Everybody’s Talking: The Escalating Impact of Customer Reviews By Diane Merlino / October 23, 2012 Share 1 -- Online customer reviews have evolved over the last few years into a must-have e-commerce commodity that directly influences sales and a company’s bottom line. The popularity of social media platforms kick started a revolution in e-commerce by introducing a customer-driven “quality aspect” that had previously been missing, according to Benjamin Jost, an expert on social semantic search technology. “Before we had only pictures and descriptions from the businesses themselves, but could you trust that, was it real? Social media — and reviews especially — introduced this quality aspect in every vertical in e-commerce, not only in travel. It provided a platform for consumers to share opinions,” said Jost, co-founder and CEO of TrustYou, an online reputation management company with a current focus on the hospitality industry. Online reputation management has had a relatively brief evolutionary history. TripAdvisor, one of the first entrants in the space when it began featuring customer reviews more than ten years ago, was joined by many other online companies in short order. A company’s online reputation, “wasn’t really that influential ten years ago, but now that it has become a commodity it can really hurt your revenues,” Jost said. “You don’t buy anything online if it has bad quality — if it has bad reviews. That’s just a fact.”The inspiration for TrustYou came from the personal difficulties Jost had as a business traveler. “We desperately searched the web for quality information, because you don’t want to sleep three or four nights in a crappy hotel in a crappy bed.” Failing to find any single site where aggregated hotel information was both easily accessible and trustworthy, Jost and partners decided to start their own company. They launched as a consumer site in 2008, but based on feedback from hotels on the site, and other business imperatives, in 2009 the partners pivoted the company to its current focus of business-to-consumer. Three years later, TrustYou counts among its customers about 10,000 individual hotels and a smattering of destinations, primarily in Europe. The company is international, with 60 employees who collectively speak 24 different languages. Jost said proprietary semantic technology enables TrustYou to daily extract “millions and millions” of reviews from more than 250 sites, and to monitor tweets, posts and thousands of blogs. The article that follows is an edited version of an interview conducted earlier this year. Are there any new social media channels emerging that will influence buying decisions or booking behavior? Review channels are still the most important, because a review channel is basically a sales channel for hotels. If I want to book online, I will go to TripAdvisor, Priceline, booking.com — whoever is out there. The reviews from all these channels influence revenues. Now a pure reputation channel, not really a booking channel, is growing. I’m talking about Twitter, foursquare, Facebook, where people ask for recommendations or have recommendations, and other followers read it. We see these channels growing in importance. We even see where people are asking for hotel recommendations on Twitter — ‘hey, I have to travel to New York next week does anybody have a good recommendation?’ We started seeing that trend about a year ago, and now more people are doing it. We search for those tweets because it’s a great way to engage with that customer if you are a hotel in New York. What about the segment of customers that books offline? Some of those customers search online but book offline. And every year we see online search and online booking going up, so there is a clear trend that everything will happen online, eventually. We know that the number of online reviews a company gets is important. Does it basically come down to a numbers game?As a customer I’m obviously more interested in a hotel that has 1,000 reviews than one that has five, because it tells me something about the hotel. So it boils down to which companies can encourage their customers to write about them — and the more places the better. In a connected world, the more content you have out there the higher the possibility that people will find you. So it is a numbers game. If you are only on your own little spot on the Internet where no one can find you, you’re lost. This is the next challenge for every hotelier and every hotel chain — how can we be present on the web and how can we leverage it? What comes after that — after a company has enough reviews to establish a sold online reputation. Then you have to stay ahead of it — you can’t fly blind. You have to read it, track it, monitor it, and respond to it. Every response is crucial. Everyone in the hotel industry is really afraid of those one-star reviews. I can understand that, but what they can do about it is respond. If there is a customer who is complaining, if you don’t respond it’s only his voice out there. But if you do respond, it shows you take the complaint seriously. Everyone sees your response. And there are many customers who know that out of 10 reviews, one or two people always complain. We know this from our own families, we know this from our friends; it’s a natural thing. So there is nothing to be afraid of, it’s about staying ahead of the game and being present and engaging with customers. Just do your homework. You’ve gathered some interesting statistics about hotels that don’t respond to negative reviews — I believe you call it the silent 68%. Is that the actual percent of hoteliers who don’t respond to negative reviews online?That’s what the data tells us. The equation goes, if you respond — regardless if the review is positive or negative — you see an average 6% higher review score. Traffic on your hotel through these channels is lower with a lower score, and that directly influences revenues. So, respond and you get better scores and higher revenues. Don’t respond and you get lost opportunities, not so good rankings, and less revenue. When I go to these social media conferences, I always hear someone talking about how companies need to start with a social media strategy, with Facebook and Twitter profiles. That’s not starting with your homework. Your homework is to encourage more reviews, track those reviews, and respond. Everything else is just the cherry on the cake. Do hotels get any peripheral benefits from tending their online reputation?The revenue is always at the end of the equation, but there are some soft factors in between. Reviews help you understand your guests better, their likes and dislikes, so you can improve on things you need to improve and market the things you’re really good at. They also help you understand your competition. This won’t immediately affect your revenue, but it will affect your revenue over time. Your business is primarily focused on hotel clients. What about destinations, or other segments of the travel industry?Destinations are a different kind of customer. Their needs are always very marketing driven, and they understand that people will come to their destination based on their reputation, so they integrate reputation information on their websites. Most of our destination clients today are regional DMOs here in Europe, but we also have countries. One example is Switzerland. The Swiss Hotel Association, which gives the star ratings to hotels in the country, realized that the system is probably old news. People looking for hotels now care less about the star rating and they care more about the social media reputation. We developed something called The Trust Score, which is basically the seal of approval for a hotel — it’s the overall score up to 100, based on all the reviews we monitor across the web. It’s kind of like the JD Powers rating for hotels. The Swiss Hotel Association partnered with us — they have 1,000 hotels in their association. They said we want to get the Trust Score for all of our hotels, and we want to see the analysis of what people liked and disliked for each hotel, and that information will become a parameter in our star rating process. And from 2014 on, no hotel will get a 4-star rating unless they have a certain level of Trust Score. I think that’s a revolution. We started that revolution here in Europe; we’re working with Germany, Switzerland, and 14 other countries on that same model. We are integrated in their IT systems. There is a lot of discussion going on about how to integrate the Trust Score. Some countries are just monitoring it for now. Some, like Switzerland, are already using it as a sector in their star rating, and others are putting it on their website. It gives people an exact data point that was previously missing. Where is all of this heading? Is it already imperative that every travel supplier have customer-generated reviews on their websites?Yes, absolutely. We talked about it becoming a commodity. I don’t see any successful e-commerce site out there that does not have some sort of social media information. It has to be trustworthy, it has to be transparent, it has to be from a trusted third-party independent site. But you have to have it on your site. Don’t most hotels already do this? No! We see it starting, we see them finally realizing they need this sort of information on their websites. But many hotels still don’t realize what a huge opportunity this is. Can the same principles about online reviews that we’ve been discussing apply to other travel verticals, like cruise lines and tour companies? It has been said that the hospitality industry was ahead of the curve when it came to online reviews. More accurately, it was the hotel sector of the industry that was really the early adaptor in this space. Online feedback about airlines, cruises and other segments is much more limited than hotel-specific reviews, in large part because of the way review sites and online feedback are structured — the focus is primarily on the hotel stay. But the same principles of reputation monitoring can absolutely be used across all segments and touch points of the travel industry, and I think we will continue to see more and more reviews incorporated into sites across the board.