What would you do if I told you I could guarantee to increase your business revenue by 5%-9% with a minimal outlay of cash? For 19 businesses, the answer to this question was “anything”, including taking their chances skirting the law by purchasing fake business reviews. Yes, you heard that correctly, skirting the law. This week we learned that 19 businesses agreed to a plea deal with the NY Attorney General’s office to pay a (collective) fine of $350,000 after commissioning fake online reviews of their businesses. (FYI – fines ranged from $2500 to almost $100,000.
However the reputation cost will likely be even steeper, as those firms become part of internet (search) history always being identified as having purchased fake reviews).
For all businesses, online reviews can have a steep positive or negative impact on revenue stream. However, it is notable that the companies caught in this sting (that interestingly had government agents setting up a fake frozen yogurt spot and then asking SEO companies about purchasing reviews) include medium and small local businesses. The group includes a teeth whitening service, a laser hair removal chain and an adult entertainment club. Amongst other firms that were investigated for fake reviews were dentists, lawyers, and medical clinics.
Why Even Chance It?
Up until this week – why not? After all, 80% of all American consumers admit to being influenced by online reviews. And, by the way those revenue increase numbers in the first sentence of this post come from a 2013 study of the value of online reviews. That study showed that if you increase your star ranking by one star on Yelp; – it is typically worth a 5%-9% increase in revenue. Those are high stakes in any economy, let alone the one we are in now.
In fact, the combination of the impact on business, and the difficulty it is to secure good reviews (which we’ll discuss in a moment), often finds business owners throwing up their hands and turning to services that offer positive write-ups on the cheap. On more than one occasion we’ve seen business owners driven to madness at the belief that their competition is paying for fake reviews, and that belief driving their desire to secure their own positive ratings at any cost necessary.
Why is it so easy to get bad online reviews and so difficult to get good reviews?
People expect exemplary service, and when they get it they are happy, and will likely mention your business in a passing conversation positively if the topic comes up. But not many of those same people are going to take the time to spread their joyous good will through a chunk of time spent writing a glowing review online
A 2013 study by two MIT Sloan School of Management and Northwestern University Professors found that online reviews (both positive and negative) are typically written by a business’ best customers (giving a whole new meaning to keep your friends close and your enemies closer).
Want real world evidence? A Herald Tribune report recently told the tale of a small business graphic designer who’s annual income dropped by 70% because of a single one star review on Yelp, that the businessman said came about after he refused to do additional work for free.
Looking at the world of book reviews (Amazon.com has installed internal policing policies that may even rival that of the tactics of the NY Attorney General!), “The data reveal that approximately 5 percent of the product reviews are written by customers for whom there is no record they have purchased the item,” and further, that these reviews “are significantly more negative on average” than the 95 percent written by reviewers who did buy the product.”
However, with social media in its infancy, and predictions that 10-15% of all reviews across social media will be fake reviews by 2014 – the NY Attorney Generals office (and those in every state) is facing an uphill battle if it believes it will be able to catch fake companies engaged in fake reviews. Of course, if $350,000 is the tip of the iceberg in collecting big fines – it may be worth their while to focus on this phenomenon.
The question we think many businesses are asking themselves right now is, are you going to gamble your online reputation on those odds? Or maybe more important – do you think your competition is going to continue to gamble on those odds? If you need help deciding whether Yelp and Google Reviews are beneficial for your business, talk to one of our experts at Premiere Creative and give us a call at (973) 346-8100.