I was reading an article recently that discussed the exchange between raters and businesses and cited a paper by a marketing academic, who referred to it as ‘the reputation economy,’ and while that term has been around for a few years now, it got me thinking about the real value of reviews and the part they play for businesses and consumers. The phrase – ‘the reputation economy’ seems to me, a fantastic way of describing how important reviews from real customers are in an online world where the reviewers are almost always strangers to us.
When over 90% of online consumers say that they look for reviews before even considering contacting a business, then the reality of the almost total reliance on reviews is established. Reviews are not a fad, they are not a passing fascination, or a distraction – they are the greatest motivator for consumers that shows no sign at all of abating.
“In the simplest possible terms a visible, authenticated reputation online gives the certainty and safety consumers need when the marketplace they are dealing with its entirely virtual.”
Reviews are nothing more than a reputation laid bare and businesses that do very well have absolutely no fear of encouraging them, whereas businesses that struggle do the opposite. Why? Is it because they have something to hide? Is it because they do not understand what their customers want, or are looking for? Or is it because they do not understand how marketing, in this case, reputation marketing works?
I think it’s a mixture of all three and in most cases it is the fear of ‘the unknown’ that keeps some business owners in a place where their customer base dwindles, while their competitors thrive on the basis of an online reputation. In the simplest possible terms a visible, authenticated reputation online gives the certainty and safety consumers need when the marketplace they are dealing with its entirely virtual. It’s so important to remember that that virtual marketplace is where nearly all business is conducted.
“The reputation economy is what drives the connection between online visitors and businesses, and that economy is booming.”
Trust is everything in business and has been for thousands of years, so it makes perfect sense that when the marketplace is not actually physical, that trust will be a huge factor, and that’s where reviews come in. Reviews are trusted because they establish a reputation – either good or bad. They tell a story of an experience and a transaction. They present the opinion of a customer of a business and signal whether that business does what it progresses to, or does not. Nobody wants to take a stab in the dark without prior knowledge and commit to a product or service if they know absolutely nothing about it. Why would they?
The reputation economy is what drives the connection between online visitors and businesses, and that economy is booming. Those who ignore it, or reject it, do so at their peril and that’s a shame. A shame because it is a real failure in positioning a business where it should be seen – seen in such a way that its products and services are desired, not ignored.
“If any and every business can be reviewed online, then what better way to encourage best practice and excellent products, services, and customer service?”
Another way to think about the reputation economy is the ways that it holds businesses accountable. If any business can be reviewed online, then what better way to encourage best practice and excellent products, services, and customer service? If every exchange is open to real and lasting customer evaluation, then reviews are an important facet of consumer protection. I know that in my experience as a consumer, my choices are guided by past reviews and I’m not alone. The vast majority of online consumers are looking for exactly the same thing.