Negative Reviews: Should Businesses Fear Them or Not?

Negative Reviews: Should Businesses Fear Them or Not?

In today’s digital world, consumers can easily sing high praises to your business or vent their frustrations over your products or services online.

Near Perfect or Perfect Rating is “Too Good to Be True”

​High praises or 5-star reviews are instinctively embraced by businesses. Negative reviews, on the other hand, are instinctively feared. But should bad reviews be avoided altogether?
 
A new study from Spiegel Research Center found that, across product categories, purchase likelihood usually peaks at review ratings in the 4.0 to 4.7 range and starts to dip as review ratings approach 5. Put it in another way, the new study suggested that products with an average rating in the 4.7 to 5.0 range are less likely to be sold than those in the 4.0 to 4.7 range.
 
“This suggests that shoppers see ratings at the far end of the spectrum as ‘too good to be true,’” Spiegel Research Center said. “Readers are skeptical of reviews that are too positive and, in many cases, a negative online review is seen as more credible.”
 
Another study from the Northwestern University arrived at the same conclusion as the Spiegel Research Center study that a near perfect or perfect rating is “too good to be true”. The Northwestern University research results showed that the probability of purchase increases with rating to about 4.2 to 4.5 stars and starts to drop as the star rating approaches a perfect 5.
 
The two studies from Spiegel Research Center and Northwestern University showed that a small proportion of negative reviews can make a product or service more appealing to would-be consumers.

The Inevitability of Negative Reviews

​An earlier PowerReviews research found that 82% of buyers seek out negative reviews; and among buyers under 45-year-olds, this number jumps to 86%.
 
“Shoppers are smart: they know that every item can’t be the newest, fastest, cheapest and highest quality,” PowerReviews study said. “As a result, they question products that claim to be all of the above.”
 
The PowerReviews study said negative reviews help businesses establish brand credibility and trust. Would-be buyers are skeptical about the lack of negative reviews, the study said.
 
Google's retail industry director John McAteer told the Economist that a few bad reviews are worth having. “No one trusts all positive reviews,” he said.
 
The Spiegel Research Center study, meanwhile, stressed that business should embrace negative reviews. Showing negative reviews on your site, Spiegel Research Center study said, helps build credibility with customers. “While it may seem counterintuitive, negative reviews can have a positive impact because they establish credibility and authenticity,” the researcher center said.
 
The research center recommended that instead of trying to eliminate negative reviews, it’s important to monitor them and respond to them.

Negative Reviews as Baseline for Worst-Case Scenario

According to PowerReviews, negative reviews offer a baseline for the worst-case scenario when buying a product or availing a service of a company. For instance, if the negative reviews center on the complicated way in which the product can be assembled and the other features of the product are given good reviews, a would-be buyer may proceed with the purchase if he or she doesn’t care about complicated assembly.

Other Factors that Affect Online Sales

In addition to the presence of negative reviews, the following factors affect online sales:

1. Price of the Product
The Spiegel Research Center study showed that online reviews have a greater conversion rate for expensive products. The study showed that when reviews are displayed for a higher-priced product, the conversion rate increases by 380%. For lower-priced product, on the other hand, the conversion rate increases by 190%.
 
2. Degree of Risk Involved in the Purchase
A product can be considered as “risky” based on its price. Aside from price, a product can be considered as risky based on its effects on health and safety. The Spiegel Research Center study showed that online reviews have a greater conversion impact for risky items.
 
3. Number of Reviews
The Northwestern University study called “Too good to be true: the role of online reviews’ features in probability to buy” published in the International Journal of Advertising in June 2016 found that “although the majority of extant research suggests that larger numbers of reviews bring more positive outcomes, we show that it is not always the case.”
 
“It’s easy to assume that having more and more reviews will continue to help drive sales,” said Spiegel Research Center in the study called “How Online Reviews Influence Sales” published on its site in June 2017. “Our research found that more reviews help, but only to a point – and that point is much lower than many might assume.”
 
Spiegel Research Center’s June 2017 report showed that nearly all of the increase in purchase likelihood happens within the first 10 reviews, and the first five reviews propel the majority of this increase.
 
4. Number of Verified Reviewers
According to PowerReviews, consumers take into consideration, not only the review but also the reviewer. “If the author of a negative review seems unlike the reader, the reader may discount the authenticity of the review for them personally,” PowerReviews said.
 
This is evident in the way consumers view the reviews left by verified and non-verified reviewers. In the Spiegel Research Center, verified reviewer is defined as a consumer whose purchase can be confirmed online, while anonymous reviewer is defined as someone whose purchase can’t be confirmed.
 
The Spiegel Research Center study showed that purchase likelihood rises by 15% when consumers read reviews written by verified buyers as opposed to anonymous reviewers. This shows that reviews written by people who have direct experience using a product or service are more trustworthy and credible, compared to anonymous reviewers who may be paid to write reviews or from those who have ulterior motives against the company.
 
According to the research center, verified customers give an average 4.34-star rating, while anonymous reviewers give an average 3.89-star rating. This shows that having more reviews from verified customers can help boost the value of the reviews in a number of ways.

Monitoring and responding to online reviews can is a time consuming and a tedious task. Connect with us today to learn how we can fully automate the process of getting verified customer reviews, monitor and respond to both negative and positive reviews to boost your brand, and increase sales.