Who's managing your reputation?

Hearts and Wallets

Who's <strong>managing your reputation</strong>?

In the days of online reviews which can make or break a company’s reputation, are you aware of what is being said about your business online? Michael Fertik’s impassioned presentation to delegates at the RLC 2016 was a wake-up call to retailers struggling to keep pace with an unstoppable force. We asked him more about how supermarkets can go with the flow – or preferably ride the crest of the wave – when it comes to digital innovations and communications. In particular, how can they improve the way they manage their online profile?

Michael, how did the whole idea of online reputation management come into being?
When I started Reputation.com, the idea was to protect individuals’ reputations and privacy online. Once we had attracted a couple of million subscribers, we had built up a large set of data about what consumers like and dislike. It was clear that people wanted to be shut off from certain data and entry points but were open to others. Over time, businesses started becoming aware of a concept called reputation too. They understood that a combination of social media, websites and review sites was an increasingly important medium through which to communicate with consumers.

How long ago did brands become aware of reputation as a tool in the marketing toolkit?
I’d say they’re still becoming aware, but it started about five years ago, along with the concept of the omnichannel marketing cloud. The automotive industry was very aware three years ago, healthcare two years ago, and retail is becoming aware right now. Every year that goes by, there’s increasing awareness, with more industries coming online.

What data is involved in maintaining a positive online presence?
There’s data that the company already has, and there’s data that the company could get, and it’s important to think about the nexus of the two. The first type tends to be data about loyalty: what customers are buying, when they’re buying it, how often and so forth.

This is often achieved through things like loyalty cards or credit cards that are issued by the retailer, but now retailers are also building additional kinds of data that tell them a little bit more about how the stores are experienced. They’re observing people inside the stores, on their e-commerce sites, noticing how they check out or don’t check out, where they get stuck, and where their purchasing falls are. Due to all of these, they’re starting to see a more complete picture of their consumers.

What they don’t often have yet is data about the prospective consumers who are researching their wares, stores, specials and experiences online. The more sophisticated companies are examining the crossover between the online and offline experience, so that they can answer the question, “What extra benefit or multiplier of value do I get, as a consumer, from being both a digital and a bricks-and-mortar customer?”

Online research is clearly appropriate when buying expensive, occasional items such as furniture, but are people really going to do it for a $2 tin of beans?
Maybe someone only needs a $2 tin of beans but ends up buying $40 worth of goods. It’s the old retail story of having to carry milk – although it’s a loss leader – because people come in for it, and then they buy cereals, bread and other high-margin products.

But you have to ask who this customer is. There are people who buy one $2 tin of beans every week, there are people who will buy tins of beans for $2 but not $3, and so on. If you know that buying a tin of beans is an essential habit for your incremental consumer, whether that person is already a customer or not, there are a very specific set of marketing programmes that can lock into that $2 purchase. For instance, if the customer is really interested in some healthy cereal, or if you know that people who buy $2 tins of beans are willing to try protein-rich cereal or legume-based items, you can market those products. You can differentiate yourself as a place that has that assortment. Or you could see that the $2 tin of beans is part of a regular weekly shopping list, and get it all automatically packaged for the customer or even shipped to her door.

That’s a nice service, but what should retailers do if they can’t offer that kind of personal touch?
If you ask consumers if they really care where they shop, probably not – they just want somewhere safe, clean and hygienic – but good reviews could make them care more about your brand. Especially in high-density retail, more and more people are relying casually on review sites, both for reviews and for location information. Clearly, companies that have more reviews get more prominence on mapping services. Indexing mapping is based on size, recency and other features, so if you don’t have enough reviews for your grocery, Google and Apple don’t really know you exist. That matters for new customers, and it also matters what existing customers are saying. Imagine if they say the aisles are dirty and unkempt. That hurts, but it also provides good real-time operating insights. If the checkout lines are too long, if finding stuff is too difficult, or if the staff are surly, these are things that are otherwise very hard for nationwide and multinational managers to learn.

Can’t you get that kind of information from normal surveys, without leaving your store open to online criticism?
Time and time again, it’s been proven that in-house, telephone based survey systems are just not as good as the open internet at figuring out the operating information about your store. One of the biggest retailers in the world asked us to analyse three basic things: customer satisfaction about the price, the inventory and the checkout process. Customers don’t expect a cheap pair of flipflops to last 5 years – they’re just interested in whether they’re cheap, on the shelves when they come in, and if they can pay for them quickly. There’s no amount of offline research that can measure up to online information when it comes to that kind of operating insight on a national scale. If you’re a national operator, you really need to be able to compare your stores authoritatively to know who’s lagging behind. You can get all these details and insights on a national level, on a dashboard basis with the data floating up to you, so real-time reputational surveys and reviews are taking the place of what people for the past 40 years have referred to as NPS (Net Promoter Score). NPS is very useful, but it’s an old method and this is much more data-rich.

Do consumers have any idea their data is being used on this scale, and do they care?
After Edward Snowden, WikiLeaks and the Yahoo password leaks, consumers have become attuned to concepts such as privacy violation, but they still don’t know much of what it’s all about and how their data is used. It does bother them that they’re somehow in this Faustian bargain that they didn’t sign up for, that as soon as they turn on the internet, their data are being taken without their knowledge or permission by people they cannot identify for purposes they can never know. It makes them uncomfortable, but on the other hand they do want the benefits of the internet. There are very ethical and responsible ways to use people’s data, such as when they sign up for loyalty programmes. They benefit by getting certain discounts and offers. It’s a knowing and honest exchange. There’s a long history of such transparency in retail.

Is the food retail industry actively engaging with online reputation Management?
I’d say they are mainly in the exploration phase. You might have 5 or 10% of brands involved in managing their online reputations, collecting reviews and using these to gain operating insights. Another 20-30% are not yet actively engaged, but are actively exploring. They want to monitor consumers, and would like tools to gain insights, but aren’t yet sure they want to take action. They want to observe first, compare themselves to their competitors, get analytics, then see how this data can plug into point-of-sale systems and loyalty card data. The rest are either open-minded or actively outreaching or just don’t believe it’s necessary yet, but that percentage is exactly what you would have seen in automotive four years ago or in healthcare three years ago. Very rapidly, these industries are tipping, changing and evolving.

One of the great strengths of retail, and grocery in particular, is how much data you have - you’re far ahead of healthcare, automotive, hospitality and other industries. Michael Fertik, founder of Reputation.com

How should companies deal with people who leave lots of bad reviews?
Stores would have to be managerially insane to sue somebody who says they don’t want to eat crisps from that store. The CEOs that I’ve dealt with in the last few years have gone through a few different phases to deal with PR flak. One was “Nobody cares - it’s just some comments on Facebook or a review site.” The second was ”We have to sue them!” and the third was “We can’t do anything about this, so we’ll just throw up our hands.” All of those approaches were wrong, and the more recent approaches have been better, such as to respond thoughtfully. But really you want to ensure that you have so many reviews from so many people, some of which will be critical but most of which will not be, that the critical feedback you get is taken into context. You want to make it easy for people to leave real, truthful reviews.

How do you get them to do that? If I’ve had a great 3-week holiday, I might not mind spending 5 minutes writing a nice review. But am I really going to do that for my weekly shop?
Not unless someone makes it really easy for you to do so. One of the things that we did was make it easy, because companies couldn’t solve it for themselves. What we found was that time and time again, companies set goals, standards, and mandatory targets for their managers or teams to get a certain number of positive reviews, and it became hugely labour-intensive and rarely had impact. Nobody ever goes home from the grocery store saying, “Wow, what a great time I had there!” Many reviews in many sectors are placed on sites where people complain. The exceptions are entertainment, nightlife, restaurants and vacations. One reason is that people want to telegraph their socio-economic status and superior taste, so even if it’s anonymous, they tell other people where they can get a nice bottle of wine, a good cheeseburger and so on. You get a lot of favourable reviews in those categories. But if you make it very easy for someone to review your business, and you don’t have to pay them – in fact you should not pay them – they’ll do it.

How should retailers interpret and act on the reviews?
Most people are not vicious: you’ll get a lot of very favourable reviews plus some constructive feedback. By the way, you don’t have to be a 4.9-star grocery store to be good at what you’re doing: 3.9 is plenty. But you do have to have enough reviews for the average consumer to believe the number is significant. They don’t have to understand the mathematical equations involved in statistical significance – they just have to see that there are enough. And the reviews must be recent enough.

You also want to suck down the reviews to get your operating feedback. If someone is saying about your store that the floor doesn’t look clean, despite the fact that you clean it several times a day, maybe you need to put up a sign saying “Look! We’ve just cleaned the floor.” And the complaints will stop. That’s the type of real-life operating insight you can get from having this kind of data. But denial, legal and hopeless are the 3 legs of the stool that have dominated every industry I’ve seen over the past 10 years and they haven’t worked.

How serious are companies about managing their reputation?
You get a more commercially aware response now, but it’s an adoption curve like any other. Sometimes you’ll meet someone from a huge hotel chain with 1,000 hotels across the world and you ask him about the reviews and he’ll say, “Oh yes, we’ve taken care of it.” And you ask him how, and he’ll say “Well, we have a social media manager.” A hotel chain like that might spend 6 billion dollars a year on marketing, but they just have one 27-yearold person, some dude doing social media management, who does Twitter, Facebook and all the English-language reviews on an entire continent. And after two years of that not working, they get it, but it can really get in their way for two years. And even after they believe in it, it takes about a year to get budget created for it in any large company. But increasingly, reviews are overtaking word of mouth when it comes to recommending or deciding where to buy your next product, or whether to become a customer for the first time. They’re not something that retailers should or can ignore any longer.

Hearts and Wallets is the official magazine of BrandLoyalty. It is a magazine for people working at the highest levels of the food retail industry. The goal of Hearts and Wallets is to come up with real insights on – and answers to – current issues, while offering its own individual interpretation as food for thought.

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