Collaboration Cast

As the web becomes more social we are seeing an increasing number of companies adding ratings and comments to a piece of content or product. The question people ask me all the time is, why should I add ratings and comments to my website and what value will I receive?

The good thing is that a lot of research has been done on the value of ratings and comments. Bazaar Voice, a social software company, has specifically focused on ratings and comments for eRetails. From an inside source I hear they are doing very well with revenues of about $30 million. So there are companies out there seeing the value in ratings and commenting.

The following statistics show the value of ratings and commenting:

• The Number One Functionality Desired By Internet Users - Forrester Research conducted a study showing that user ratings and reviews was the number one feature requested by US internet users.

• Makes a Site More Credible - According to a global Nielsen survey of 26,486 Internet users in 47 markets, consumer recommendations are the most credible form of advertising among 78% of the study’s respondents. (Nielsen, “Word-of-Mouth the Most Powerful Selling Tool”)

• People Trust Peer’s Opinions More Than Advertising - Online social network users were three times more likely to trust their peers’ opinions over advertising when making purchase decisions. (“Social Networking Sites: Defining Advertising Opportunities in a Competitive Landscape,” JupiterResearch, March 2007)

• #1 Aid To Buying Decisions - A consumer survey by the JC Williams Group ranked consumer content as the #1 aid to a buying decision, cited by 91% of respondents. (JC Williams Group, 2006)

• Reviews Makes Your Website a Top Destination - When asked what sources of information they are “very likely” to consult before making a decision about their entertainment options, 62% named Web sites with user reviews as their top choice, even beating out a knowledgeable friend (59%). (Marketing Sherpa, July 2007)

• More Likely to Buy - Two thirds of UK social networkers (66%) are more likely to buy a product as a result of a recommendation, compared to 52 per cent of non-social networkers. (Royal Mail’s Home Shopping Tracker Study 2007

• Influences Purchase Decisions - More than eight in 10 (82%) of those who read reviews said that their purchasing decisions have been directly influenced by those reviews. (Deloitte & Touche)

• Pay More - Consumers were willing to pay between 20 to 99% more for a 5-star rated product than for a 4-star rated product, depending on the product category. (comScore/Kelsey, October 2007)

• Drives Higher Spending - Reviews usage drives higher spending: 27% of users report an increase of 5-10%; almost 7% report an increase of 20%+. (Avenue A/Razorfish “Digital Consumer Behavior Study,” October 2007)

For those companies who have adopted reviews and are posting fake reviews, I would recommend to stop doing. Number one it is not ethical. Second if you do not cover your tracks and consumers find out, your consumers will surely create a PR nightmare for you. Just look at what happened to Slide, a Facebook application company, who fabricated their own reviews. TechCrunch picked up the story, there were 92 comments about the story, and at least 7 other bloggers picked it up.

Besides just a PR nightmare, I believe it could be possible that fake reviews could also end up in a lawsuit. Just look at Sony, who promoted fake reviews about one of their films and got sued for $326,000 in 2002 and again in 2005 for $1.5 million.

In summary, reviews are very beneficial for companies and companies should stay honest in their review and posting practices, while allowing customers to speak openly about the company’s products and content. In the end of the day, if a company is listening and improving their products to meet customer needs, they will be successful.

Brad and his wife bought a brand new 2003 Dodge Grand Caravan in 2003. It was a nice looking car, but the car had not been assembled properly and the roof started to leak. The leak, which the dealer could not find for 6 months, led to several other issues such as electric problems and mold and mildew growth. Daimler Chrysler Canada and McIVER Dodge did not immediately resolve the issue and Brad created the site “Do Not Buy a Dodge” (www.donotbuyadodge.ca) to document their ongoing fight with Daimler Chrysler and McIVER Dodge. Since May 2008 over 4.2 million visitors have visited Brad’s site.

Brad was not the only person to use blogs and the internet to point of Daimler Chrysler’s quality problem. Brad’s site points to at least 16 other sites that have also made it their mission to become customer advocates pointing out faulty Daimler Chryler product issues:

• Dodge and DaimlerChrysler Vehicle Defects
• Caravan Sucks!
• Don’t Buy One - Chrysler, Mercedes, Dodge
• Dodge Caravan Transmission Problems
• My Chrysler Sucks!
• Intrepid Horror Stories
• PT Cruiser Problems
• Dodge Neon Problems
• Dodge RAM Problems
• My Dodge Durango Died!
• Chrysler Intrepid Problems
• Letter to Chrysler - Jeep Cherokee
• Sebring Problems
• Issues with Another Dodge Dealership
• Screwed at PC Dodge
• My Car Sucks

The internet has not only allowed companies to virally spread their marketing message, but it also has allowed consumers to virally spread their bad experiences with other potential customers. Companies like Daimler Chrysler who do not react fast enough, are greatly exposed to consumer backlash that can greatly cause PR nightmares.

An example of how easy customers can impact a brand is clearly identified by looking at the Diet Coke brand. If you type Diet Coke into Google you will see that the third highest post is a blog written by John McManamy, Don’t Drink the Diet Coke, who points out that Diet Coke can cause depression and fatigue because Diet Coke uses Aspartame.

Google has become a brand’s home page and information customers post by way of blogs, microsites, or comments can truly affect a brand image and sales.

Tim Anderson a blogger for IT Week documented an experience he participated in that affected Sony’s music sales. In 2005, a developer named Mark Russinovich posted a blog showing how a Sony BMG music CD, when played on a computer, would install a piece of software to prevent piracy that would scan the PC’s hard drive every two seconds and greatly slow down a PC’s performance. Since Mark was a computer expert, he was able to remove the piece of software and posted a blog to make others aware of this issue.

Mark’s post was viewed by many and several hundreds of bloggers also posted about the same issue. Within 24 hours, the story was picked up by Slashdot, the Register, and several other popular news sites. User reviews appeared on Amazon.com warning customers not to buy. Some of the most dramatic postings stated:

“It is a grave security threat” another said, “Do not buy Sony music CDs.”

Just in a period of 24 hours, hundreds of blogs were posted and I imagine 1000’s of potential Sony music buyers saw blogs and comments, on leading online CD retail sites, warning other customers not to buy Sony music CD’s. Bad news not only travels fast, but can be greatly exaggerated, which all can impact sales.

Dell went through a similar incident a few years ago when several customers started to post blogs and comments about the horrible experience they were having with Dell products and Dell’s customer support. The series of posts were called “Dell Hell” and they drew hundreds of comments from customers with similar negative experiences.

Dell chose not to ignore the posts and found a few ways to react to customers feedback.

1. Open Communication through Blogging

Dell started a blog called Direct2Dell (www.direct2dell.com) to officially start communicating with customers. Customers could now come to Dell and quickly find out about what really was the issue and how Dell would be solving the problem. Dell chose not to censor negative comments about problems, which was a contributing cause for its blog success. A post last August about the delay in shipping new In-spiron notebooks drew hundreds of comments from frustrated and irate customers. “Taking the criticism when the company screws up builds authenticity, said Bob Peason, from Dell.

2. Monitor and Respond On-Going Conversations

Over 15,000 posts mention Dell each day. Dell has implemented a tool from Visible Technologies that allows the Dell team to monitor all these conversations and route them to a team at Dell who responds to postings. Over 100 posts per day receive responses.

Also, Dell leverage’s other users responses to help solve problems. If a user likes a response provides by the community, then the user tags the response as an “accepted solution” to the problem. Dell’s community now lists over 6000 accepted solutions.

3. Capture Customer Ideas and React

Dell released IdeaStorm, a customer suggestion site, to capture customer ideas and to leverage the community to vote on the most important ideas. IdeaStorm has taken in 9,000 ideas, recorded 600,000 visitor votes, and implemented 120 suggestions. One of those suggestions was a Linux-based laptop that was developed in large part to customer responses.

Dell still has a long way to go. 21% of their customers still post negative comments about Dell, but compared to where Dell was several years ago, this is a significant improvement.

Companies such as Dell, Daimler Chrysler, Sony, and Coke have all learned the hard way that Blogs and User Generated Content can really hurt a brand and sales.  Like Dell, companies need to open up communication with customers to quickly resolve customer issues, ensure that the full truth is being told, and to prevent potential PR nightmares.