Criticism is a great persuasion box. Everyone hates to get criticized, especially in public as with a bad review on Yelp. But, a lot of public criticism, like a bad review on Yelp, has no Countable impact. Remember this post from . . . hmmmm . . . 2009 on the economic impact of Yelp reviews?
Michael Luca crunches the numbers for Seattle restaurants from 2003 to 2009 and finds, drum roll, an average gain of 7% (plus or minus 2%) in annual revenue. Thus, if 4 star restaurants earn $1,000,000 a year, 5 star restaurants earn $1,070,000. Expressed in Windowpane terms, a Small Windowpane would be 10% so this is 30% smaller than a Small Effect. That’s pretty small and pretty close to a zero effect, but because Luca has a huge sample of observations, even something this small is statistically significant and thus reportable in a paper.
Hey, Steve, it’s economic hard times so even a very Small gain of 7% is important! Doncha get it? Well, so I do get that, but I also get the point that this 7% gain may be untrue, an instance of Fooled By Randomness. The data are observational with a lot of adjustment and the effect size is barely detectably above random variation. Rather than jump all in with those Yelp reviews (and others from the Wisdom of the Crowds social media websites), I’d suggest that the reviews may have less impact than you think.
But, I’d be wrong as this WSJ story demonstrates.
Small businesses are increasingly turning to online reputation-management services, often in an effort to bury negative reviews posted on websites such as Yelp Inc. and Angie’s List Inc.
Small businesses think that Yelp has Changed their business so they buy a persuasion expert to Change the Change the Changed the business!
Small and midsize U.S. businesses are expected to spend $700 million on tech tools or platforms to monitor customer opinions on the Web over the next year, more than double the spending in the past 12 months, according to BIA/Kelsey, a Chantilly, Va., media-research firm. Some of the services make bold promises. Profile Defenders, which launched last year in Fort Lauderdale, Fla., said in a May 31 news release that it “100% guarantees to get rid of unwanted Yelp results” for a base fee of $5,000. “There are certain loopholes on Yelp that we’ve been able to manipulate legally,” Richart Ruddie, the chief executive, said in an interview.
The WSJ article does a nice job of balancing the pro’s and con’s of this artful persuasion. The writer contacts the good people at Angie’s list who say they diligently search for manipulation attempts precisely to combat these persuasion tactics. Thus any Mom and Pop who buys RestorationReputation.com™©® will pay for disappointment!
But, the point the article does not address is my opening concern. The reviews apparently have very small impact, positive or negative, for business as a whole. Please realize that RestorationReputation.com™©® aims at a big problem for all Mom and Pops, not just a couple of isolated cases. Their argument is that Yelpish operations play a major role in all Mom and Pop businesses. I’d like to see the Counts on that Change.
Think about that. We’ve got some Counting that demonstrates Yelpish feedback plays a very Small role in business success (at least for the big chains like Starbucks). Where’s the Count for showing you can Change back a bad Change to make more change? I suspect that the ReputationRestoration.com™©® guys probably answer that with a rational argument (“It stands to reason!”) rather than with empirical arguments (“I’ll show you the money!”).
And, that’s the fun persuasion play for you practical players out there. All the Other Guys hate public criticism even though on average it has virtually no impact on the bottom line. Hmmm, the Other Guys have fear? See any persuasion possibilities there? Hey, we could develop ReputationRestoration.com™©® that sometimes actually removes bad reviews, but more importantly, we tell the Other Guys all the good things we’re going to say about Them to at least balance off the bad thing that makes Them so fearful. Do you think that Other Guys would like to see a campaign that says good things about Them? Do you think that Other Guys would pay for such a campaign? All in the name of ReputationRestoration?
Realize that this practical persuasion is just another kind of campaign that Mom and Pop are buying. M&P think they are trying to kill that criticism, but really all they are doing is buying a persuasion campaign. And they want to buy that persuasion because of the persuasion box created from the Wisdom of the Yelpish Crowds and all that . . . grrrrr . . . feedback.
I’m sure that some of you are shaking your head at me right now, laughing at my naiveté. It’s obvious that bad reviews hurt business and it’s obvious that repairing those bad reviews will help business. If it’s that obvious, I just ask you to do an easy thing.
Count the Change.
Show me the model with data that first Counts the Bad Change from the bad Yelpish reviews then Counts the Good Change from the ReputationRestoration.com™©® persuasion campaign and then Counts the Good Bottom Line for Mom and Pop. Don’t tell me it stands to reason this happens because when you tell me that all you are telling me is that you are easy, ripe, and luscious. Just like all those M&Ps buying this persuasion play from those sand and ice mavens at RestorationReputation.com™©®.
P.S. I’ll be obvious. Bad reviews generate fear. Fear creates a fabulous Persuasion Box. Run Persuasion Plays that make the fear recede (i.e. show a story board with lots of positive statements about M&P, run a “focus group” with M&P personnel about what they think is good about M&P, then incorporate those claims into campaign messages). Create a report with tons of those groovy Web infographics based upon Tooth Fairy Tale statistics when all you do is swamp Yelp with faux reviews. Cash the M&P check and move on.
P.P.S. How do you price your persuasion? The more fear from M&P, the higher your price.
P.P.P.S. Most of the money you make from persuasion comes not from Changing all the Other Guys, but from Changing just the Other Guys Writing The Checks.
P.P.P.P.S. Ain’t Social Media great? They sell you that SM brings you together then sell you that SM tears you apart when SM doesn’t do anything except mess with your feelings.