Why focusing on negative reviews pays off for a retailer

June 5, 2015 03:51 PM

Finding the positive in the negative is not just some pithy phrase; it’s good business. That’s the message from Henry Coleman, director of marketing for retailer Hammacher Schlemmer, and Matt Moog, CEO of PowerReviews, who presented “How to Mine Negative Reviews for Positive Results” at the Internet Retailer Conference & Exposition on Thursday in Chicago.

A majority of consumers won’t shop on a site that doesn’t have reviews, and data shows that consumers like negative reviews whether of products, places or services, Moog said. 82% of consumers seek such comments online, and that jumps to 86% of consumers under age 45, he said.

Hammacher Schlemmer, which specializes in gifts and innovative products and is No. 373 in the Internet Retailer 2015 Top 500 Guide, spent 18 months studying the impact of customer reviews. Not surprisingly, they found that customers who were “delighted” spent more money, Coleman said.

Customers who gave two stars to a product were uncommon, but they would write paragraphs about why they didn’t like it, Coleman said. “When we excited people, they rewarded us, and when we disappointed them—wow—it was a wake-up call,” he said.

Every negative review received follow-up communication from Hammacher. Customer feedback prompted the retailer, which has a website, a store in New York and the longest-running catalog since Montgomery Ward stopped publishing one, to make sure only top-performing and top-reviewed products received the “hero” spot in emails. The retailer also re-evaluated how it described products to ensure they were meeting customer expectations and reworked supplier contracts to include clauses allowing for the return of products that did not perform well in reviews, he said.

Coleman offered several product examples: A sandalwood watch had a 2.7-star rating, mostly because of complaints about the clasp. Hammacher worked with the manufacturer to change the clasp, and the rating improved to 4.3 stars. A suitcase billed as “the world’s lightest luggage” was receiving an average of 3.2 stars, lower than what staff expected. It turns out customers thought the case would have leather handles, not lightweight foam ones, so the company modified the product description and reviews improved to 3.9 stars, he said.

But sometimes an item just couldn’t be fixed. A video camera clock was selling well, but its ratings varied from one star to five because it wouldn’t work consistently. The manufacturer couldn’t address the quality control issue, so Hammacher dropped it, he said.

In addition to the insight on what products matter most and why, reviews on a site drive traffic, Moog said. User-generated content on a product page draws more organic search, and “reviews drive sales online and in stores,” Moog said.

Gone are the days of measuring customer satisfaction mostly by the number of returns. Often, especially on lower-priced items, customers won’t bother with a return because it’s not convenient, Coleman said. Reviews offer greater insight and help Hammacher ask questions that improve its business model, he said.

“We stopped selling products we realized were disappointing customers,” Coleman said. “We didn’t have this information before, and now I can’t imagine operating without it. It’s key to the long-term customer relationship.”




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