Thanks to online reviews, customers can now share their brickbats and bouquets with the entire world. For business, the rise of consumer power is both threat and opportunity, reports Suzanne McFadden.
Since the bad reviews, business has only improved for Queenstown's Rees Hotel.
The wounding incriminations were discovered earlier this year: rooms reeking of smoke, grubby walls and sinking ceilings. It just didn't tally with the usual commendations the five-star hotel gets for immaculate rooms, breathtaking views and attentive staff.
But out of the scorn has come triumph. As it turned out, that negative feedback on the website of Travelocity, one of the world's largest online travel agents, rightly belonged to America's Best Value Inn in Midland, in the heart of the west Texas oilfields.
The site had inadvertently posted the five unflattering appraisals under the name of The Rees - a blunder that cost the luxury Queenstown hotel, with its Michelin-starred chef, an estimated 40 room nights a month for two years before it was spotted by the hotel's chief executive, Mark Rose.
But Rose says the stain on the hotel's reputation had a silver lining. "It was all due to a technical problem, not bad reviews. We got great media coverage from it - traffic to our site was up 40 per cent over this period - and now Travelocity are trying very hard. We've since gained a heap of business via their site," he says.
Far from tainting his view of online consumer reviews, the mix-up has only highlighted how powerful the voice of the common man or woman is - especially when posted on the internet for anyone to see.
Consumers, it seems, are no longer happy to trust their own instincts, the glib words on a glossy brochure, or the verdict of a professional reviewer when it comes to buying or booking, either online or in-store. They would rather hear from someone who has tried it for themselves. The internet has also finally given consumers somewhere to vent their discontent about a product, or to deliver a bouquet.
It's a worldwide phenomenon, and one that New Zealanders are rapidly embracing. Nearly three-quarters of Kiwi internet users now read other consumers' product opinions before booking a holiday or buying a new computer, according to Nielsen's 2010 Social Media Report. Of those who hadn't yet, almost two-thirds said they intended to. Around 44 per cent had published their opinions on products, services and brands they'd experienced.
As Tony Boyte, research director for Nielsen's online business, predicted two years ago, the 1.92 million New Zealanders who at that stage were turning to fellow internet users for advice were just the beginning of an online revolution.
"New Zealanders' engagement with online word of mouth communication is going to increase in coming years as social media plays an increasingly important role in consumer decision-making," he said then. "The opportunities for brands and companies to tap into the social media phenomenon are really just beginning to emerge and to date we've only seen the tip of the iceberg."
Businesses are coming to realise that they cannot ignore the power of online consumer reviews. Hotels such as The Rees feature on some 40,000 travel websites across the globe, and Mark Rose knows their impact on bookings. "A site such as TripAdvisor has a huge effect on us, especially as we are an independent, with no central sales office or inducements," he says.
TripAdvisor, the world's largest travel site, draws 50 million visitors a month to its 18 travel sites and collected revenue of US$486 million ($591 million) last year, up 38 per cent on the previous year. Its founder, Stephen Kaufer, encourages independent hotels, without multimillion-dollar marketing budgets, to embrace his site as a free marketing vehicle.
Of course there's no guarantee that the feedback will be all wine and roses (even though a Nielsen global consumer study found New Zealanders were most likely to post positive reviews rather than negative).
"If you are a complacent hotelier, if you prey upon travellers who don't know any better, then yeah, you're probably going to get negative reviews and your business is probably going to go down," Kaufer told the Independent.
But avoiding consumer feedback, for fear of receiving a none-too-rosy review, could be a costly mistake. Frank Gilbert, managing director of New Zealand e-retailing specialist Solutionists, believes business is being lost by those who refuse to include customer reviews as a feature of their websites.
"It's a competitive thing," he says. "That whole webspace is expanding and not only is the technology changing, but the users of e-commerce websites are becoming more experienced.
"Consumers are so much more sophisticated now. They shop all over the world - on Amazon and Net-A-Porter - and experience the ability to post their own reviews. They come back to a local operator here, expecting to see the same, but if it's not there, they aren't as comfortable making a purchase." In fact, 78 per cent of consumers say they have more trust for brands which offer reviews, according to a survey by Bazaarvoice, a US social commerce company.
"I think a lot of retailers are afraid that if they give people the chance to say something negative, that it will put others off," says Gilbert. "We're saying the positives vastly outweigh the negatives, and any feedback is useful. Negative reviews can increase perceived authenticity of websites' review systems.
"You'll get the occasional over-enthusiastic negative person who makes an irrational comment. But people - especially those reading reviews - are smart, and want to make a reasoned judgment, so they are perfectly capable of recognising when someone is having a rant and there's no basis in fact to it."
So what's to stop the target of a bad review simply wiping it from their website? Nothing, says Gilbert, although he believes it is inappropriate for website administrators to edit other people's comments. "The client has a choice of allowing it to be displayed or hiding it."
So as a consumer, there's a knack in knowing whether to trust the reviews we are reading, to judge whether they are genuine opinions written by honest consumers, not by a bitter rival manufacturer or service provider.
Several global surveys have shown that consumers give other people's reviews almost as much credibility as recommendations from friends and family, and the reviews are significantly more trusted than descriptions from manufacturers. But should we be so trusting?
Fake consumer reviews may have contributed to the downfall in 2009 of Ferrit, Telecom's online-shopping website. Public confidence in the company was seriously undermined when it was revealed that seven perkily positive reviews for a $500 two-slice toaster were written in-house.
The Rees receives a couple of requests each month from people asking for a cheaper room rate in return for writing a positive review on a website. Rose says such bribery is becoming more common, "but the answer is always no".
"There are hotels out there that write their own reviews and also aren't particularly polite about others. There are firms in India that will guarantee you a high TripAdvisor ranking, and they own thousands of email addresses," he says.
TripAdvisor has created software to catch out those trying to manipulate rankings, and a team of detectives "who are particularly good at tracking down this internet phoney business," Kaufer says.
There are more legitimate ways to make the best of consumer reviews, and doing so has become a business in itself. In fact, the question of how to use such reviews to best effect has created a whole new genre of public relations.
Some PR companies offer clients online reputation management, to handle the rapid growth of retailing online, and all the new consumer issues that it brings.
PR consultant Fleur Revell, from Auckland-based agency Impact PR, encourages business clients to influence consumer reviews. She suggests all customers should be treated as potential reviewers, and businesses that provide good service should ask their satisfied customers to post reviews on recommended sites.
"Where your product or service is complex, make sure consumers know how to use it. Frustration with a lack of instructions can lead to negative feedback," Revell says.
"The important thing for a business to consider is, far from being the end of a transaction, negative service experiences may be an opportunity for businesses to showcase their customer service."
Resolving the issue is the first and best approach to dealing with negative reviews; that's the advice her company gave when called on by a "large international online retailer" wrestling with negative customer reviews ranking high on Google.
"We suggested they treat each issue not as an argument with a dissatisfied customer, but as a low-cost marketing opportunity. As a result, for the cost of replacing the client's product or refunding their purchasing price, they were able to significantly reduce the number of negative online reviews," she says.
"Once resolved, a business can ask the consumer to update their review, showing the resolution. It's important that it's clear to readers of reviews that they believe the business attempts to address all service issues regardless of whether they are posted publicly," she says.
When a negative review can't be altered online, PR consultants are called on to try to reduce the review's search engine ranking. Negative reviews have the power to trump a business' own website if they appear on a high-ranking site.
"Reducing the ranking of a negative article involves the online optimisation of several positive articles featuring the brand name as a strategically placed keyword. It's a time-intensive process which often needs ongoing maintenance to keep positive stories ranking high," Revell says.
On the other side of the transaction, there's no argument that having the ability to say your piece online, especially in social media, has boosted the clout of the everyday consumer.
Over the past 50 years, Consumer NZ has been all about getting Kiwis a fairer deal, by testing and comparing products, but it's only recently that the organisation has invited members to have their say online.
Sue Chetwin, Consumer's chief executive, says the benefits have been double-edged - for the consumers and for the watchdog.
"Even though other sites provide member reviews, our Consumer members are a reasonably intelligent lot, and we think sharing their views is good communication," she says. "Even if it's a negative review, it gets a conversation going. We saw it as a way of our members becoming more active.
"It's been a wake-up call for us, too, because the feedback is so immediate, and it demands an immediate response. It's certainly made us think about the way we do things."
Sometimes, the public voice has led to change. A case in point was an espresso machine that came out on top in the Consumer-run tests, and still does. But many members found that through constant use, the drip trays were corroding, "and a side knob fell off", Chetwin says.
"For the first time, even though it tested really well, and has subsequently tested well, we couldn't recommend it because the trays were faulty.
"To their credit, the manufacturer changed the metal trays to plastic, but it took a while. It just showed that member comments could provide change.
"We can test new things but we can't test durability. We carry out durability surveys and the information we get back is invaluable. But when people try these products in their homes and then provide instant responses, it's even better."
On the Consumer website today, you can find a slew of everyday users' comments, queries and reviews under virtually all of the products and services the organisation investigates. Heat pumps, vacuum cleaners, car GPS, dishwashers and broadband are the most popular - or most contentious - topics. Some of the subjects Consumer has reviewed of late have been spurred by members' suggestions.
"When TV advertorials first started advertising steam mops, we were inundated by requests from people to test them. So we set up the cafeteria at work as a testing ground. That report has been incredibly popular," Chetwin says. The steam mops, however, proved not so successful.
By approaching manufacturers, Consumer has been able to address some problems encountered by users. A Fisher & Paykel washing machine that repeatedly ticked the boxes in the Consumer tests, for example, left some members agitated when their laundry emerged streaked with white residue.
"We went back to Fisher & Paykel, who pointed out that they needed to use the right laundry detergent for it."
So do manufacturers and distributors generally take note of consumers' gripes and grievances? "I think they monitor our member reviews, and some of them have been quite helpful in answering member queries," she says.
"One thing we have to be wary of is manufacturers putting up incredibly positive reviews. We know how to recognise them now. We've also had cases of rival distributors and manufacturers putting up negative reviews."
Chetwin also remains vigilant for overly cantankerous or erroneous postings from consumers.
"Members think they have a certain anonymity by posting their reviews on the site, and they can be quite rude sometimes. We tend to put them up and give them an immediate response, unless they are really belligerent," she says.
"You get a rude awakening sometimes. People certainly aren't backwards in coming forwards, and if they don't like something, they'll come straight down on it. But the biggest benefit is that we couldn't get a more immediate response.
"It's growing, and that's great, and we'd like to get even more participation. It's the measure of how popular the things we do are, and it means we have to be on our game too."
While New Zealanders were initially a little hesitant at coming forward with their virtual brickbats and bouquets, websites such as mongreldog.co.nz and thevent.co.nz are now emerging that give us somewhere to vent our spleen when we experience flawed service or dodgy goods.
Daniel Drupsteen, an Auckland online entrepreneur, had been travelling through the Americas and arrived home to the shock of a $1200 Vodafone bill.
"I spoke to Vodafone who said there was nothing I could do but pay it. I was so angry and I thought 'where can I go to vent, and get it off my chest?' There was really nowhere to go."
A couple of weeks later, Drupsteen had issues with Genesis Energy: "So on a hungover Sunday morning, my flatmate and I came up with the idea of The Vent."
The website was built in an afternoon, and two years later it is jammed with tales of incompetent customer service, exorbitant power charges and common rip-offs. But there are also compliments for businesses who get it right.
"It started off as somewhere to put negative vents, but then I realised there were a lot of positive things to say about Kiwi businesses and services too, so we adapted it so people could post positive comments. I'd say one in four is positive," Drupsteen says.
Feedback from those copping the flak has been minimal. A few businesses have asked The Vent to remove personal names from condemnations, prompting the creation of site rules: no personal attacks and no swearing.
"There are a lot of people out there who experience over-corporatisation and feel hamstrung. I think this site is having an effect - a lot of people go on there to read and relate, and make their own judgments," says Drupsteen.
While Kiwis are becoming more confident in tapping out their views, we still have some ground to make up. American site Yelp.com features 17 million consumer reviews of local businesses and services, drawing more than 50 million monthly visitors.
"Kiwis are learning to write reviews now. In the US, people use their voice more often; they're a little more educated about writing reviews or having their say," Drupsteen says. "New Zealanders are traditionally more reserved or laid back about things, but we're getting there."By Suzanne McFadden