When Your Own Customers Turn on You

July 15, 2013 Posted by Hulya Aksu - No Comments

It’s no secret that in the world of online product reviews, you have to weed out the fakers. This is especially true for books, as publishers have long been paying for users to produce a glowing write-up about something they’ve never read, and rival companies shell out top dollar for the creation of reviews that lambaste an author or their work. This type of negative and positive cyber-shilling is ubiquitous now — leaving no industry untouched. Back in 2011, Finance Tech News reported on the booming shilling market, much of which is being outsourced to countries like China for mere pennies per review.

But perhaps more of a threat than even these deceptive tactics is the increasing incidence of a company’s own customers writing negative reviews about a product that they have never seen, purchased, or used themselves. The rampant growth of this behavior was recently highlighted in a paper co-authored by Eric Anderson (of Northwest University) and Duncan Simester (an MIT Sloan Professor of Marketing), based on Simester’s extensive research.

In studying product reviews for a prominent, private-label apparel company, Simester and his team discovered that around five percent of the reviews were written by individuals who had no record of ever having purchased the item. Though five percent may seem negligible, for this particular company the result was several thousand negative reviews. And these reviewers weren’t rouge shillers — they were familiar with the company. Purchasing records indicated that many of these users had previously bought, on average, 100 or more items from the business. What’s more, the reviews from these customers were overwhelmingly more negative than those from individuals who were honestly dissatisfied with items they had actually purchased. Perhaps most confusing of all: Unlike cyber-shillers, who are paid (however cheaply) to produce false content, these reviewers had no financial incentive to post fake write-ups about these products.

Though not many customers write product reviews (at the company involved in this study, it was less than two percent), Simester explains that there is “some evidence that these negative reviews do drive purchasing decisions and can reduce sales,” and that “this loss of demand is evident for the next 12 months.”

So why does this happen?