Research

The power of social media: How to deal with a thumbs down review

Do you check the reviews before booking a hotel? Although number of social media outlets is increasing, consumer review forums remain the most influential with over 60 percent reading reviews before purchasing. As a result, more companies are watching reviews and trying to implement service recovery by responding online. But how successful are they? Information systems Professor Bin Gu decided to find out.

2012-10-03

Say you are the owner of a small hotel in a charming seaside town. Your business is seasonal, so you work hard to promote your property as the perfect place for local families when they are hosting out-of-town company for that wedding or reunion. Or you are the CEO of a luxury hotel chain that takes great pride in its meticulous services and posh accommodations. One day you look online and you find a review that savages your service and staff.

Dissatisfied customers are a fact of life. No business can perform perfectly every single time. Employees make mistakes; things break. Customers come in with impossible expectations, or misunderstand the extent of your capabilities.

Not so long ago, a disappointed customer would ask to speak with the manager, and when the issue is successfully resolved we called the process service recovery. But increasingly, customers are skipping the front desk and telling their stories on line, and these reviews are influencing the buying decisions of other customers.

Information Systems Professor Bin Gu, who studies the impact of social media, says that although number of social media outlets is increasing, consumer review forums remain the most influential with over 60 percent reading reviews before purchasing. Studies show that positive reviews can increase sales, but negative comments are sometimes even more powerful, Gu says.

As a result, more companies are listening to social media, and are trying to implement service recovery by responding online. But how successful are they in converting a complainer into a happy customer? Gu and his research colleague, Qiang Ye of the Harbin Institute of Technology in China, decided to find out. Using data from an online travel agency, Gu and Qiang followed the conversation between customers and hotels after customers complained.

The study revealed that “management responses are highly effective among low satisfaction customers.” And, because the interaction with the customer is in public – online – the researchers found that management response also has unintended consequences on others. Those who received a response went on to be more satisfied with the hotel after future stays, but disgruntled guests who received no reaction but observe management responses to others become more agitated. Gu’s research show that they were likely to be more dissatisfied in the future.

The finding is significant for all service businesses, not just the hospitality industry. Facebook users numbered 901 million earlier this year; add to that another 500 million on Twitter for a sense of the power of social media. And the size of that universe is just one of the reasons why businesses need a strategy.

We hope you enjoyed your stay

To explore the impact of management responses, Gu and Qiang used data from Ctrip.com, the largest online travel agency in China, serving 5,831 hotels in 48 cities. Ctrip provides an online form for customers to post a review within a week of their hotel stay and for hotels to respond. The site sends customers email reminders about the opportunity to review, and those who comment are entered into drawings for substantial prizes. As a result, the site generates a large number of reviews that are representative of the customer population.

Gu and Qiang developed a crawler to automatically download 316,568 customer review pages, and another system to parse HTML and XML pages into a database. They collected customer review information, management responses and publication dates. Their paper notes that all of the hotels logged at least one comment, and managers at half had responded. On average, the paper notes, about 23 percent of the reviews received an online response, and 7 percent of customers reviewed hotels a second time.

Are you listening?

First the researchers analyzed how the receipt of a review response influenced a guest’s subsequent reviews.

Customers whose first score was 1 (low) and received no management response rated the hotels higher the second time. Gu said this suggests that the really bad reviews were the result of “random events in service encounters that are unlikely to repeat.” At the other end of the spectrum, customers who ranked high tended to remain high, supporting the notion that a high score indicates consistent excellent service and not a one-time incident.

On average, when looking at all reviews that were answered by managers, these responses appeared to have no significant impact on future reviews. But Gu pointed out that the mean masks some interesting variances.

Customers who gave low marks – a 1 or 2 – and received a communication from the hotel were significantly more satisfied after later visits. This supported one of the researchers’ hypotheses. But the impact on the other reviewers – those who perhaps witnessed the conversation between hotel and unhappy guests – is varied, Gu reports.

If a reviewer was dissatisfied but did not hear from the hotel, he is likely to be even more dissatisfied after a return visit, the study finds. This is peer-induced fairness theory in action, according to Gu. This theory suggests that when one customer sees another customer getting better treatment, the first customer will feel that he was treated unfairly and will be even more dissatisfied in the future.

To validate their findings, Gu and Qiang performed another analysis, following only those reviewers who panned their hotels with a score of 1 on first visit. When those customers received responses they upgraded their subsequent experiences almost twice the average of all low-grading customers. But when they did not get a response, their next reviews were significantly more negative.

For further verification, the researchers decided to look at complaints about temporary issues – such as construction noise. Since the situation is temporary, guests will not find that problem on their next visit, and guest satisfaction did improve – without managerial action. But complaints about room cleanliness – a key performance measure for hotel operations – tap into a potentially long term issue at a hotel. These complaints are similar across properties, and managers’ replies tend to be the same too, promising better employee training, etc. When managers did reply, however, those guests reported better impressions on following visits.

Please visit us again

Gu said that in interviews with hotel managers he learned that many hotel managers are often sporadic in responding to reviews, which could be damaging to the bottom line. “The effect of management responses cannot be overstated,” the study reads.

The take away for hotels and other businesses is to pay careful attention to those negative reviews. A response is almost certain to improve the viewpoint of the visitor when he returns.

But just as a parent tries to be consistent among her children, managers should take care to lavish the same amount of care on everyone when dealing with grumpy customers. In fact, “addressing the concerns of all low satisfaction customers should be an integral part of a service provider’s social media strategy.”

Fortunately, this strategy has the advantage of being doable. “Given that low satisfaction customer reviews account for only 5.6 percent of all customer reviews, addressing these customer reviews is operationally feasible for most service providers.”

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