The costs and benefits of responding to negative online reviews

When consumers choose a hotel for a business trip or vacation, there’s no question that online review platforms such as TripAdvisor and Yelp are hugely influential in their decisions. Just a few negative reviews can decrease a hotel’s overall rating and make people wary of booking a stay.

A new study published in Marketing Science by Questrom marketing professor Georgios Zervas and Davide Proserpio at the University of Southern California suggests that managers who respond to such complaints can boost their hotel’s overall ratings — but may have to contend with a smaller number of highly detailed complaints.

To study the issue, Zervas and Prosperio sifted through more than 300,000 reviews of 5,000 Texas-based hotels on TripAdvisor. They discovered that the average rating that was submitted after managers started responding to reviews was .12 stars higher than that of a review prior to management responses. The jump was small but meaningful in an area where consumers scrutinize every detail.

While the improved ratings might seem to suggest that the hotel management is fixing the problems outlined in the reviews, additional analyses indicated that the more likely reason was that the management’s presence on the site deterred some people from leaving negative reviews at all. “When people know that someone is listening, they are more likely behave differently,” says Zervas. “They might think twice before leaving a negative review because they don’t want to cause a confrontation for a small problem.”

The flip side of this otherwise good news for hotel management is that the negative reviews that people leave when management responds to reviews tend to be lengthier. Consumers point out more significant flaws in their experiences, and share those experiences in greater detail. For Zervas, that still represents a win for the hotels. “The remaining negative reviews are detailed and contain constructive feedback that [hotel management] can act upon,” he says.

On the balance, hotel managers who take the time to respond to negative reviews benefit from higher overall ratings and fewer negative reviews. Consumers, meanwhile, may need to factor the management response bump into their decisions: a hotel with management that responds to reviews may actually be slightly worse than an identically-rated hotel with management that doesn’t respond to reviews. “Ratings may not be due only to the quality [of the hotel] but also because [management] responds [to reviews],” says Zervas.

Read the complete study.

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