It’s all about the ratio of positive to negative.

Your day is going great! You had your breakfast, the sun is shining, and you are ready to start your work day with enthusiastic passion because you love what you do and do what you love. And then, all of a sudden you see a “bad” review of your company. Your heart sinks, the room feels colder, your blood pressure rises and now everyone, even your goldfish, is afraid to look in your direction.

Yes, every company has been there. We all face the naysayers of the world on a daily basis. Most of the time, when it is verbal candor, we can easily brush it off and move forward but when it is archived, broadcasted and searchable on the web, it’s harder to get over.

Here is why you shouldn’t fear bad reviews:

1. It’s all about the ratio of positive to negative. If you provide overall quality service, generating tons of reviews is the secret to success: reviews volume increases the ratio of positive to negative, pushes negative reviews off the first page of reviews, and decreases the statistical impact of one review. Newegg.com has 350 bad reviews, yet they have a 9.8/10 rating thanks to their 30,000 positive reviews. Consumers are smart and they see the big picture. If your focus is making every experience great, then it will organically create positive reviews that will lower the impact of a few negative reviews.

“I don’t look at individual reviews,” said Ricardo Reyes, Las Vegas, NV, “I look at the overall picture to see what the general experience is going to be.”

No one can make every customer happy. Focus on making the majority happy and your rating will remain positive and strong.

2. Reviewers can be reasoned with. When a person writes a bad review, they felt like they received a less than perfect customer experience. In a professional manner, you should always ask if you can make the situation better. In many cases, reviewers will change their review to reflect the company’s effort to make them happy.

“I’ve changed my review before,” said Courtney Ronca, San Jose, CA “ I think if a company honestly tries to right something that they did wrong; it shows they have good customer service and that should be acknowledged.”

If you can change their experience, they will just as actively speak well of your company.

3.  Respectful company replies can sway how people feel about a situation. A public flogging of a company is never pretty but consumers can tell the difference between a rant and a fair review.

“When a business representative posts a public reply to a angry reviewer, I tend to side with the corporation if it is done in a respectful and fair way,” said Ryan Smith, Seattle, WA, “Sometimes the reviewer’s counter argument is loaded with emotion and detracts from the original issue which makes me think they only wanted to complain; making me feel like the business is actually the victim.  Businesses want things resolved to keep their image intact, reviewers have nothing to lose.”

Being respectful and fair to your consumers is important. If you do your best to ease a situation, you might not gain any ground with the reviewer but you will leave an overall good impression on the community.

4.  Negative reviews are direct customer feedback on what you can improve. If one customer mentions it, it’s probably affecting others, too. One of the most powerful things a company can do is take feedback and use it for positive change. Change can create fans and drive sales.

“I really believe that one way that companies can differentiate themselves from the competition — given that there’s a TON of competition via the internet — is to have really good customer service. I have had companies who’ve given me bad service and I’ve let them know I was dissatisfied and they didn’t care at all. You’d better believe that I will never shop there again…I have a long memory in that regard,” said Michael Shipley, San Francisco, CA, “However, if they had said ‘you’re right, we’ll look into it’ or ‘we’ve made changes to improve the situation and we hope you’ll give us another try,’ then I would certainly shop there again. Part of customer service is actually listening to the complaint and evaluating if there is room for improvement. Take the time to listen, evaluate and respond.”

When you make a corporate change, let your reviewers know that they helped create change and they will return the favor with their dollars.

5.  Negative reviews actually lend credibility. According to Clickz.com (http://www.clickz.com/clickz/column/1725342/reasons-not-fear-negative-reviews), “having a site full of nothing but glowing reviews can make a shopper skeptical. Allowing a mix of positive and negative reviews proves to customers that you care about what they say – both good and bad.”

Taking the time to understand your consumers is vital for any organization. Positive and negative reviews can help with that process and should be used as important market information. Like Shipley stated, “Take the time to listen, evaluate and respond.” Good things can come from less than perfect reviews.

Prepare for Holiday Shopping Online.

As the holiday shopping season quickly approaches, many internet retailers are signing up with ResellerRatings to polish up their ratings with the ResellerRatings’ exit survey, since 95% of all exit survey sourced reviews are positive, on average. Great ratings and reviews are key to influencing consumers to purchase, according to a new research study, conducted by Cone.

The Cone study found that 4 out of 5 consumers will abandon purchases when negative review information is found, reiterating the importance of using tools such as the exit survey to help generate reviews, thereby providing consumers with a balanced  view of your company. Those 1,600 retailers who subscribe to ResellerRatings, choose to take an active role to generate and manage customer reviews, rather than leave their reputation to pure chance.

In the survey it states that “Positive information has a similar effect on decision making, with 87 percent of consumers agreeing a favorable review has confirmed their decision to purchase.” That’s the power of positive, to establish consumer trust and make every possible sale.

Empowered with positive reviews, merchants should focus the areas that are most important to shoppers this holiday season. According to a recent Pricegrabber survey of 3,070 online shopping consumers, 75 percent of respondents indicated that free shipping, price cuts, coupons and sales would entice them into buying from a retailer this year.

With forty nine percent of consumers expected to spend the same amount as last year and seven percent to spend more, merchants should begin to strategize now about the best ways to capitalize on the holidays.

One approach is to offer early seasonal sales, due to the fact that fifty three percent of those surveyed stated that they would begin shopping early.  Thirty three percent stated their shopping will begin as early as October.

“Consumers are becoming savvier and empowered with more and more shopping tools and data each year,” said ResellerRatings CEO, Scott Wainner, “With the changes in the economy, shoppers are thinking ahead and spreading out their purchases to fit their current economic state. Focusing on great customer service and striving to attain high ratings early in Q4 can yield greater financial gains later in the season. Early holiday shoppers will influence the shopping patterns of their friends and family, so it is prudent to become customer focused even as early as October.

Cone Research August 2011 Online Influence Trend Tracker Study: http://www.coneinc.com/news/request.php?id=4007

PriceGrabber study: http://www.prnewswire.com/news-releases/pricegrabber-survey-finds-consumers-plan-to-spend-the-same-or-less-this-holiday-shopping-season-compared-with-2010-130965018.html

On the weekend of August 20, 2011, HP announced a firesale and liquidation of their HP TouchPad tablet, dropping the price from $499.99 to $99. Retailers instantly adopted the new pricing. One such retailer, OnSale, sells its HP TouchPad tablets through Amazon.

Within minutes of the TouchPad price decrease, Amazon accepted more than 100,000 orders for the HP TouchPad for OnSale.  10,000 TouchPads were available in OnSale’s inventory. While 10,000 is an impressive inventory, it was insufficient. The transactional system was not designed to accommodate thousands of orders in a matter of seconds or minutes, and the system required time to send the actual number of orders received to OnSale and receive an “inventory remaining” response.

The design of the OnSale->Amazon->OnSale inventory/transaction system was no match for deal hunters, who flocked to scoop up the cheap TouchPads in minutes, after learning about the deal on Dealighted, Slickdeals, and Anandtech.

3 days later, OnSale canceled orders that it could not fulfill. In response, shoppers whose orders were cancelled, encouraged each other via Slickdeals.net and OnSale’s Facebook page, to write reviews at ResellerRatings. The resultant 1,800 reviews dropped the merchant’s rating from a 9+/10 to a 0.47/10 in a matter of days.

Why the major drop in rating? OnSale had only 29 six-month customer reviews comprising it’s 9+ rating, when along came 1,800 negative reviews. We always encourage merchants to maximize their reviews volume, which insulates them from the impact of one or two reviews and even from a social media onslaught. For instance, Newegg.com has 350 negative reviews, yet manages a stellar 9.8+ rating thanks to their 30,000 positive reviews.

For all intents and purposes, we believe that this was not a deliberate failure. Clearly, no retailer would bring the wrath of thousands of savvy shoppers upon it, deliberately. However, there are a number of important lessons to learn and issues to address, from both the ratings and customer service perspective:

• Inventory systems should be real time and failing that, a cap should always be in place for every product that you sell. Stating that you have an item in stock, and failing to deliver it, is one of the leading causes of customer dissatisfaction. If you list it on your site, it should be in stock (if not, you should indicate that it is a drop ship item, is out of stock, or indicate the specific lead time). If you sell through Amazon or other channels, ask what can be done to mitigate the risk of suddenly accepting more orders than you can possibly fulfill.
• We live in a global 24/7 marketplace. Saturday and Sunday are always open for business. If you’re not staffing your web store on the weekend, then at the very least, extensive alerts should be established to inform you of unusual activity and all sales, pricing, and inventory activity.
• Consumers do not like having orders canceled. When an order is placed for a product that was listed as “in-stock”, the consumer very much believes that the order is a done deal, and any deviation from this, especially in cases where the consumer believes they secured an amazing deal, will result in hurt feelings. Part of what fuels the consumer’s rage when orders are accepted and then canceled, is the multi-day fund hold inherent to authorization transactions with debit cards. If an inventory mistake is made, cancel the order as soon as possible (within hours!), and if practical, issue a coupon code as an apology. Apologizing to shoppers and explaining what really happened (if an honest mistake was made), and ensuring that processes are in place to prevent a reoccurrence, can go a long way.
• Generating large numbers of authentic reviews can shield you from one time errors, one time public attacks or one time negative reviews. If you have 5,000 reviews, even 500 reviews is unlikely to impact your rating, and consumers are very smart – they will know the difference between a onetime issue and an ongoing pattern of customer service problems. Our checkout exit survey is precisely designed to poll as many customers as possible to maximize volume and statistical accuracy, and 97% of those customers polled with our exit survey leave positive comments (on average).

This issue may have been prevented by defining a maximum quantity cap for the TouchPad to pre-set the limit on the number of orders that may be accepted for the product. However, we’re not privy to the exact specifications of this OnSale->Amazon inventory feedback loop system. If this failure, accepting tens of thousands of orders above and beyond the available inventory, was the result of a design flaw in Amazon’s seller platform being too slow to send realtime sales data to OnSale’s inventory systems and update itself with the remaining product quanity, then this should be a wake up call to redesign the Amazon->seller inventory feedback loop to update on a millisecond by millisecond, not minute by minute, basis, and to alert sellers of this potential operational risk.

ResellerRatings’ rating score is a six month trailing average. Six months from now, the retailer gets a fresh start, since those 1,800 TouchPad related reviews won’t impact the merchant’s rating later. However, OnSale can use our exit survey to request reviews from its extensive customer base to maximize its reviews and rating, assuming overall quality service is provided, long before then.

City: New York, NY
Company: bhphoto.com
Hosts: Henry

Had a great time exploring B&H Photo Video Pro Audio in Manhattan. A superstore (both online and IRL!) that’ll light up the eyes of any media enthusiast. They’re on top of their game with an unbeatable selection, the lowest prices and stellar customer service. But don’t take my geeky word for it, check out their ResellerRatings.

B&H Photo-Video and Pro Audio is a leader in all photo, video, audio equipment needs for amateurs and professionals offered through their online and brick-and-mortar retail superstore. B&H goes to great lengths to engage with their customers. They are often spotlighted for their excellent customer service and social media programs. B&H concentrates much effort on collecting and addressing feedback through ResellerRatings, using the Merchant admin tools, the Exit Survey and the Elite Merchant Badge. “One of the reasons why B&H’s ratings are as good as they are is because we offer the exit survey to all of our customers,” said Henry Posner, Director of Corporate Communications.

City: Boston, MA
Company: Karmaloop.com
Hosts: Sidney & Ian

Got to peak in on a fashion photoshoot at KARMALOOP.com during my ResellerRatings visit! Just like many of the great Merchant Members I’m vising on my tour, Karmaloop goes the extra mile to photograph all their products in-house and from many different angles.

City: Elkhorn, NE
Company: FatBrainToys.com
Hosts: Karen & Mark

FatBrainToys is a family business dedicated to fun and educational toys for kids. Husband and wife team pride themselves on superior customer service the old-fashioned way-from personalized recommendations to wrapping with care. When entering the world of online reputation management, owner Mark Carson said, “I knew we were doing all the right things and getting all the positive feedback from our customers, but I wanted to put it out there from an authority that wasn’t us so it gives us that extra credibility.” After their own comparison shopping, FatBrainToys decided to focus all their reputation management efforts on ResellerRatings.

They particularly appreciated ResellerRatings genuine approach to honest, verified customer feedback. And for a family-owned small business, an affiliation with ResellerRatings, and thus Google Products and Bing Shopping, helped solidify their position in the industry among giant corporations.

City: Boulder, CO
Company: DrillSpot.com
Hosts: Monika & Shad

Visited with the great people at DrillSpot.com yesterday! We love companies like them at ResellerRatings!
DrillSpot is an online distributor of industrial supplies and hardware. An thriving energetic startup, DrillSpot has focused their attention on ResellerRatings since 2007 to manage their online reputation. When asked what the main benefit of being a Merchant Member is, Shad Tischer responded, “Consumer confidence. We are tremendously confident in the partnerships esellerRatings is building with companies like Google and Bing.” After being named one of the fastest growing companies by Inc 500 and Internet Retailer, and Monika says, “DrillSpot would not be where we are with customers leaving us reviews on ResellerRatings.”
DrillSpot utilized ResellerRatings syndication deals with major shopping engines to help put their young company on the map in the vast territory of e-commerce.

It’s October and I am embarking on the ResellerRatings Merchant Member Autumn Tour!

I will be traveling around the USA visiting a few of ResellerRatings’ top Merchant Members this month to see how they are using ResellerRatings everyday. Sometimes working at a web company feels like a lot of clicking and typing. Looking forward to the facetime!

First stop: Colorado