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Beware the negative review

Business owners and foodies alike are relatively well versed in the dynamics around Yelp and other crowd-sourced review sites. Recently, trust was a primary area of concern. Just this week, Jonah Bromwich stately plainly in his New York Times article, "Two Apps to Guide you to Good Food," that "I don’t trust Yelp reviewers." And it appears he may have good reason.

A recent study by MIT Sloan Professor Duncan Simester and Eric T. Anderson of Kellogg School of Management of Northwestern University, found that approximately 5% of product reviews on a large retailer's website were submitted by customers who had no record of purchasing the product. These insincere reviews were also significantly more negative than others. As a result of findings such as these, many businesses are now including language in their contracts to ban customers from (or even fine them for) writing negative reviews--a reaction that has created it's own ripple of controversy. Anti-disparagement clauses, however, are probably unenforceable and are now illegal in California and may soon become illegal in every state.

negative review

In some cases, business owners are confronting negative reviews head-on. Here in Cambridge last month, chef and restaurateur Michael Scelfo was faced with a pair of demanding and combative customers threatening to write a negative review on Yelp. The chef fired back, posting a photo of the customers on Instagram with the hashtag #wedontnegotiatewithyelpers. In an article about the incident on Eater.com, Scelfo was quoted as saying, "I would encourage more people to be responsible with [Yelp]. Uber allows for service providers to rate customers, we should move to that system."

Some businesses have also accused Yelp--not just its users--of foul play, complaining that advertisers are favored on the site and that the negative reviews of non-advertisers are highlighted. The company denies it manipulates reviews in exchange for advertising.

Despite all the kerfuffle, crowd-sourced reviews are popular. There are a number of highly profitable companies running and managing these sites and services, and most consumers trust the information they find listed. But what Simester and Anderson's research proves is that these reviews--both individually and in aggregate--should be viewed with a bit of skepticism. Or perhaps, in the case of restaurant reviews, with a [large] grain of salt.


Duncan Simester is NTU Chair in Management Science and Professor of Marketing at MIT Sloan. He teaches in the MIT Sloan Executive Education programs Driving Strategic Innovation: Achieving High Performance Throughout the Value Chain, The Global Executive Academy, Strategic Marketing for the Technical Executive, and in the Advanced Management Program. He was also the featured speaker for the MIT Sloan Executive Education webinar, "Understanding the Customer Decision Process: Why Good Products Fail."

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