A new study shows companies that respond to user reviews get better ratings overall.
It’s not really news to point out that buyers and renters are likely to consider online reviews when making decisions about properties. In fact, more than 80% of Americans seek a recommendation when making a purchase of any kind.
All this is great for real estate — when the reviews are good. But stay in business long enough, and a few bad reviews are inevitable.
So what do you do when reviews go bad?
A brand new study from Harvard Business Review (HBR) shows that businesses that respond to reviews get better ratings overall. This means that bad reviews don’t necessarily spell disaster — but they do mean that you should incorporate a response plan into your overall marketing strategy.
Replying to reviews is a important part of online reputation management, which is especially crucial in the real estate world, where companies live and die by their reputation.
How does responding to reviews improve your online reputation?
To examine this question, Assistant Professor of Marketing at University of Southern California Marshall School of Business Davide Proserpio and Assistant Professor of Marketing at Boston University Questrom School of Business Giorgos Zervas looked at tens of thousands of hotel reviews and responses from TripAdvisor.
What they found was that “when hotels start responding, they receive 12% more reviews and their ratings increase, on average, by 0.12 stars.” While 0.12 may not seem like a lot, in the scale of TripAdvisor’s 5 star system, where ratings are rounded to the nearest half star, it has a significant impact on customers’ perceptions.
Proserpio and Zervas found that “approximately one-third of the hotels we studied increased their rounded ratings by half a star or more within six months of their first management response.”
Why is it that the hotels started to get more and better reviews when management started responding?
The researchers examined every facet of the data to rule out other factors that would undermine causality, and found that, in fact, “improved ratings can be directly linked to management responses,” rather than improvements made to facilities or services.
To explain it, the researchers make the analogy of eating at your favorite restaurant, and your meal arrives late. You complain to your dinner companions, but when the manager checks in seconds later and asks how everything is, “for a moment, you consider complaining, but instead choose to avoid confrontation and focus on enjoying the rest of your meal.” Essentially, by humanizing your presence on review sites, you discourage potentially awkward online interactions.
The researchers conclude, “While negative reviews are unavoidable, our work shows that managers can actively participate in shaping their firms’ online reputations. By monitoring and responding to reviews, a manager can make sure that when negative reviews come in — as they inevitably will — they can respond constructively and maybe even raise their firm’s rating along the way.”
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