Today in Digital Marketing - Special: How Much Damage Can a Single Negative Product Review Have?

Starting point is 00:00:00 Do you have business insurance? If not, how would you pay to recover from a cyber attack, fire damage, theft, or a lawsuit? No business or profession is risk-free. Without insurance, your assets are at risk from major financial losses, data breaches, and natural disasters. Get customized coverage today,

Starting point is 00:00:18 starting at $19 per month at zensurance.com. Be protected. Be Zen. It is a stat holiday here in Canada today, at zensurance.com. Be protected. Be Zen. 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. 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. Martin Varga is co-author of that paper. He is an assistant professor of marketing at the Bocconi University in Milan, Italy. Dr. Varga, welcome.

Starting point is 00:01:15 Thank you, Todd, for the kind invitation and the amazing introduction. It's my pleasure to be here with you today. 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-authored with Paolo Arbe-Kirki from INSEAD, 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?

Starting point is 00:01:57 Yes, yes, yes. To if there was no negative review on the product page before. But on average, that works. So it's a big impact. You know, 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 1,000 or 2,000 reviews, I feel like I take into account the positive and the negative and that I don't

Starting point is 00:02:26 really, you know, if it's just a handful of negative reviews that I, you know, it's not a big deal to me. 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. 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 they stick with it they are just that's just fine for most of the people so imagine if you see something bad within this set. That makes you not to buy the product, essentially.

Starting point is 00:03:10 Of course, if you have time to investigate hundreds of reviews, obviously you will find a few that are pleasant. But given the limited attention we pay to information, we are all busy. So that's what makes people very sensitive to negative information in these days. 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. So think about like what I have on my desk, a water boiler. You know, I didn't really purchase that product because I fell in love with this category, but because I

Starting point is 00:04:01 needed a water boiler to function so that I can have my tea. So these products are utilitarian de mert a végzőknek kellett egy végzőhely, hogy legyen a teámba. Ezért a következők együttműködőek, mert akarjuk őket, mert a főnöknek van a működés. I need to possess this product. I need to own it. So think about like an Xbox or any game or home decoration. So these are more like hedonic products. 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 that there is you cannot really argue with that if it doesn't turn on then it doesn't

Starting point is 00:04:52 turn on and people want you know a toaster to toast properly and not to miss the breakfast. How did you study this? Can you briefly describe the methodology you used? Yes. So I previously mentioned to you that the setup we have is that people go, it's 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. And then they have the chance to scroll down and see the most recent reviews. You know, just this setup is quite typical among many retailers, technically around the globe. So then people go down and they see the first set of reviews. And I mentioned that people have limited attention, so they typically don't click on the second set of reviews.

Starting point is 00:05:43 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. 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 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're on the way you you're preparing for your podcast and then you only see good reviews now my question to you like who is more likely to purchase that item, you or I?

Starting point is 00:06:32 So you only saw positive reviews on the bottom, but I actually happened to see some negative. And because both of us are busy, you know, here is the end result is that you might buy the product and I will not. Do you have business insurance? If not, how would you pay to recover from a cyber attack, fire damage, theft, or a lawsuit? No business or profession is risk-free. Without insurance, your assets are at risk from major financial losses, data breaches, and natural disasters. Get customized coverage today starting at $19 per month at zensurance.com. Be protected. Be Zen. Getting access to a pool of data for this kind of research is not

Starting point is 00:07:06 easy. Your data came from a British retailer and it was from 2015. Since then, of course, retails changed pretty dramatically. Online purchasing has changed. How do you think your results would differ if you had access to more recent data. That's a good point. I think our results hold, and if not, they might even be more pronounced because, you know, basically we are talking about attention spam. And compared to eight years ago, we might say that we are even more busy. Maybe our attention spam is even less. So because all our results kind of boil down that people don't really pay attention to all the reviews,

Starting point is 00:07:49 maybe today they pay attention even to 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 is posted? 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.

Starting point is 00:08:29 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 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.

Starting point is 00:09:04 Why this topic? What inspired you to investigate this? So when I started this topic, I started to study this topic when I joined the PhD program and my background was economics. And at that time, I was thinking like maybe

Starting point is 00:09:18 I want to dive into a topic that is like really interesting to all marketers. That was one potential reason why I started this topic. And 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,

Starting point is 00:09:46 I keep posting reviews about hotels. Negative reviews, apparently. 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? 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

Starting point is 00:10:20 is that improve on product quality. So, you know, you avoid all chances of getting negative reviews. Fair enough. Okay, fair enough. But that's on product quality. So, you know, you avoid all chances of getting negative reviews. Fair enough. Okay, fair enough. But that's not necessarily easy. So what, you know, here is like one option could be like offer customers some chances to reconcile the issue. So maybe offer some refund if the product doesn't function.

Starting point is 00:10:41 You know, you receive a toaster that doesn't toastödik. Ha egy tostot keresztül veszed, talán képesek az összeállításra, vagy talán képesek a lehetőségét, hogy egy újabb produkciót készítessék, talán egy kicsit jobb verseny, Another option, or what I would recommend, is the team-proven customer service. Maybe that's something that 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. And that's something you can do even without adjusting your product quality much. What surprised you the most about your findings?

Starting point is 00:11:33 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 and whatever specification, how I run, how hard I try to figure out what are the effects, I always found this 40-50% negative effect. And that's just strong.

Starting point is 00:12:00 Even one single review can create this aversion. 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 invitation. And then it was really my pleasure to talk to you. Martin Varga is an assistant professor of marketing at Bocconi University in Italy.

Starting point is 00:12:19 He joined me from Milan.

Today in Digital Marketing - Special: How Much Damage Can a Single Negative Product Review Have?

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.