Love or hate online review sites regarding your small business, they play a part in gaining new customers.
According to a Harvard Business School study, a positive evaluation on the popular review site Yelp appears to lead to increased business for restaurants and other service providers.
For example, a one-star increase in a Yelp rating leads to between a five-to-nine percent increase in revenue. While the study showed that Yelp ratings have no real effect on large businesses such as chain restaurants, it does have a huge impact on small businesses for positive and negative.
Online review websites like Yelp can be tricky for businesses because there is no opt-out option. Your business can be listed on a review site without your knowledge or consent. Yelp purchases basic business information from third-party providers and registered users can add businesses to the site.
There is always the possibility of fake reviews on platforms such as Yelp and TripAdvisor. TripAdvisor takes them very seriously because they are damaging to the trust factor of the platform. There is a lag time between when the review is written and when it is posted publicly. Some reviews may be flagged for a closer look by the platform based on language used.
TripAdvisor does not fact-check reviews. However, a business owner can report a potential fake review. TripAdvisor will review it and may take it down if it violates their terms of content.
Review sites been plagued with “pay to play” allegations, meaning businesses have felt pressure to purchase advertising for more favorable placement. A business in California felt its business was negatively affected when it decided not to promote its business on Yelp. It filed suit against Yelp alleging extortion. The U.S. Court of Appeals for the Ninth Circuit recently ruled that Yelp could lower or raise the rating of a business depending on whether the company advertises with Yelp.
What does this mean for businesses?
According to Brad E. Dempsey, partner in Faegre Baker Daniels LLP in Denver, the court ruling means that businesses should not look to courts to referee the practices of online review sites. Kenneth Eade, California-based international business attorney, concurs but adds that Section 230 of the Communications Decency Act, which provides immunity to Internet services such as Yelp, which publish comments from others, makes it very difficult for a business to allege anything actionable that will stand up in a federal or state court.
While a business cannot take legal action against a review site, the business may be able to file a lawsuit to subpoena the identity of the negative reviewer if the business suspects a competitor is behind the negative review and sees damage to the business has taken place. But defamation is often very hard to prove against a business.
There are things businesses and business owners can do to manage review sites. Realize that not everybody who visits your business is going to love your business. That’s part of doing business. It is important to understand that and be prepared to respond to negative reviews. Businesses should continue to focus on providing great goods and services to customers. Word of mouth either online or off will do the rest.
As a company, you should claim your business on review sites giving you more access to the site to respond to good and bad reviews. Then create a response plan as to how to react to good and bad reviews.
What does the ruling mean for consumers?
When consumers visit an online review site they are doing so with trust. They are looking for customer-generated reviews or real, honest reviews to help them make a decision about where to go for dinner or to get the dog groomed.
The ruling means that reviews must be taken with a very big grain of salt. Review sites are no longer non-biased review sources. Dempsey encourages reviewers, consumers and businesses to remember that review sites exist to make money and they have tremendous control over what reviews you actually see.
At the same time, people who submit reviews are generally not an average consumer but are motivated by some other factor to prompt them to undertake the chore of writing a review.
The ruling also may signal a shift from a non-trusted model to a trusted model by consumers. Peter Shankman, customer service and marketing futurist, said people will trust the networks over the anonymous review sites. Google and Facebook are now sharing recommendations with users based on their connections.
When users feel as though they can’t fully trust reviews, what will it mean for online review sites? Only time will tell.
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