Tourism | Rethink Marketing | Rethink Marketing

July 2, 2021

The Power of Good and Bad Reviews

I visited Ferguson Falls Winery recently, and at the front door was a sign which said “After so many people told us our Pizza is the best they have ever had we started to keep a tally – 3097”

With social proof like that at the front door, my tastebuds had decided the only thing to order was pizza, and pretty soon they were adding one more to the tally.

The psychological trigger that this sign had on me got me thinking about how much we rely on the opinion of others to make decisions. In marketing language, we call this social proof, and it can take many forms, reviews, testimonials, or recommendations.

Why Reviews are Important

We are all a little afraid of asking for feedback because we don’t like the thought of being judged. Human nature of course. However, reviews are critical to the success of a business, even if the reviews aren’t what you wanted or expected.

As a small business owner, your business is your baby. You spent years conceiving of the business, risking everything just to get started. Only those behind the scene know of the blood, sweat, and tears it took to launch. Not to mention the hard work that goes into building a business to be proud of only to be hit one day with a single negative review.

A single bad review, while bad for you, is also good for your business. If you received one negative review out of 100, you wouldn’t need to be too concerned. Like the coffee story above, it’s only one person’s opinion. But what if you kept on getting bad reviews. Perhaps it’s time to sit up and take notice.

It can be difficult to do, but by focusing on the trends, rather than the individual data points, you get a much better picture of how your business is performing.

Tracking your star rating, and the number of reviews you are receiving allows you to see whether the service you offer to your customers is improving or not.

Reviews Allow You to Pivot

Think about two very famous failures in business. Nokia and Blockbuster Videos.

Nokia was the market leader in the mobile phone marketplace in 2006. They had invested heavily in Symbian OS and wanted customers to love them. Unfortunately, as anyone who had one of these first-generation smartphones will tell you the OS was horrible, and if the reviews of this phone are anything to go by, customers certainly let Nokia know! Nokia’s sunk costs influenced their ability to hear what their customers wanted, and they stopped listening. The Android OS was freely available and they could have made the switch, but they chose to “stay the course” with an operating system that customers didn’t like. The rest of the story is now history.

Kodak was once the premier provider in the world of photography. After a century of market dominance, they were forced into bankruptcy in 2012. This happened because Kodak executives were convinced that digital cameras wouldn’t take off and no one wants to look at their photos on a phone or their television set.

As Netflix entered the market – this was the beginning of the end of Blockbuster. By 2010 Blockbuster went bankrupt and today Netflix is a 28 billion dollar business.

Perhaps these businesses should have listened to what the market was telling them.

While you aren’t Nokia or Blockbuster, it’s vital you listen to the feedback of your customers and potential customers. Poor reviews are just as important as great reviews. They give you the feedback you need to thrive. If you continue to receive feedback that is negative, perhaps it’s time to analyze what you are doing well and what you aren’t doing well. It may be time to pivot and change up your product mix, pricing, and your service standards to remain competitive.

Reviews Provide You With Insight

If you aren’t delivering what the market wants or needs, perhaps you are in the wrong business. If your customer service isn’t up to scratch, perhaps it’s time to invest in customer service training. If you aren’t delivering the quality, speed, or price your customers want, perhaps it’s time to analyze your product and service offering.

On the other hand, it’s equally helpful to receive feedback on what you are doing well and why customers love you. Great reviews give you bragging rights and provide you with an opportunity to leverage these in all your marketing collateral and on your website.

Carefully monitoring your google reviews and Facebook reputation allows you to develop insight into how your customers view your offerings. While big businesses often have teams of marketing experts conducting research and spinning the results, your secret weapon as a local business is your ability to listen and adjust course.

Every review offers an insight, the question is are your willing to listen and take note of customer reviews.

Listen to Your Customer Reviews

We need to listen to our customers to find out what they want or need. Markets don’t sit still. We saw this during the 2020 pandemic where businesses had to adjust to a new way of thinking.

With lock-downs, bricks-and-mortar businesses suffered. They had to scramble and come up with innovative ways to keep operating. Restaurants had to turn to home deliveries. You could now order your groceries online and pick them up. To survive, clothing stores had to set up online stores overnight. Other businesses could send their people home and work from their laptops.

This happened all over the world, not just in Australia, not just in WA.

When faced with a new way of doing business, it’s vital you seek regular feedback from your current and potential customers to find out how their buying habits have changed. Find out how their needs have changed. Without this feedback you could operate for months, steadily losing business and not knowing why.

Reviews happen with or without your permission.

Reviews Happen With or Without Your Permission

When customers do business with you, they automatically review the quality of your products and services in their minds. If the customer is happy with your products or services, they might tell one person. If they are unhappy with products and services they tell 10 people.

Because your customers subconsciously give feedback in their minds, it makes sense to know what their feedback is, good or bad. Isn’t it better to know what people are saying about you and your business upfront? That way if you do get a negative review, you can at least try to fix it before they spread the word or leave a bad review online.

If asked for a recommendation, we all like to recommend a company, business, or person we were happy with. People trust the words of family, friends and colleagues over an advertisement. They also trust the words of stranger reviews and testimonials over an advertisement.

If a review is good, then leverage these great reviews and use them as part of your marketing tactics.

People Buy From People

You would think people buy from companies – in reality, they buy from people. Consider the times you walked into a store to buy something and came away thinking; “I don’t care how much I want that widget I’m not buying from them!” People can make or break a sale and if they break a sale, what happens next. They can’t wait to leave bad reviews.

People believe people.

By building a positive online reputation, builds trust. With trust comes loads of free marketing – with great reviews. Great reviews mean more sales. More sales mean more customers which naturally leads to more profits.

Essentially, great reviews are good for business.

Why Google Reviews Are Great For Business

Think of great reviews as influencer marketing or an infomercial. People tend to trust the word of others even if they don’t know them personally. Reviews and testimonials attached to adverts are even more powerful.

Positive reviews naturally help grow your business.

Don’t just depend on reviews, find out how to make them work for you through something called reputation management.

Driving 5-star reviews is good for business as they help develop and grow your business organically. They also help consumers make buying decisions if they are sitting on the fence. They lead to referral business – and as you know, word-of-mouth is the cheapest form of advertising.

Consider how reputation management helps you leverage your great reviews and manage poor reviews.

Online Reputation Management

Both good and poor reviews start with reputation management. You would be forgiven for thinking reputation management is only about managing a negative review. Not so – reputation management is also about managing great reviews, and doing the things necessary to drive more 5-star google reviews.

Not sure how you stack up against your competitors? Book a free assessment of your reputation here with our Review Management Expert.

Rethink Marketing – Rethink Reviews!

July 16, 2011

Viral Marketing in Action

Sometimes we come across a marketing campaign that is so brilliant that you can’t help but wonder if it was planned or accidental. My wife received one this morning via an email from a friend, but we’ll come back to that later.Viral Marketing is by definition a marketing technique where by your marketing objectives are achieved by a self replicating viral like process from person to person. In the past we would have called this a word of mouth process, but today with social media the speed and spread of successful viral marketing campaigns has been supercharged. Today viral marketing may take the form of emails, video clips, interactive Flash games, advergames, ebooks, brandable software, images, or text messages.I often receive a SMS message from West Suits in Perth when they are having a factory outlet sale. The last line on everyone of these SMS messages is “tell yr m8s” which is a great way of encouraging people to share the news, amplifying the effects of the marketing effort.Sometimes though marketers (or perhaps non-marketers) manage to create a campaign which is so clever that no encouragement is needed to get the sharing in place. One such campaign was a flyer sent out to the email list of a small retailer in Victoria Park U-Chus. The flyer was titled “Cooking with Poo“. Whilst it isn’t stated anywhere on the flyer that the hosts name is Poo, I think this would be a fair assessment.We received the email in the 4th generation as one of 20 recipients. As a very rough calculation, assuming that 50% of each generation decided to forward the email to a similar number of people, an initial mailing list of 100 people saw the message about this cooking class reach an astounding 85,775 people have seen this flyer! Given the cost of mass media, and the difficulty that any business big or small has in cutting through today, a campaign that cost very little and touches 85,775 people has to be rated a raging success.

Cooking with Poo – Viral Marketing Campaign

July 4, 2011

Does the Groupon model lead tourism businesses racing to the bottom?

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In a recent announcement by Groupon, after raising almost a $1 billion in funding, CEO Andrew Mason said “we will continue on our mission to change the way people shop locally and serve the world’s local businesses”.

But is Groupon, and other group discount sites, changing the way people shop for the better or doing it at the expense of small business?

There is no doubt that the Groupon business model has been a tremendous success, you just have to look at the amount of money they’ve made and how quickly they’ve grown to realize they are on to something big.

The growth has been a result of two important factors:

An economy that has pushed consumers (especially those in the US) into a mindset of extreme deal seeking.
Small businesses desperate to generate revenue at whatever cost.

But are there enough small businesses to make this model survive? In a word… yes.

When you consider that, on average, about 80% of businesses in the U.S. alone are small businesses with less than ten employees, there are a lot of potential customers to keep the likes of Groupon and other deal sites churning out the revenue for many years to come.

But the bigger question is whether or not these deal sites are really doing anyone any favours.

Part of my issue with group deal sites is not specifically the model but the hype and lack of clear understanding of the costs associated with these advertising models.

For many small tour and activity businesses, where the owner of the business does not necessarily have a business background, the seduction of acquiring hundreds of new customers without investing any upfront cash can seem too good to be true.

But, frankly, it is too good to be true and the downstream costs for a small business, once all the numbers are crunched, are perhaps not what a business owner might have expected.

You don’t have to look very far on the web to find stories of disgruntled retailers, spa owners, restaurateurs, and even photographers who have been stung by a Groupon promotion. What seems to be a common theme across all of these stories, however, is the lack of understanding of the true costs of running a group buy promotion and the impact it has on cash flow and future revenue.

Let’s take a look at the example of a sightseeing tour as way of determining the costs of running a Groupon campaign for this particular business type.

A local sightseeing company with a 15-passenger van decided to try and attract new business by offering 50% off its $140 tour.
Groupon sold a very modest 250 coupons.
In this case, Groupon took 50% plus credit card costs as commission, so at the end of the day, the operator received $8,312.50 for $35,000 worth of tours and Groupon received $9,187.50.

Not bad, considering Groupon doesn’t have to handle fulfilment or customer service.

Group buying sites have suggested that the money spent on acquiring new customers should be looked at as advertising and not necessarily as the cost of sales.

For a small business whose profit margin is on average 5%, an advertising campaign that costs, in this example, $27,000 and brings in 250 new customers is not sustainable when you consider that locals (the primary consumers of group deals) are less likely to re-use a tourism based product or service again.

The other dilemma facing tourism related businesses is that there is little or no opportunity for upgrading or upselling their product. In most cases, the customer is only going to spend what the value of the coupon, so the business loses out on the up-sell potential.

Think about this for a moment, at 5%, this operator would have to sell $540,000 worth of tours to cover the cost of this one “advertising” campaign. This works out to about 3,857 full paying customers to subsidize 250 deal seekers.

Sobering numbers for a small business owner who has to spend his or her days trying to provide the best possible experience for their customers and pay the bills at the same time.

Now, don’t get me wrong, group buying sites have worked well for many types of businesses, I just think that before a business, especially a small tourism business, chooses to execute a group deal, they must look beyond the hype, do their research, and crunch the numbers. There is no such thing as quick cheap cash.

By participating in a group buy promotion a business is essentially extending credit to hundreds or thousands of customers for which they are now liable, at least until the coupons expire.

In the previous example, the company is adding $8,312.50 in revenue but they are also adding $35,000 in short-term liabilities for tours not yet delivered for the life of the coupon, that would give any accountant a mild heart attack.

The other side of this equation is the consumer and the affect that group sales sites are having on the perception of value of local businesses. Consumers don’t know the individual business’ costs or how much revenue they are making from each customer.

What many consumers will do is assume that you’ve built in enough mark-up to make the deal worthwhile because why on Earth would you run a deal like that otherwise?

Over time, this has the effect of eroding the perceived value of the service being provided and the service runs the risk of becoming, GASP, a commodity. No one wants their service to become a commodity.

Patrick Lefler through CustomerThink:

“The risk here is that profitable customers become conditioned to wait for sales and discounts–reluctant to ever pay full price again.”

In a segment dominated by small businesses, the in-destination tour and activities segment is an excellent target market to advertise on group buying sites like Groupon.

Considering, however, that over 85% of these businesses don’t distribute their products through sites like Expedia and Viator because they consider 20-30% commissions to be too high, it seems ironic to me that they would be willing to jump on a model that charges an effective commission of 75%!