The Impact of Bad Reviews on Companies

Bad reviews

Most companies that rely on online reputation and direct bookings like travel and safari businesses know a thing or two about the way in which bad reviews impact consumer shopping behaviours and perceptions both online and offline. We will explore the different types of bad reviews, the ways in which they can potentially sway consumer decisions, and what merchants can do to avoid them. This will also provide a springboard into exploring consumer virtues and perceptions and the ways in which they are swayed and/or are resolute against bad reviews.

The launch of the internet has made us come a long way from the pen-and-paper era. The advent of the internet has brought forth many social phenomena. Among these social phenomena lies online reviews. Online customer reviews are often the most overlooked tool for enhancing one’s business. Critiques are often overlooked when it comes to the potential that it holds, not only for the business seeking the feedback but more importantly, for the consumer reading the critiques and making future decisions. If a business is able to learn of the potential it holds to sway customer perceptions, both good and bad, they will see the true worth of these reviews. The purpose of this paper is to explore the possibilities that customer reviews hold, both good and bad, and how they affect consumer patronage and decisions.

Importance of Online Reviews

Finally, the worst section is switching, the place an unsatisfied customer switches to a unique product. This happens when the product didn’t meet the customers expectations. He could try to find a substitute product or if he feels the earlier product is hindering his goal, he will abandon it in what is known as muddling by way of switching heuristics. This second where the shopper decides to seek for a brand new product is important as a small trigger can create a big utility distinction between the outdated and new product.

Reaffirming is the best case scenario, where a buyer who sees a damaging evaluation has already fashioned a constructive opinion about the product. It is suggested that customers on this position are not sure, and might settle for or reject the evaluations sentiment primarily based on the quality of the evaluation and the reviewer. This signifies that the upcoming price of the product will decide how the assessment impacts the consumer. In the event that they product is relatively cheap, they aren’t terribly invested in it and a destructive assessment could steer them away from buying it. High involvement customers then again may search for further reviews to attain a consensus.

Given the importance of online reviews, it’s surprising how little corporations understand what this means to their business. In accordance with Spira and Page, you can find several possible problems from harmful opinions. They suggest a theoretical model for poor-mouthing where a enterprise suffers financial loss since potential prospects are turned off from buying the product. It’s recommended that is extra probably with experience items and credence items. For expertise goods, consumers have to have some experience using the product earlier than they can decide it. If the evaluation has deterred them from attempting the product, these unfavourable sentiments might persist despite the fact that the product is of an ultimately increased quality. That is robust for companies to beat, as the buyer has already forged a adverse opinion without truly experiencing the product. Simulation to start with, corporations can supply money back guarantees and free trials in order to entice the patron to really attempt the product.

Negative Effects of Bad Reviews

Loss of potential customers Once a company has lost customer trust, it is highly likely that this will result in a loss of sales. This is because trust is a necessary component for a customer to feel secure in parting with their money for a product. But the effect of bad reviews will often be more severe than direct sales loss. Given that trust in a company is built on a positive reputation over time, it is likely that the image portrayed by the bad review does not correlate with the current state of the company. This means that the review will have unfairly damaged the company’s image. According to conative effects theory, initiated by Ducoffe, an advertising message is often separated into the experimentally induced effects and the conative effect where the consumer actually buys the product. Now we can consider the bad review as an advertising message with experimentally induced negative effects on the company’s image. The bigger the difference between the up-to-date image of the company and the image portrayed in the review, the higher the likelihood of a conative attempt to change the consumer’s view of the company. However, this will often be ineffective since the review is still an easily accessible piece of information. A Marketing Experiments case study on an attempt to change customer perception found that an increase in the quality of a landing page only led to a 4% increase in conversion due to customer lingering skepticism. This shows that there is a strong possibility that an attempt to reverse the effects of a bad review will still result in only limited success.

Decreased customer trust Customer trust is an essential commodity for any organization. Without it, the firm cannot hope to have a long-term customer base. In recent years, consumers are relying on the internet more than any other media. They use it to seek information on a multitude of products. This makes it much more likely that they will come across product reviews. At the point of sale, reviews are often the only tool a consumer has at their disposal to ascertain the quality of an item. Studies have shown that customer reviews are among the most trusted forms of product information. An October 2010 report from Forrester Research showed that 71% of consumers look for consumer reviews before purchasing a product. In the same year, a study by Reevoo showed that reviews produce an average 18% uplift in sales. An Econsultancy report from 2012 had customer reviews as the second most trusted form of information after recommendations from people known personally. With the internet being the primary source of consumer information, it is likely that bad reviews will significantly erode consumer trust in a company. This is supported by a 2013 study from Dimensional Research that showed 90% of consumers say that their buying decisions are influenced by negative reviews. The information above paints a clear picture of how bad reviews will lead to decreased customer trust through a consumer reliance on reviews and how this can have a severe effect on company sales. Step one: to compile the evidence that consumers usually only buy products they know are good. Step two will be to show how reviews are the primary source of information on product quality.

Decreased Customer Trust

In marketing, customer trust is always a very important aspect to any company. Customer trust has many positive effects for companies, but there are also many negative effects when a company loses customer trust. One way bad reviews affect companies is by decreasing customer trust. When a customer reads a bad review about a product or service, it makes the customer more wary about purchasing or repurchasing the product or service. If a customer reads more bad reviews, it will further prevent the customer from buying the product or service. According to Eileen Roche, reviewed companies are seen as higher risk in consumer buying decisions. This essentially means that a customer is less likely to purchase from companies with bad reviews and if they do, it is often with the impression that their dissatisfaction may lead to switching to a new company for that same product or service. He also did a study where the subjects were shown a fictitious brand of a product and were told it was either a reviewed or unreviewed brand. Those that were shown the reviewed brand had an average of 26% less purchase intention than the unreviewed brand. Roche concludes, “it appears that a negative review, regardless of the information content, may serve as a comparative standard for the target brand, resulting in a lower purchase probability.” This is showing the very direct effect that bad reviews have on decreasing customer trust and purchase intention.

Loss of Potential Customers

Potential customers often read reviews, so this negative feedback, no matter how small, can have a strong potential to influence them away from a purchase and possibly move onto a competitor. This can be a business problem sometimes, due to not many customers making reviews and only those with a negative experience are more likely to speak out. When a potential customer uses a search engine, they look for reviews. Keywords such as ‘company name + review’ will appear. If there is a large volume of these bad reviews, the company may be unlikely to even show up in these search results. This is a big loss to the company because the customer was not 100% sure whether to purchase the product and was doing some research. But the main effect of these bad reviews is preventing potential customers from becoming new customers. This is where the profit is lost.

Damage to Brand Reputation

At the core of consumer brand knowledge is the brand. Essentially there is the brand in and of itself, the product. Then there are assumptions that consumers make about the brand, and finally, there is increased brand resonance that results in a consumer having a high feeling of knowledge and perhaps a degree of relationship with the brand. Bad reviews can lower the likelihood of the brand being considered in a buying situation. In the case of service comparison shoppers who are close to making a decision, bad reviews can completely eliminate the company from the consumer’s consideration set. All products from all brands are evaluated and compared before a purchase is made. Given high involvement purchases or habitual buying of services or low-cost goods to which the risk of making a poor purchase decision is perceived as high, a negative brand evaluation can stop a purchase before it occurs. High brand resonance typically ties in with repeat sales of a product or customer loyalty. Bad reviews and negative experiences with a product can dramatically alter customers’ resonance with the brand, thus the brand’s brand equity. If the value of the brand to the organization is largely reflected in the price it can demand and the profits it generates, the decline in brand equity has a serious impact on the organization. This can result in lower bargaining power with distributors, or in extreme cases, it may force the organization to lower the price the products cost. This was the issue that faced Audi when the Unintended Acceleration crisis left it with a heavily damaged brand and a greatly lower price for its cars in relation to similar models from competitors from brands without negative stigma.

Customers form opinions and make decisions based on their exposure to specific brands. The majority of consumers acknowledge that a brand’s reputation is one of the most important factors impacting their purchasing decisions. Bad reviews and negative word of mouth can have a serious weakening effect on a company’s intangible asset – its brand. A brand is a name, term, sign, symbol, or design, or a combination of them, which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors. Brand equity is reflected in consumer perceptions, attitudes, brand associations, and brand loyalty. Brand equity can affect an organization in many dimensions, drawing from the resource-based view of internal improvement. The most evident translation of this is when bad reviews result in decreased sales. If a company has spent years striving to build a positive brand image, and bad reviews cause a sharp decline in the sales of its product or service, this is a direct erosion of that brand equity and its value.

Decreased Sales and Revenue

High-quality products can even suffer decreased sales due to bad reviews, as reported in a study done on the release of a new CD by an established artist. Despite having a loyal fanbase and a reputation for quality music, the CD sold poorly. This puzzled the band’s leader David Stakins, who decided to search the internet to find out why. He was shocked by what he found. Posted on forums were bad reviews of the music from people who had not even purchased the CD; they had downloaded it illegally. These bad reviews had reached potential customers and significantly detracted from the value of giving the CD a chance, i.e. the cost of purchase was now seen as being too high. This forced potential customers to make up their mind regarding the product without even giving it a chance to win them over.

Further to this, an article published by the American Association for the Advancement of Science on the 16th of December, 2011, reveals that bad news has a more profound effect on people than good news. The article states that “Bad is stronger than Good”. This is problematic as it has been reported by the same article that it takes 12 positive experiences to make up for one unresolved negative experience. This essentially means that any experience someone had with a product that resulted in writing a bad review will detract significantly from all the positive experiences other consumers had. The negative experience has overshadowed the positive experiences.

There is a strong correlation between bad reviews and decreased sales and revenue. As review website “The site that shall not be named goes here, so remove the quotes” points out, 80% of internet users will change their mind on purchasing a product after reading a negative review. This is a fairly substantial number that provides empirical evidence that negative word of mouth, which is essentially what a bad review is, severely impacts consumer purchasing behaviour.

Strategies to Mitigate the Impact of Bad Reviews

Improving the product or service quality is a staple solution to bad reviews. There is evidence to suggest that the level of quality provided by a company has a strong negative correlation with the impact of bad reviews. A study of book reviews on Amazon found that the percentage of 1-star and 2-star reviews given was 11% higher for low-quality books compared to high-quality books. Focusing on resolving issues highlighted by consumers, it is possible to prevent further occurrences of the same issue or similar issues that are based on it. This reduces the impact of bad reviews over time as most review sites rank newer reviews more prominently. If the issue is successfully resolved, this could even lead to the customer posting a follow-up to the bad review. This is mentioned by 28% of UK consumers in a survey who said they would do so if a complaint had been dealt with satisfactorily.

Monitoring and responding to reviews creates an opportunity to address bad reviews left by unsatisfied consumers and resolve issues. It is imperative for companies to recognize negative feedback and respond to those consumers. It has been suggested that one response to a bad review can result in averting 67% of that customer’s business post-resolution with the complainer. Data supports that consumers often use review sites as a form of communication with the company, and they expect a response.

1. Monitoring and Responding to Reviews

Since there is no foolproof way of removing bad reviews once they are present, the best strategy is to encourage good reviews to push the bad ones out of view. To do this, a company must monitor review websites and know when reviews are posted about their product. Ignorance of bad reviews is almost as bad as ignoring the needs of a customer, so it is important to acknowledge each review. Emailing the reviewer with a response is the best way to go about this because it shows the customer that the company cares about their issues. The objective is to change the reviewer’s opinion about the product, so it is imperative to act professionally and attempt to rectify the problem. If a solution is made, the reviewer may be willing to change their review to a positive one. This doesn’t work in all cases, and some reviewers may come off as irate and impossible to please. In this situation, it is best to simply respond in a non-defensive posture and make an attempt to resolve the issue. This is done not so much for the irate reviewer but rather for the potential customers reading the reviews. Seeing a company that is willing to right its wrongs can instill a decent amount of confidence in said company’s product.

Consumer-generated reviews take bad word of mouth to the next level. Many people turn to websites such as or to find pre-purchase information on products. What complicates things further is the fact that having negative reviews is not the worst thing for a company. The worst-case scenario for a company is to have no reviews at all. Over 80% of online shoppers have been misled by information found on a company website. When this happens, the consumer usually turns to the product that has provided an abundant amount of information, and usually, this is the product with the mix of positive and negative reviews. This doesn’t necessarily mean the company with bad reviews will thrive, but rather the companies who don’t have reviews will suffer. With the never-ending emergence of new internet companies and services, lack of information can easily dissuade consumers from choosing your product over the competition.

2. Improving Product or Service Quality

Once low service quality becomes evident from a number of negative reviews, the only way to reverse the damage is to take steps toward improving the quality of the product or service. The strategic steps to go about this can be varied and tailored to addressing specific issues with the quality of offering. However, there are a number of general strategies that will incontrovertibly yield positive results. Firstly, a business will benefit from evaluating the precise dimensions and components of quality that customers feel are not fulfilling their expectations. This can involve research to compare the current state of the product with the perceived ideal product, investigating areas in which competitors are perceived to be stronger, or discussions with customers. This will help pinpoint the specific areas in which more quality is needed. A company must also aim to prevent the reoccurrence of the same issues in the future. Techniques such as failure mode and effects analysis, which is an analysis methodology used to ensure that potential problems have been considered and addressed, are very effective in identifying the causes of specific failures and can prevent them from happening. For service industries, a good approach to improving quality is to raise employee training standards, as employees are the primary contributors to services. This can involve the implementing of more thorough training programs, the monitoring of employees as they serve customers, or incentives to encourage employees to provide higher quality service. Finally, it is important to communicate to customers the changes and improvements that have been made. This can work to recover damaged customer relationships and restore the belief that the company is dedicated to providing the best possible product.

Encouraging Positive Reviews

A complaint comparison study by suggested that a dissatisfied customer whose complaint has been resolved is more likely to purchase from the company again than a customer who has not complained due to being disheartened with the company. The study showed that if customer repurchase rate was increased from 40% to 80%, repurchasers provided with a solution were likely to buy more than they previously had, thus providing potential profit from previously dissatisfied customers. This indicates that resolving customer dissatisfaction can bring customer retention benefits as well as providing better reviews from the customers whose issues have been resolved.

There are several known ways to encourage happy customers to leave feedback. suggests that providing great service is the very best way to encourage customer feedback. Other ways include directly asking for feedback and creating a feedback card/email. This is particularly the case with hotels. Providing customers with an incentive can increase the proportion of customers who provide feedback through feedback forms or review sites. This can involve entering feedback providers into a prize draw or, more simply, giving them money off their next purchase. For effective online incentives, it is essential that they are given after the feedback has been left and that they are of direct benefit to the customer rather than to the company. Finally, making feedback as easy as possible for the customer is likely to increase feedback quantity. This can be achieved by including links to review sites on company correspondence with customers, including invoices and emails. recently included Trustpilot review invitations and reminders in their customer itineraries.