Research says 85 percent of people will make a purchase after reading online reviews about a product or service. This has had huge implications for the hotel industry and helps explain why TripAdvisor, a massive repository of user-generated reviews, was the most-visited travel website in the world in 2013. Professor Thales Teixeira discusses TripAdvisor’s staggering success, how the company has forced an entire industry to change the way it considers (and purposefully influences) the online review process, and how consumers navigate that sea of reviews.
Listen to the Cold Call podcast here.
Brian Kenny: What motivated you to write the case? Why were you interested in it?
Q: Which you do by providing a better experience for people.
A: Yes, that’s the point. Word-of-mouth has always existed. If you have a better product, you’re going to have a better review. But that’s not what’s in this discussion. If you’re going to have a better product your advertising is going to work more. Apple’s advertisements work very, very well because they have amazing products.
The point here is not improving your product, because I could go to any hotel and say, “Oh you want to sell more, I know what you should do—have a better hotel, have a better experience, have better services.” And then word-of-mouth is going to be better and you’re going to sell more. And they say, “Well, that’s obvious.” Apart from the product, you cannot influence the quality of your reviews unless you start doing things that are very, very fuzzy. For example, some hotels when you check out they ask how your experience was. And if you said, “Oh it was amazing, I loved it, the staff are so good,” then they give you a form and ask you to please fill out a review on TripAdvisor and we’ll give you [something]…
Q: They’re manipulating you.
A: Manipulating to some extent. You could argue what the definition of manipulation is. If it’s changing your mind, they’re not changing your mind because you already said that you love the experience. All they want from you is to incentivize you to talk about that experience. So it could be argued that that’s not manipulation. Now what happens with the person who says, “Oh, I had an awful experience, the staff was not courteous, my room was awful.” What are they going to do? They don’t ask you to write on TripAdvisor, so they withhold. They selectively try to choose the better reviews. And at that point in class the students start debating what is appropriate, what is not appropriate, what is actual manipulation, what is actually self-serving by selecting the better ones?
So this idea that companies should start influencing word-of-mouth, marketers should influence word-of-mouth, is actually not entirely correct. We still do advertising because you control 100 percent of your advertising. You have very little, sometimes no control over what other people say about your product apart from the quality of the product itself.
Q: This is a lesson that actually applies to any consumer category really. I would say with pretty much any product or service that somebody is selling, word-of-mouth is always going to be important. So for the marketers that are out there listening to this podcast, is there one particular thing you would like them to take away from a case like this?
A: The particular thing is that while there’s been a lot of badmouthing of advertising, if done well it has an impact on your business. Now there are many ways to do it and some ways have better or worse impact or lower impact. But controlled, firm-driven communication using the brand, my definition of advertising, still has a place for many, many companies. They should track consumer-to-consumer communication, i.e. word-of-mouth, but in some cases with word-of-mouth there’s very little that you can do about it.
Q: So that leads me to my last question, which is for the consumers that are out there listening to this. How concerned should they be about having to filter the authentic reviews from the inauthentic? Is it a rampant problem? Are many brands out there stacking the deck with inauthentic reviews?
A: There’s definitely some amount of influence that the industry is making on providing various levels of inauthentic reviews. When you talk to consumers, most of them say, “I’ve gotten pretty good at selecting which ones are inauthentic and just using the authentic ones.” And that’s one thing consumers say. The other thing is if there are enough reviews I can debias--I can just select the ones that are more authentic and not consider the inauthentic ones.
Q: We use our trust meter that’s built in and figure out which ones are authentic.
A: Yes. And if you had a course in statistics, one of the simple things that you learn is if you’re sampling from a biased set, even if you have a thousand, a million, ten million samples, your sample is still going to be biased. There’s no amount that you can use to overcome a biased sample. Size will never eliminate the bias. Just knowing that is important, that just going to a website that says, “We have a million reviews,” might actually be worse for you to make the correct decision than one that has 10 or 15 reviews. What is important is how these reviews were collected. It’s very important when you’re looking at how the reviews are configured to understand who is allowed to review. And I think that would be my biggest suggestion: don’t think that more is better. In this case, it is not.
Q: Very helpful as I think about planning my next family vacation. Thales, thank you for joining me today.
A: My pleasure Brian. Thank you for having me.
Brian Kenny is chief marketing & communications officer at Harvard Business School.
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[This article was provided with permission from Harvard Business School Working Knowledge.]