Levelling the playing field between buyers and business


Could bilateral online reviews be commerce’s ‘great equalizer’?

By Patrick Vaillancourt, Senior Columnist

It is often said that “the customer is always right.” The expression is perhaps as old as commerce itself: we’ve all heard it said and we have all used it at one point or another when trying to resolve a grievance or complaint with a merchant.

I didn’t coin the expression, but my understanding is that it was coined as a means to highlight the benefits to businesses in providing a high-quality customer experience. After all, a happy customer is a repeat customer.

The art of doing business, as any student of the subject would attest, is a complex mixture of providing quality products or services at an attractive price-point, while offering the best experience to the clientele. A failure on the former would simply result in a customer looking elsewhere, whereas any misgivings on the latter could potentially produce blowback that could cripple a commercial venture.

Ask anyone who has owned a small business in the last 25 years: they likely won’t joke about that double-edged sword known as “word-of-mouth.” The dynamic of a business transaction—that of a buyer and a seller—has always tended to favour the buyer. If a buyer didn’t like their experience, there are consumer relations boards to call, a letter to the Better Business Bureau to be written, and spreading that horror story to 10 friends. Business owners could do little about managing a disgruntled customer, aside from trying to resolve the matter privately.

Just as business owners bowed their heads and found solace in the notion that it couldn’t get anymore one-sided, the Internet came along.

The digital space is increasing its reach into our lives, and it is only accelerating exponentially as more and more people become literate in developing smartphone applications and other web-based services. Its importance in our lives compels businesses to adapt, asserting their presence online to increase their reach. The benefits to businesses going online are limitless, but in the early days of the Internet, owners of small and medium enterprises (SMEs for short) saw the digital space as simply another avenue for consumers to air their horrible customer experiences. It wouldn’t even matter if the experience was factual. The attitude was, if a customer detailed their story about a product or service they didn’t like via a blog or forum post, the business was at fault. When you consider the anonymity granted to a user of the Internet (especially in its early days), there was no recourse for a business to rectify the situation. Once again, “the customer is always right”—even if they lie.

There was some semblance of change when eBay came on the scene with its proprietary feedback system. It naturally allowed buyers to rate their seller either positively or negatively and allowed them to leave a detailed account of their experience. It was, however, revolutionary when it allowed sellers on the site to rate their buyers.

Surprised? Yes, eBay allowed its sellers to rate those who purchased products or services from them, and allowed them to leave comments on a buyer’s profile as well.

Suddenly, that buyer who promised to pay for the item within 24 hours could be called out by the seller for paying late, or not paying for the item at all. It was eBay’s way of weeding out the bad apples, and helping those trying to run a business worry about just running the business.

The eBay feedback model evolved with time, and its ratings have become more geared toward ensuring that quality sellers get the most exposure. Buyers with repeat negatives on their profiles are dealt with by site administrators, usually with a suspension or removal from the site altogether. The model may seem primitive now, but in 1997 it was the first of its kind.

In recent years, other online initiatives have followed in eBay’s footsteps. Not a bad idea when you consider how prominent online reviews have become in the buying behaviour of consumers.

A study conducted by BrightLocal revealed that, “79 per cent of consumers trust an online review as much as personal recommendations.” The same study concluded that 73 per cent of those surveyed made decisions on the trustworthiness of a business based on online reviews.

What does that mean for businesses? Companies with positive reviews are able to convert up to 183 per cent more business than a company with negative or no reviews, and with consistent good reviews they are potentially earning a business with 58 per cent more sales revenue.

The story of online reviews is one of dollars and cents, which is why initiatives meant to give business a voice online are now starting to find some traction. That consumer’s blind rant about a business they don’t like isn’t as damaging as it once might have been, thanks in large part to innovative new uses in online review websites, such as rating a review. This particular technique, in which a user can rate another user’s review as either “useful” or “not very helpful,” has sprung up on Yahoo, TripAdvisor, Amazon, and Yelp, just to name a few. These sites will take the information from these ratings to rank the order in which reviews appear. Those that are deemed more useful are featured more prominently on the page, while the others are found at the bottom of the list.

Other sites too have adopted eBay’s bilateral review approach, such as Airbnb and Uber. In the case of Airbnb, a site that allows a user to find a place to stay within someone’s home, reviews could be critical. No one wants to welcome a stranger into their home if they have a track record of destroying the furniture. The case is the same with Uber, the app-based taxi service, which allows drivers to refuse fare from customers if they are rated poorly.

Many business owners welcome the opportunity to participate, and some are not pulling punches.

Take, for example, a case from April 2013, in which the owner of a popular Beverly Hills restaurant publicly shamed some of his prospective customers on Twitter for not showing up for their reservations on a busy Saturday night. The owner, who had prepared for a packed house that evening, turned away dozens of walk-in customers, only to have seven parties “no-show” that night.

“I hope you enjoyed your GF’s B-day and the flowers that you didn’t bring when you no-showed for your 8:15 res.,” read one tweet from Noah Ellis’ Twitter account. A tweet posted shortly thereafter tagged seven people as no-shows for reservations that evening at Red Medicine, the restaurant co-owned by Ellis. The public shaming of his customers sparked a mixed reaction on social media, but many took to Yelp to give Red Medicine poor reviews. It didn’t seem to matter, since the media attention caused by Ellis’ tweets gave the restaurant more exposure, thus expanding its customer base.

A review that enables a business owner to publicly shame customers clearly isn’t the answer, but bilateral reviews seem to be more acceptable because they still provide some discretion. The idea is still in its infancy, and the complete story of online reviews will only unfold through the passage of time. Nonetheless, digital innovation seems to have made the relationship between buyer and seller somewhat more equal.