Small Biz in :15 – Mike Blumenthal on How to Respond to Negative Reviews

Most small business owners know about online business reviews. They let you know what your customers like about your products and services and what they don’t. But what if you could suppress the negative reviews so that potential customers can only see the positive ones?

In this episode of Small Biz in :15, Shawn Hessinger, the Executive Editor for Small Business Trends, interviews Mike Blumenthal, the co-founder and analyst at Near Media, who discusses new federal guidelines and what should be done about negative online reviews for businesses.

How to Respond to Negative Reviews

Here are some of the highlights from the discussion in this episode:

Shawn: “Mike, first explain to us exactly what makes online reviews so critical to small line businesses?”

Mike: “Reputation, which used to be established by a business, and the story that a business would tell, is now largely a co-project between you and your customers, where your reputation and ideas about your company are developed largely by your customers online and largely in the review space.

It depends on what industry you’re in, but if you’re a local business, this takes place at Google, at Yelp, at Facebook … perhaps on Apple Maps … perhaps a few other places. But it’s what the world sees about your business.

And it may or may not be what YOU think about your business. But it’s what the world thinks about it. So, it’s critically important in that sense.

It also important helps your rank at Google, which is not the primary thing, but for me it’s important because it’s the first view a consumer gets of your business.

Typically, when they are trying to find your business, they’ll stop at Google. Google will summarize your reviews from around the web. So, they’ll develop an opinion there.

And then finally the reason it’s important is that it really is a great data resource that you can use to improve your business.

Even negative reviews—there’s a saying that goes way back: that complaints help build a stronger business. If you take the complaint and take it as an opportunity to improve, then that will be the best outcome.”

Shawn: “Can explain to us exactly what review gating is?”

Mike: “Sure, from where I sit, I learned long ago that the best way to engage in the world of reviews was to ask every customer for a review. And when I first got involved and developed an online platform, many businesses were fearful of asking every customer for a review because they weren’t sure what they were going to say.

So, they wanted the ability to selectively ask customers. And in 2012, I built an automated system that allowed businesses to ask customers what they thought.

Those that were unhappy weren’t asked to leave a review and those that were happy customers were asked to leave a review. That’s review gating.

It’s as selective ask of happy customers to leave a review.

It’s something that Google’s Terms of Service made against the rules in 2018 and which the Federal Trade Commission (FTC) recently came out explicitly and said, ‘it’s against the rules.’”

Shawn: “About that, can we talk a little bit about the background of this? What exactly caused the FTC to take this action?”

Mike: “Well, the FTC is charged with preventing businesses from partaking in deceptive activities. And they did an investigation of a large review platform in 2019.

They looked back through the previous four years, and they found that one of the clients of this platform had done what was known as review suppression, where they were using the platform to gather reviews about their products, but they weren’t publishing any negative reviews. And thus, were giving consumers the misleading idea that every product that this company had, a company called Fashion Nova, was a great product.

And so, the FTC determined it was deceptive and in a bit of great fanfare they fined Fashion Nova $4.2M. Fashion Nova said “Oh, the Apple Platform made me do it!” kind of an excuse.

The FTC says every business needs to be responsible for the tools they use, to the SEOs they use, for the marketing they use, the business is ultimately responsible.

And Fashion Nova had to pay a very large fine for suppressing somewhere in the order of several hundred thousand negative reviews from their website.”  

Shawn: Given this FTC guidance, is it likely that we’ll see this review gating discontinued on a lot of platforms?

Mike: As I mentioned earlier, Google prohibited review gating in 2018. And if you get caught review gating at Google, you will lose all your reviews. So, there already is [something] in place.  

And the forward-thinking platforms that accept the reviews embrace that idea. The ones that didn’t embrace the idea, the FTC recently sent them a letter and said, “We noticed on your website that you claim to partake in this practice; we’re alerting you that it’s against our guidance. We’re sending you a letter to that effect. If we find you’re doing it, you will be in trouble.”

So, that’s one side of it. It is part and parcel of a longer shift: consumers expect honesty in reviews. And Google, and now the FTC, is saying to businesses this is the standard you have to perform to. But more importantly, is that consumers expect it. So, even if the FTC says it’s bad and even Google says its bad, the reality is that the consumer here is king.

I have a friend who recently had his roof redone. He went and he looked up reviews and picked somebody with stellar reviews. And the job went down the tubes really quickly, the roof ended up leaking and he ended up getting into a bad argument with the company.

And when he learned that this company was review gating, he immediately filed a lawsuit and filed with the state’s attorney general. And ultimately, he’s going to write a bad review about the company.

So, the risk with review gating is really with your customers more than with the FTC.”

Shawn: “You mentioned a little bit before about small businesses and how they might be affected vs., obviously, it sounds like the company’s involved in this were on the larger side. How much is this guidance really going to affect the average small business that might be watching this?”

Mike: “I think that as a small business you want to understand the world in which we operate, you want to understand that it is perceived as unethical to be doing this, you want to respect your customers.  

If you are doing it, I think you are mistaking what good business practice is. You are unlikely to get caught, so the risk is low. Although, like I said, if a consumer or competitor turns you into Google, you’ll lose your Google reviews, if you are turned into Yelp, you lose your Yelp reviews and you might get a little red badge of shame at Yelp.

But the financial risk is low, but I think the bigger risk is that you’ll offend a customer. So, you’re not going to be directly impacted, but I think a business needs to understand the way the wind is blowing and what consumers really want. And they need to be listening to that carefully.

I think the FTC is a trailing indicator of what consumers really want, and they want honesty and transparency.”

Shawn: “Some small business owners being overwhelmed by this, and it’s putting them off on reviews entirely. What do you say to the business that says, “You know what I’m just not going to participate in reviews anymore. I’m just not going to pay any attention to it. This is just overwhelming to think about.”

Mike: “Well, I did some research several years ago and I’ve continued it—where I looked at the source of new leads for local businesses. Somewhere between 75 to 95 percent of those new leads came from Google, and the bulk of those new leads never made it to the small business website.

They stopped at Google, looked at the information that was on Google and made the decision right there to either do business with you or not, either take driving directions to your business or to call you. Some of them went on to your website and made additional calculations.

So, I would say if you ignore reviews, you are ignoring one of the best ways to find new customers. And you run the risk by not allowing all of your customers to give you a review—of just the unhappy ones leaving you a review at Google, which is what’s likely to take place.

So, you have a choice you can just have unhappy customers leaving a review at Google, or the really happy ones or you can encourage every customer to leave you a review at Google

And if you get an automated system, it shouldn’t be overwhelming. If you pick a system that’s sort of ethical and principled, they will take care of being in real compliance, so you don’t have to worry about it too much.

You should double check when you sign up that they are. But beyond that, you put your email addresses in, or your SMS numbers in, you set it up and it just runs.

So, I don’t see any reason why a small business shouldn’t engage in online reviews.

I think they are too critically important to your reputation, but I think also there is a lot to be learned from reviews. And a lot of information that you can use to improve, and any business that isn’t is improving is getting worse. And in this competitive world that’s a surefire way to not succeed.”

Shawn: “Mike, let me ask you about the less talked about the idea of buying reviews, and whether that something you should do. I think I kind of know the answer to the question.”

Mike: “It’s always a temptation when you feel like your reputation is suffering, whether fairly or unfairly, to ask friends and family to review you or to even go online and try to buy reviews,

You can pick them up for $5 a piece at Google, maybe $30-$35 at Yelp. But it’s really, a very, very treacherous territory.

Obviously, it’s against the terms of service for both Yelp and Google— and if you’re caught, those will definitely be removed. Again, at Yelp you’ll receive a little badge that says we caught this business buying reviews.

And The FTC has come out clearly that it is inappropriate, and if caught, will lead to being chastised by them. But I think, again, it’s a tremendous violation of your consumer trust.

I think it’s better from my point of view, instead of putting yourself in a position to have to buy reviews, is build a business that sucks less, build a business that really works for your customer, so that people are happy, and they are willing and ready to give you a review when you ask them.”

Shawn: “Maybe this is a little bit more of a slippery slope, but how about incentivizing reviews?”

Mike: “Incentivizing reviews recently was mentioned in the FTC. It’s a somewhat complicated area because the FTC feels that, if you incentivize reviews in any way, even if it’s just a coupon, it doesn’t matter whether it is happy or unhappy—if it’s a neutral ask—but if you incentivize it in any way, that review has to be clearly labeled as incentivized, as having received some consideration for the review or testimonial.

Which is impossible to do on Yelp and Facebook and Google, because if you have your customer say, “Oh, I received a $5 coupon,” which puts it in compliance with the FTC, it is then out of compliance with Yelp or Google.

So, your review would then be taken down. Really, the best bet is to avoid the practice altogether.

And what we find is that if you ask every customer for a review, let’s say you have a thousand customers, you’re likely going to get what are called first-party reviews, reviews directly to you, probably 30 percent of those customers are going to give you direct feedback and probably 5 percent will give you a review at Yelp or Google.

But if you just keep asking over time and view reviews as a long-term strategy, as opposed to a short-term tactic, as indicated by buying reviews or incentivizing reviews—just something you do as part of your business marketing, and over time, you’re getting 5 percent of all of your customers to leave a review.

And you’re doing a good job, you’re going to have a great reputation, you’re going to rank really well at Google, people are going to make a decision to buy from you, and you can be proud of what you are doing without having to resort to less than scrupulous tactics to convince a new customer to do business with you.

Shawn: “Up next, it’s time for our small biz tip in 15 seconds or less. Remember that negative reviews help your business as much as positive ones. They let you know what your customers don’t like about your product or service and how you can improve.

Thanks again to Mike Blumenthal of Near Media for showing us how to respond to negative reviews. To learn more about Mike Blumenthal visit Near Media.

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Holly Chavez Holly Chavez is a staff writer for Small Business Trends and has been a member of the team for 2 years. She is also a successful copywriter for marketing agencies and private firms. Holly has contributed to various publications and news websites and is a former entrepreneur and industrial engineer who has worked for two decades in the manufacturing and logistics industry.