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ARTICLE Business TipsJuly 28, 2014

Online reviews: why you need them and how to manage them

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Only word-of-mouth product recommendations are more trusted than online reviews and ratings. We look at why online reviews are so powerful and what you need to know about managing them.

Online reviews are an important part of all e-commerce businesses’ marketing mix. Research shows that, globally, online consumer reviews are the second most trusted form of advertising after word-of-mouth recommendations.

While online reviews are a powerful tool, businesses need to ensure they are being responsible in their use of reviews and that they stay on the right side of the Australian Competition and Consumer Commission (ACCC).

Nielsen’s 2012 Global Trust in Advertising Survey , which surveyed more than 28,000 internet respondents in 56 countries, showed that 70 per cent of people surveyed trust online reviews. The study revealed that only word-of-mouth recommendations from friends and family, which were trusted by 92 per cent of respondents, were more trusted than online reviews.

In Australia, more and more people are turning to online reviews or social media ratings to help them make a purchasing decision.

Online reviews inform purchase decisions

According to the Yellow Social Media Report 2014 , most Australians who are active on social media will read up to five online reviews or blogs on a product or service before they make a purchase decision.

In fact, 60 per cent of social media users in Australia will read up to five online reviews or blogs before deciding to buy a product or service. A further 28 per cent will do even more thorough online research, reading between six and 10 online reviews, while 10 per cent will take the time trawl through 11 to 20 online reviews.

The products and services that are most likely to be reviewed online are: hotels / motels (30 per cent); tourism / travel products or services (20 per cent); restaurants (18 per cent) and retail stores (13 per cent).

How to respond to negative online reviews

Businesses and review platforms that do not remove reviews that they know are fake risk breaching the Competition and Consumer Act 2010”.

The Australian Competition and Consumer Commission (ACCC)

Business owners dread getting a negative online review or rating, but the Yellow Social Media Report 2014 shows that responding to this type of review can help turn a negative into a positive.

Two thirds of social media users said they would consider changing their opinion if a business responded to a negative review or blog that they had posted. Only 44 per cent said that they would not change their mind, with women less likely than men to change their views.

Writing online reviews

While social media users are keen to thoroughly research products or services before they buy them, far fewer actually post online reviews themselves. Only 28 per cent of social media users ever post reviews or blogs, with men being more inclined to do so than women (34 per cent compared with 22 per cent). Most Aussies who post online reviews are in their 30s, 40s or 50s.

For those who do take the time to review products online, they leave nine reviews a year, on average.

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Beware of fake reviews

The power and popularity of online reviews means that you could be tempted to head online and start reviewing your own products or to encourage your friends and family to leave glowing reviews on your site and Facebook page.

Do not succumb to the temptation – those types of practices breach the ACCC’s guidelines on online reviews and business owners’ responsibilities when it comes to managing fake reviews.

“Consumers rely on online reviews to make purchasing decisions. Businesses and review platforms need to manage online reviews to prevent consumers from being misled,” the ACCC advises.

The ACCC provides guidance on online reviews and reviews and comments left on social media.

The ACCC can even fine businesses for posting fake reviews or for not managing online reviews responsibly. In 2011, moving company Citymove had to pay a $6,600 infringement notice after the ACCC found the company had posted comments on its website, supposedly from genuine customers, that were not from clients.

Reviews that could mislead consumers include: those that are written by the reviewed business, a competitor, somebody who has been paid to write a review or someone who has used the product but written an inflated review to receive a financial or non-financial benefit.

The ACCC says you should take action if you know there are fake reviews on your website. “Businesses and review platforms that do not remove reviews that they know are fake risk breaching the Competition and Consumer Act 2010,” it states.

The ACCC advises website owners to be wary of, and to consider taking action against, reviews that are:

  • Part of a significant spike in reviews about a particular business over a limited period of time
  • Written from the same email or IP address
  • Written about the same business, product or service where the reviewers’ accounts are very similar
  • Written in an overtly positive or “marketing speak” writing style
  • Written in the same language as other reviews of the same business or product.
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