Special: How Much Damage Can a Single Negative Product Review Have?

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[00:01:04] We've always been told as marketers that authenticity is key. That sure some people might give your product a negative rating, but you should leave those up. Because it proves that you are a responsible brand, a company that can be trusted.

[00:01:18] After all, if your brand has lots of great reviews, how much damage can one negative review have? To answer that question, we turn to science. Specifically a paper published recently in the Journal of Marketing Research called The Impact of Negative Reviews on Online Search and Purchase Decisions.

[00:01:38] Martin Varga is co-author of that paper. He is an assistant professor of marketing at the Boconi University in Milan, Italy. Dr. Varga, welcome. Thank you Todd for the kind invitation and amazing introduction. It's my pleasure to be here with you today.

[00:01:52] Thank you so much. So let's get to the bottom line first. How much does a single negative review matter in a sea of positive reviews? So in our research that we co-author with Paolo Arbeck-Kirke from INSEAD,

[00:02:09] we find that even one single negative review can have a very detrimental impact on purchase. And if I remember our estimates correctly, that sums to a 42% decline in purchase probability. Wow! From one negative review? Yes, yes, yes. If there was no negative review on the product page before.

[00:02:35] But on average that works. So it's a big impact. As I was preparing for this interview, I was thinking about my own purchase journey. You know, I go on whatever, Amazon.com or something. And I look at, especially if it's got a thousand or two thousand reviews,

[00:02:51] I feel like I take into account the positive and the negative. And that I don't really... you know, if it's just a handful of negative reviews, that I... you know, it's not a big deal to me.

[00:03:03] Am I an outlier? Or is something happening in my brain that I'm not even aware of? I don't necessarily think that you're an outlier. I mean, it depends on how much time people actually spend on investigating reviews.

[00:03:16] And there's one thing that really shocked me in the data is that most people don't spend much time on reading reviews. So whatever they are presented with, like here in our setup, is the first five most recent reviews,

[00:03:30] they stick with it. They are just... that's just fine for most of the people. Imagine if you see something bad within this set. That makes you not to buy the product essentially. Of course, if you have time, if you... if you to investigate hundreds of reviews

[00:03:45] and you obviously will find a few that are... that's pleasant. But given that limited attention we pay to information, it's... we are all busy. So that's what makes people very sensitive to negative information in these days.

[00:04:03] You found that negative reviews have a different impact on utilitarian products compared to hedonistic ones. Can you explain the difference between those two and what you found? Yes, so essentially this means... think about the product that you use mainly because you want the product to function.

[00:04:21] So think about like what I have on my desk. Water boiler. You know, I didn't really purchase that product because I start... I fell in love with this category but because I needed a water boiler to function so that I can have my tea.

[00:04:36] So these are products that are utilitarian products in the sense that we want them because they are functionalities. On the other hand, they are hedonic products that you search for or you might need to search for

[00:04:48] but someone tells you like, okay, I need to... I need to possess this product. I need to own it. So think about like an Xbox or any game or the home decorations. These are more like hedonic products.

[00:05:03] And so yes, your question is like spot on. We find that negative reviews matter more for utilitarian products in a sense because there is no question if I write that a product doesn't function,

[00:05:19] that is... you cannot really argue with that. If it doesn't turn on, it doesn't turn on and people want a toaster to toast properly and not to miss the breakfast. How did you study this? Can you briefly describe the methodology used?

[00:05:35] Yes. So I previously mentioned you that the setup we have is that people go... It is a large retailer in the UK, so they go to the selected product category and they click on a product to view their product page.

[00:05:52] And then they have the chance to scroll down and see the most recent reviews. You know, just this setup is quite typical among all many retailers technically around the globe. So then people go down and they see the first set of reviews.

[00:06:08] And I mentioned that people have limited attention, so they typically don't click on the second set of reviews. So imagine that today I go to this amazing products website and I see a product that has some negative reviews on the bottom of this page.

[00:06:26] Now imagine that we sleep, have a good night and some reviews come in, some customers post their opinions. That basically relegate these negative reviews to the second page. So imagine your friends are posting now great reviews.

[00:06:40] So I thought you go next day and you see the very same product, you scroll down, you are busy, you are running, I mean you are on the way, you are preparing for your podcast and then you only see good reviews.

[00:06:51] Now my question to you like who is more likely to purchase that item you or I? So you only saw product positive reviews on the bottom, but I actually happen to see some negative.

[00:07:02] And because most of us are busy, you know, here is the end result is that you might buy the product and I will not. So this is the Visual Collaboration Platform that helps you run effective, engaging and actionable retrospectives.

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[00:09:07] Getting access to a pool of data for this kind of research is not easy. Your data came from a British retailer and it was from 2015. Since then, of course, retail has changed pretty dramatically. Online purchasing has changed.

[00:09:22] How do you think your results would differ if you had access to more recent data? It's a good point. I think our results hold and if not, they might even be more pronounced because basically we are talking about attention spam.

[00:09:38] And compared to eight years ago, we might say that we are even more busy. Maybe that our attention spam is even less. Because all our results kind of boil down that people don't really pay attention to all the reviews,

[00:09:53] maybe today they pay attention to even the fewer information. So that means that if I had data from today, I would expect the same results if not even bigger. Does it matter to the consumer decision-making process how recently the negative review was posted?

[00:10:11] So that one is a very spot on question, but our research cannot address that given the setup. Because we only face this setup that the reviews are sorted by recency and we cannot disentangle this. So maybe another research can address exactly this point.

[00:10:33] Your study also looked at the role of search process in online shopping. How do negative reviews affect search behavior? So when I see a negative review as a customer, we find that I am more inclined to search for competitor products.

[00:10:48] Because of course it sort of makes sense that this is not as attractive. The focal product loses its attractivity and then I'm more inclined to look out for other things that might be good options. So it increases search clicks for other suitable alternatives.

[00:11:08] Why this topic? What inspired you to investigate this? So when I started this topic, I started studying this topic when I joined the PhD program.

[00:11:17] And my background was economics and at that time I was thinking like maybe I want to dive into a topic that is really interesting to all marketers. That was one potential reason why I started this topic.

[00:11:33] The second one is that I myself, I often post reviews but mostly about hotels. And maybe I wondered whether my opinion ever makes a difference. And it turns out that easily it can make a difference. So since then I keep posting reviews on about hotels. Negative reviews apparently.

[00:11:56] No, I try to be honest when I post reviews. So I post equally negative and positive reviews. So what should a marketer do then? What should a product marketer do or a hotel marketer?

[00:12:10] Are you suggesting that the data shows that we should remove negative reviews from our websites? That's not what I would say. What I would recommend first is that improve on product quality. So you avoid all chances of getting negative reviews. Fair enough.

[00:12:32] Fair enough but that's not necessarily easy. So here is one option could be like offer customers some chances to reconcile the issue. So maybe offer somebody found if the product doesn't function. You receive a toast that doesn't toast, maybe offer the option to exchange it.

[00:12:51] Maybe offer a possibility to get an upgraded product. Maybe slightly or better version potentially for a reduced fee. So some aspects like this could be implemented. Another option or what I would recommend is the improve on customer service.

[00:13:11] Maybe that's something that it has been going on for decades. But in our research we still find that when people complain about customer service, these negative reviews also have a serious strong negative effect on purchase.

[00:13:27] So and that's something you can do even without adjusting your product quality much. What surprised you the most about your findings? I think the effect size potentially that this is so strong. So you know during this many years we have made sure that the effects are robust

[00:13:48] and whatever specification how I run, how hard I try to figure out what are the effects. I always found this about 40-50% effect negative effect and that's just strong. Even one single review can create this aversion.

[00:14:10] Well it's fascinating research. I'm delighted you were able to share it with us. Thank you for your time. Thank you for the kind imitation and then it was really my pleasure to talk to you. Martin Varga is an assistant professor of marketing at Bocconi University in Italy.

[00:14:24] He joins me from Milan. With Shopify you can sell products via favorite channels. Whether personal POS system or an attractive e-commerce platform, social media and marketplaces like Facebook, Instagram and Ebay will be supported. Thanks to the constantly growing selection of innovative functions

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