Monday, September 23, 2013

Customer Reviews: To Trust or Not to Trust?

Fake customer reviews of goods, services, and establishments are much in the news these days. Last month, Edmunds.com settled a lawsuit it had brought against a company alleged to have posted thousands of fake reviews of car dealerships.

Yelp is working to crack down on fake reviews and warning users to be wary of extremely positive reviews. The site even flags businesses that have been identified as posting fake reviews, a sort of "buyer beware" caution, for more transparency.

Why the focus on reviews? It's a bottom line issue, quite literally. Academic researcher Michael Luca recently determined that a one-star improvement in ratings can translate into a 5-9% revenue increase for the business being reviewed. "Online reviews are shockingly important for a small business that is trying to thrive. Five percent is enough of a difference in sales to make a business stay open or closed," he explains.

The New York attorney general is currently cracking down on fake customer reviews because they are misleading. "When you look at a billboard, you can tell it’s a paid advertisement — but on Yelp or Citysearch, you assume you’re reading authentic consumer opinions, making this practice even more deceiving," he says.

So can customer reviews be trusted? A USA Today writer concludes: "I'm convinced that you should believe what you read, or at least some of it, because the reviews might be written by real hotel guests and restaurant patrons, and they can be useful when you're planning your next vacation." In other words, take reviews into consideration as one of several criteria used when making buying decisions. Good advice. Trust, but verify with other sources and use your own judgment.

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