any bad reviews from a business.”

“Every valid negative point in a review has the potential for helping you improve your business. Think of it not as criticism but as data.”  The book includes the story of a restaurant that received numerous reviews complaining about the portion size of a pasta dish. The owner intended the dish as an appetizer, but customers were obviously ordering as an entrée. He solved the problem by adjusting the menu to include starter and main course options.

“Is there a deficiency in the marketplace that you can capitalize on?”

The author writes about a very busy organic restaurant that has consistently terrible reviews on both its food and its service.  There is obviously strong demand for an organic restaurant in this neighborhood, but it is not being well served. This is an opportunity for a competitor to fill the gap.

“Over the last ten years I’ve built a career around online competitive intelligence, helping clients leverage online behavioral data to improve their own business. The amount of consumer behavioral and competitive intelligence that is available just by reading reviews of your business and your competitors’ is staggering. It’s not unlike having access to customer satisfaction survey responses for your closest competitors. Why wouldn’t you want to distill what works and doesn’t work for other businesses in your industry?”

Tancer makes some predictions:

  • “Online reviews represent the first acquisition channel that is merit-based versus cash-based… As online review platforms improve their ability to reduce the noise of fake reviews, and customers choose which businesses to purchase from based on quality, I can deduce that the net effect will be a decrease in advertising spent across the board.”
  • “Over time, as more consumers write online reviews, customer satisfaction surveys will become extinct.”
  • Google Reviews will become the dominant player. “According to Experian Marketing Services data, 82 percent of Yelp’s traffic comes from search engines; Google accounts for 60 percent of that traffic… According to Google, 20 percent of all searches are local.”
  • Review sites will be bilateral, meaning both buyer and seller are rated. Uber, Airbnb, and eBay already do this.

The author also sees an opportunity for automated data analysis to improve review sites. It is tedious for customers to read through reviews from people with differing tastes and priorities. “If, as a consumer, you could save hours and truly find the best hotels, books, music, or masseuse based on your past likes and dislikes, how much of your online privacy would you be willing to give up?”

Tancer, Bill. Everyone’s a Critic: Winning Customers in a Review-driven World. New York: Portfolio / Penguin, 2014. Buy from Amazon.com

Disclosure: As an Amazon Associate I earn from qualifying purchases.

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