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The High Cost of Paying for Reviews
The pressure to keep up appearances is encouraging companies to pay for praise.
For the rest of the December 2012 issue of CRM magazine please click here
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Given that online reviews can be a driving force behind a business's success or failure, some companies have started paying for positive reviews about their products. But this increasingly dangerous practice usually fails to produce the desired effect.

Research firm Gartner predicts that by 2014, 10 percent to 15 percent of online reviews, including those posted on social networks and sites such as Amazon, Yelp, and YouTube, will be fake and paid for by companies.

To protect the integrity of their sites, some of these Web providers have begun employing a combination of algorithms and moderators to separate sponsored reviews from the unbiased versions. Facebook, for example, has begun weeding out "likes" that were purchased in bulk or gained from malware and compromised accounts.

Among those affected was gaming site Zynga's Texas HoldEm Poker, which lost more than 96,000 likes in one day, reported TechCrunch. Pop star Justin Bieber and Argentine soccer player Leo Messi also lost tens of thousands of likes as a result.

The Federal Trade Commission is also looking to crack down on misleading online reviews. It requires bloggers who review products to disclose any connections with the companies involved and can go after companies that pay for reviews.

In 2011, the FTC levied a $250,000 fine against Legacy Learning Systems for not disclosing that hired marketers had written reviews of its products. According to the FTC's complaint, the Nashville-based company hired an online affiliate program that recruited "Review Ad" affiliates to promote the company's guitar lesson DVDs through endorsements in articles and blog posts. These endorsements generated more than $5 million in sales of Legacy's courses, reported the FTC.

When it comes to padding reviews, most companies understand the significance of what they're doing, but it is difficult to ignore the pressure to post positive reviews, maintains Gartner senior research analyst Jenny Sussin. "Clients tell us they need the initial views to get visibility, or they have to report back to management, and it doesn't look good if they don't have a lot of commentary [on a product or service]," Sussin says. "We understand that, but [online reviews] are going to be something that [are] increasingly scrutinized, and more companies will be caught."

Companies will invariably get negative reviews, because it's impossible to please every customer every time. To deal with these, companies should make it clear that they respond to complaints, advises Kristin Muhlner, CEO of newBrandAnalytics, a social business intelligence provider. "Generally when a company responds to a negative review, it allows everyone to see it," Muhlner notes.

Muhlner also advises organizations to encourage customers to share their experiences about the company by including a blurb on receipts or having employees tell customers they would love to hear from them.

If customers are genuinely unhappy with a company, "fake reviews won't fix the problem," adds Nathan Chaney, CEO of WebStar, a Web site design and reputation management firm. "You can purchase 100 reviews, but those aren't 100 customers, and your customers are still mad," Chaney says. "If a company has a ton of bad reviews, the best way to fix it is to fix your way of doing business."


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