When the Bad Isn’t So Bad

Andrew Knight, manager, online user experience, for The Home Depot, Atlanta, wanted to jump on the online-customer-reviews bandwagon back in late 2005. But like many retailers debating whether or not negative posted reviews could hurt the brand, Home Depot was reluctant to adopt the hot e-commerce trend.

“In business, there are often certain concerns and risks with management,” Knight said at February’s 2007 eTail conference in Palm Desert, Calif., “and product reviews was definitely one with a lot of upper-management concern.”

“Home Depot is usually a conservative organization; we’re normally not the first to do something. We tend to look at what others are doing,” Knight explained at the panel session, “Making Your Mark and Empowering Consumers While Enhancing Business: The Intersection of E-commerce and Social Networking.”

When Knight initially pitched the idea of online reviews to Home Depot, (which reported net sales of $90.8 billion in 2006), it came back as a no. Upper management was concerned about protecting the brand and the risks of negative reviews, he said.

However, Knight knew that, risks aside, reviews were becoming a competitive requirement and a standard customer expectation in the online retail world.

According to Austin-based product-review company Bazaarvoice, which offers service to more than 400 retailers including CompUSA, Golfsmith, Macy’s and Petco, about 77% of online customers actively seek product reviews.

Additionally, 67% of consumers who visited an online store intending to make a purchase left because the retailer did not provide enough product information, according to Allurent Research.

For every $1 spent online, the Internet influences consumers to spend another $6 in stores, according to Jupiter Media. So keeping customers satisfied online is a huge investment. With that said, Knight planned to fight for review presence on Home Depot’s site.

“We felt so strongly about it that we lobbied for it,” Knight said. “It took us six months to do so, and it actually got all the way to Bob Nardelli. We convinced him that this was the right thing to do for the brand and our customers.”

The results are impressive, he said.

“We recently did a focus group on why shoppers come to the site, and found that the single most important aspect for shoppers making a purchase decision was product reviews,” Knight said.

Another panelist, John Lazarchic, VP of e-commerce, Petco, San Diego (whose net sales for 2006 are expected to be in the $2 billion-plus range), also said that customers say reviews are the No. 1 reason why they return to the site.

According to Bazaarvoice data, Petco saw a 49% higher conversion rate after implementing online reviews, and shoppers are spending 63% more than before. Users can sift through products by ratings, using search capabilities powered by Cambridge, Mass.-based Endeca. Through this feature, Petco.com has seen 22% higher sales per unique visitor rate.

Additionally, retailers can take the immediate customer experience feedback and actively promote top-rated products in catalogs, stores and online.

Despite these benefits, some retailers still fear the effects of negative feedback. The panelists agreed, however, that the site should be an unbiased source.

“We want to keep negative views out there because if you remove them it takes away the credibility, especially to whoever wrote that review,” Lazarchic said. “And believe me, if those who write them don’t see their name up there in a few days, they will e-mail and question [it].”

“We do, however, filter certain reviews that seem questionable and those that give the wrong impression,” Lazarchic said.

The panelists suggested that since customer expectations are high, sometimes 24 hours is too long to wait to post a review. If a retailer rejects a review, it’s important to inform the writer why it was not posted online, even if through an automated service.

While retailers such as NewEgg.com employ about 15 full-time people to go through reviews, Home Deport outsources the task to Bazaarvoice.

Bazaarvoice doesn’t edit reviews; it approves or rejects them based on best-practice policies. It also monitors them for privacy violations and profanity.

If anything, the real risk is not what’s being said, the panel noted. It’s about acting on what your customers are saying and changing for the better.