In its second-largest acquisition, Amazon buys the company for $970 million.
Consumers may be skeptical of exclusively glowing reviews, especially when experts say 30% of online reviews are fake. An e-retailer reports what it’s done—and not done—in response to good reviews.
New York State Attorney General Eric T. Schneiderman recently wrapped up his year-long investigation code-named “Operation Clean Turf,” busting 19 companies for generating fake online reviews. This highly publicized investigation leveled fines of $350,000.
Unfortunately, the investigation and subsequent findings confirmed the public's growing mistrust of online reviews. Several high-profile pieces on “fake reviews” that hit the press this year further fed the widespread distrust of glowing online reviews.
Mary K. Engle, director the U.S. Federal Trade Commission’s Division of Advertising Practices, has estimated that 15-20% of online review are fake, though she conceded a lack of hard data. Bing Liu, a researcher at the University of Illinois at Chicago who tracks the issue of false reviews, estimates that 30% of reviews are phony for some products.
Given this skepticism, what is a new e-retailer to do?
I am the founder of Novosbed.com, a site that sells foam mattresses. One of our four core philosophies is “to make our customers deliriously happy.” We eat, sleep and breathe by this mantra: and we deliver and expect overwhelmingly positive reviews. After all, this is best practice for building a solid business.
This approach has resulted in thousands of Facebook fans, and hundreds of glowing reviews spread across the Internet. Even customers who haven't enjoyed our products rave about our generous return policies and customer service. That includes a 120-night free trial and free two-way shipping. A large percentage of our business is from word-of-mouth, and we have achieved a 10/10 ratings on several large review web sites.
So as long as you're not faking, what's the problem?
The problem is that when you've got almost nothing but glowing reviews, customers assume that you're faking. And who can blame them given the results of the New York attorney general’s investigation and other indications that phony reviews are on the rise?
Since we achieve a 10-out-of-10 rating on ResellerRatings.com, we've also noted a 300% increase in customers asking us whether our reviews are authentic. It has been critical to strategize and communicate about the suspicion ignited by positive reviews. This includes proactively responding to potential customers voicing their disbelief in public forums, by sharing our real return policies and guarantees at every opportunity to dispel the “fake” label.
A well-intended friend suggested that Novosbed consider posting some mildly bad reviews to make our review mix “more believable.” For many reasons—mostly due to our ethical values and integrity as a company—we didn't adopt that strategy because it would have added to the “fake” review problems. Certainly this conundrum has turned conventional business thinking on its head.
So, what's the takeaway?
Even with negative publicity, online reviews continue to carry huge influence on purchasing decisions, with the majority of people trusting them as much as personal recommendations. The problem of fake online reviews may not go away anytime soon, and as long as it continues, companies will be at their mercy and must act accordingly.
Eventually technology will solve the authenticity problem, but until then, those companies creating exclusively happy customers may find themselves getting much more scrutiny than the companies creating mostly happy customers.