feedback economy, How to Navigate the Feedback Economy

Why are ratings suddenly so important?

In the UK alone, online reviews influence an estimated £23bn of transactions each year (source: FT). At the same time, Amazon has filed more than 1,000 law suits against reviews abuse (source: Fortune). The feedback economy is becoming a huge factor in marketing to consumers, and for good reason.

The sheer scale and type of reviews has changed significantly. Reviews and ratings are a manifestation of word of mouth, and consumers have for all time been using this method to communicate (dis)satisfaction. The difference now is that, what was previously face-to-face between family and friends, has now been supercharged and globalized. It’s word of mouth on steroids, having permeated its way into the internet age and manifesting itself in new ways.

What does the feedback economy mean for businesses?

This is a big moment in the way consumers and businesses interact and relate to each other – we now rely on what our peers think, even when we don’t know them at all. Importantly, businesses know now to take this seriously. They noticeably spend time, effort and money on improving customer experience, and the insights gained are hugely beneficial.

As reviews have become more important, there has been a significant effect on the prevalence of ranking. London Business School studied order effects and found that, if the first review you see in a list has a top rating, it can increase sales by 8%. On average, consumers close to purchasing a product will read 10 reviews about it. There are also consumers that have developed different strategies – looking at either positive or negative reviews, particular subject matters, quantity of reviews, etc., suggesting that there’s more nuance to the data that needs to be available for consumers to be confident in their purchasing.

Evidently, context is key. For the consumer purchasing a perfume, simple insights relevant to the buyer – price, scent, type of bottle – are easily gained. Moreover, these different elements matter varyingly from person to person and businesses need to let the customer focus on what matters to them.

How reliable is the feedback economy?

A single bad review can be made into a positive through rectifying problems straight away – omitting the need for word of mouth negativity. Your response can become a marketing tool to benefit the rest of a business’ customers, and the business themselves. It’s only when rankings go down, when the overall negatives outweigh the positives, that it starts to impact the brand.

Can you also stimulate more engagement in the way that you ask for feedback? Our recent research into the ways customers and brands are using emojis in business communication makes for an interesting read. One of the biggest drivers for people using emoji is that over half of people believe help avoid conflict or misunderstanding. Check it out here.

Ultimately, the review economy offers a potentially very powerful and democratic system for consumers to engage with and respond to businesses. The system is still maturing but is increasingly being utilised to the benefit of all involved.

If you’re looking for a better way to get customer feedback, give Customer Thermometer a try for free. We’re like the Instagram of customer feedback; simple, quick and visually-engaging:

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *