It started with Amazon and eBay, but in today’s increasingly interactive online marketplace, the ‘star-rating and review’ paradigm is becoming ubiquitous. It may seem a relatively new phenomenon, but in terms of reputation marketing it is the manifestation of a human trait that seems hard-wired into our psyche: the need to feel safe by following the herd.
And the more people get used to reading reviews and counting stars, the more they will come to expect to see customer feedback and ratings. A Neilsen survey, conducted in 2012, backed this up, revealing that 70 per cent of respondents were happy to trust the evaluation of complete strangers, an increase of 15 per cent in four years.
Apart from the herd mentality (or need for ‘social proof’, as the theory terms it), there are other, more pragmatic reasons why star-ratings are so powerful. With time often at a premium, and access to a global marketplace readily available at the click of a button, shoppers need to efficiently narrow down their options. A star-rating system, particularly when combined with the ability to order data in a table, enables potential buyers to quickly whittle down their choices to a select few. In this way, a company with glowing buyer reviews could still fall foul of the visual prominence of the star-rating system if they have a more modest score than their competitors.
Looking at Star Rating Systems
But how sensitive are businesses to variations in their star-rating? Is a five-star score that much more likely to attract customers than a four-star rating? Does a half-star difference have an impact?
That question attracted the interest of Harvard University and the University of California, Berkeley, and, according to these institutions, the difference is significant, with restaurant bookings particularly volatile. In fact, the difference in one star was found to equate to a five to seven per cent difference in revenue. Even a half-star advantage was found to increase the chances of a restaurant filling its evening tables by up to 49 per cent.
Rank and Review Paradigm
The harnessing of this ‘rank and review’ paradigm to social media platforms has added a new dimension to the field of reputation marketing, with Douglas Adams’ quote about bad news travelling faster than light becoming even more relevant today than when he first uttered it. Few will forget how quickly the news of HMV’s mass sacking spread across the Internet once the company’s social media planner decided to go public on Twitter.
And with sites like Google Plus, Facebook, LinkedIn and Foursquare now facilitating and encourage reviews, feedback and recommendations, it is increasingly challenging for brands to stay in control of their own reputation.
It is clearly prudent for every business to micro-manage its online reputation marketing, to both limit the damage of negative publicity and unleash the power of positive feedback. Not paying due attention to this aspect could undo much of the good work undertaken in other brand marketing aspects such as Search Engine Optimisation, Pay-Per-Click Advertising and offline promotion.
Keep an eye out for part 2 in our Reputation Management series, as we look further into consumer ranking and reputations.