The impact of negative reviews on purchase decisions

The Castle has the best view of Budapest, but how are the reviews?

The Castle may have the best views in Budapest, but how are the reviews?

My colleague Kelly McGuire recently teamed with Associate Professor Breffni Noone at The Pennsylvania State University to study the role of reviews and ratings and price on purchase decisions in the hotel sector. Their findings confirmed the relationship linking ratings and reviews with quality and value perceptions of hotel room purchases that they'd found in a previous study.

While their research focused on the hospitality industry, it's not a stretch to see how negative reviews can impact purchase decisions in other industries.

Kelly summarized the four biggest take-aways from their study as follows:

  1. Reviews and price are the most important influencers of choice. While consumers did pay attention to aggregate ratings, TripAdvisor rank and to a lesser extent, brand, positive reviews contributed the most to consumer choice behavior followed by lower price.
  2. Negative reviews remove you from the choice set. Period.  Lower price or higher ratings do not overcome the impact of negative reviews.  Consumers simply will not choose a hotel with negative reviews.  Hotels that are in this unfortunate situation should focus energies on improving their reputation.
  3. Consumers prefer to pay a lower price. While consumers would go for a higher-priced hotel when the reviews and ratings were better than the alternatives, all things being equal, they will look for the lowest price.  Hotels need to understand their position relative to their competition both on reputation and on price in order to take advantage of any pricing power associated with positive UGC.
  4. Consumers only notice high ratings and rankings.  Our results showed that consumers only notice ratings and rankings when they are high as compared to other choices.  Consumers do not place any value on the comparison between low and mid-level ratings and rankings.

For more details about this research and the findings, read Kelly's blog post, "Pricing in a Social World: How consumers use ratings, reviews and price when choosing a hotel."

As you think about what this might mean for your organization, your first thought might settle on how to manage a bad review - or worse yet, a string of bad reviews. And the bigger your operation, the harder it is to even find out about issues with your reputation. Social Media Analytics can help you keep a pulse on "the buzz" about your brand so you can catch issues early.

Then there's the more strategic question of the root cause of bad reviews, which come from bad customer experiences. And considering how customers experience most brands both online and offline, customer experience management has broad implications in the enterprise far beyond marketing. Adaptive Customer Experience can help manage the online experience of your customers, but engaging with your contact center or customer experience department in addition to getting the messages from your marketing campaigns means more opportunities for miscues and more chances for wrong expectations that can lead to negative reviews.

An integrated marketing management approach that drives the necessary customer-centric focus is how to address the impact of bad customer reviews. It's also how to align your organization around preventing the bad customer experiences that lead to negative reviews. It's far easier said than done, but well worth the effort. And we have many examples of how well it works - please contact us and find out how it can work for you.

As always, thank you for following!


About Author

John Balla

Principal Marketing Strategist

Hi, I'm John Balla - a Digital Marketing Principal here at SAS focused on Content Strategy. I co-founded the SAS Customer Intelligence blog and served as Editor for five years. I like to find and share content and experiences that open doors, answer questions and maybe even challenge assumptions so better questions can be asked. Outside of work I stay busy with my wife and I keeping up with my 2 awesome college-age kids, volunteering for the Boy Scouts, keeping my garden green, striving for green living, expressing myself with puns, and making my own café con leche every morning. I’ve lived and worked on 3 contents and can communicate fluently in Spanish, Portuguese, Hungarian and passable English. Prior to SAS, my experience in marketing ranges from Fortune 100 companies to co-founding two start ups. I studied economics at the University of Illinois at Urbana-Champaign and got an MBA from Georgetown. Follow me on Twitter. Connect with me on LinkedIn.


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