Is social too noisy to be useful? (Why reviews are better) (18-4-2013)

Article on Inc.com by Michael Fertik, 18 april 2013:

If social media is the most popular girl in high school, then customer review sites are the smart kids who dazzle at the high school reunion with their success and confidence. And like those quirky students, I think companies will see that reviews, not social, are the key path to new customer acquisition and current customer retention – though it might take a little while for review sites to reach their real tipping point.

In short: many companies pay too much attention to social media, which is noisy and often ineffectual in terms of customer intelligence. But the path for clear insight into customer perception is plain: that future is customer reviews. I’d love to hear your thoughts – how are you paying attention to what customers say about your business? And how do you, as a consumer, research and assess new companies?

Why Customer Reviews Trump Social-Media Marketing

More and more businesses are pouring time and money into tweeting and posting on Facebook. But there’s a better way.

People love us on yelp

Sometimes, it seems like it’s all social, all the time.

But are companies really getting everything they need from the social-media conversation?

Absolutely not.

There’s ample customer engagement in the social scene, but for many organizations, it’s also a loud and noisy cocktail party, with lots of guests all clamoring for the host’s attention. It’s hard to hear precisely what’s important–and there’s little mechanism for aggregating information into usable intelligence.

Yet companies continue to pump precious amounts of time and money into social. The number of small businesses that have increased their social-media budget has quadrupled, and 43 percent of small businesses now spend more than six hours each week dealing with social media.

But as time progresses, I’m willing to bet companies will find that online reviews offer them a more concentrated customer conversation, one that’s easy to listen to and that opens a window into the invisible consumer–the one that got away (and went online to tell about it). Even more important, it’s how businesses acquire new customers–after all, when people want to check out a business, they often go to review sites as a first stop, not a Facebook page.

The Evidence

My team at Reputation.com recently did a study researching two residential property management companies. We used patented algorithms we developed to analyze 8,000 online reviews for sentiment and patterns in both review growth and customer perception.

The results provided some valuable insight into customer preference and behavior, suggesting ways companies can be smarter with operations and marketing.

  • Review growth was similar between both companies, despite differences in target markets (upper-middle income versus middle to lower income). No matter how much or how little a person spent on rent, no matter regional differences, people still wrote reviews.
  • Overall, negative terms–like damage, mold, dump–were highly similar but positive words were not. Our conclusion: The factors that drive people to write bad reviews are much more universal than the aspects that inspire glowing accounts. Tenants were fairly unified in the kinds of things that irritated them, but the features they preferred were correlated to the unique properties of each apartment type. For instance, in the higher-end complex, reviewers might highlight crown molding as a positive, whereas the lower-end renters might focus on the clubhouse amenities.
  • Despite general similarities, the top 10 negative terms varied by rental demographic. For example, the lower-middle-income renters focused mostly on pests and maintenance. That’s intel that the property management company can actually use. If the company pumps more money into pest control and maintaining facilities, it will see a powerful, positive change in its review profile. Upper-mid renters were more focused on customer service and transparency in financial procedures, so that’s where the other company should focus its attention.
  • Brand association was stronger for lower-mid renters, but upper-income renters cared more about a complex’s location and nearby amenities. That information is another signpost for the companies: The lower-mid-market company should link the brand name with its amenities (e.g., “The Groves offers…”), while the higher-end business should advertise the neighborhood attractions (“Two blocks from foodie heaven”).

That social is a game changer, there’s no doubt. But online reviews are the dark horse in this race, at least in terms of where businesses are currently putting the most focus. As research continues to show how companies can use reviews to better their business practices and improve customer satisfaction and acquisition, I think that will change.

 About the author:

Michael Fertik founded Reputation.com with the belief that businesses and individuals have the right to control and protect their online reputation and privacy. He is credited with pioneering the field of online reputation management

Two interesting responses on LinkedIn:

Rob K., Senior Digital Marketing Consultant at Tata Consultancy Services:
Thanks for the post, Michael. Raw social media streams, are indeed noisy. One should never attempt to drink from a firehose. Instead their are numerous social media listening tools– including those developed by TCS, Radian 6 and countless others–that filter and make sense of the huge streams of unstructured data throughout social media via natural language processing, advanced analytics and dashboarding.
While review sites provide good feedback, many more insights can be derived from the perceptions, sentiments and feedback about a brand and its competitors expressed throughout the blogosphere.

Thomas B., Freelancer:
It is commonly known that consumers tend to share extreme beliefs about a product/service/company – negative or positive. That’s why you get those U or J shaped distributions. But is that a bad thing? As a consumer you want to buy the excellent/good products and avoid the mediocre/bad ones. With that in mind the reviews provide you with, although binary, aid. Key thing about these consumer reviews is that they are multidimensional; characteristics of the author, reader and product play an important role. In that point of view consumer reviews also have a lot of noise. Use cases and points of interests aren’t the same for everyone and so the relevance of reviews isn’t equal for everyone. Although trustworthiness is a major point, it’s not the only one you need to consider. A consumer can write a honest review, but that review is still based on the beliefs of that consumer, on the points where he assigns value. A better fit between review and reader is therefore necessary and that’s where major developments can be made: how do you design these platforms so users can get the most relevant reviews? So it’s not social media OR consumer reviews; it’s an AND and I think there is a huge potential to combine these two so they can stimulate each other. Realtime monitoring to see trends and respond to them. For example, use social media to prevent negative reviews or use certain reviews in the design of your social media campagnes. With social media you can extract a lot of information about your user and so give him the most interesting, helpful and relevant reviews.

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