Small businesses, paid reviews and the Federal Trade Commission
Bad reviews can drop web traffic, slow down online orders and keep shoppers out of the store. It’s a well-known problem. Many companies are tempted to “buy” good reviews. Even Amazon has a problem with fake reviews; recently they sued over 1,000 people for posting fake product reviews. Amazon works hard to manage reviews and even highlights their Top 10 Reviewers. Yelp has been working on finding paid reviews for some time. In this post, we'll look at the Federal Trade Commission rules, why reviews matter, and what small businesses should be doing for customer reviews.
The Federal Trade Commission (FTC) regulates both traditional (TV, print, and radio) and online (display, blogs, and social media) advertisements. The rules for traditional media are long established and well known; however the online rules are still evolving as the technology changes. If a small business gives its product (or service) to a customer in exchange for a positive review, the customer must disclose it. The rule applies to guys like me living in Richmond posting pictures of BBQ that I like* or celebrities posting pictures of themselves with a branded product. The FTC has already put celebrities on notice for paid reviews. If your small business gave a consideration to the person or celebrity posting on social media (a paid review), they need to disclose it.
Why do reviews matter?
Trust. When we think about the traditional buyer behavior funnel:
<<<<<<< Awareness >>>>>>>
<<<< Consideration >>>>
<<< Conversion >>>
<< Loyalty >>
< Advocacy >
Trust plays a part of the consideration stage. A 2015 study by Mintel found nearly 70 percent of Americans seek out others' opinions online before making a purchase, but only 59 percent trust the recommendations they read. Beware of ads offering to “get” you positive reviews for a fee.
What can small businesses do?
The basics still matter like preparing great food, performing a service on time, and shipping a product with enough packaging to keep it from being damaged in transit. Customer service really matters. Here are my recommendations:
- Ask for reviews. Tell them your Facebook or Yelp page and suggest a great photo spot for their selfies.
- Monitor reviews. Make it part of your business workflow to look at social media and note what customers are posting.
- Acknowledge reviews. Reply promptly and follow up as needed.
- Take action if warranted. Think strategically: if posts have a common thread, look for a systemic cause.
- Build trust. If customers know that you care, they will too.
*Vidjaa always discloses if we use the software. Vidjaa does not accept money to review a marketing software tool.
**Also Butch has never been paid to post BBQ pictures. Mostly he posts BBQ pics to embarrass his wife.