Many businesses believe they completely understand their customers – but research* into consumer behavior has found that for every single customer complaint a business receives, there are 26 more unhappy but silent customers. For businesses, this knowledge often comes too late.
We connected with Georgina Nelson, founder and CEO of point-of-payment rating system, TruRating to discuss why customer ratings are so important for businesses and the value of genuine feedback at the point-of-sale, as well as the technology’s expansion into the U.S. market.
*Research: CX Solutions (formerly U.S. firm, TARP Worldwide)
Q: Why are customer ratings important to a small business?
Happy customers often spend more, return for more, and share more about their great experience. But how do businesses know if customers are happy? For a long time, customer ratings have served as one of the most important yardsticks when it comes to the measurement of happy customers. The problem, however, is that they have traditionally been difficult to trust and regulate – and, more importantly, challenging to glean valuable insights from.
Customer feedback is recognized as critical, but, too often, small business owners don’t have the brand or the budget for meaningful research. For these businesses, a cost-effective, feasible and validated consumer ratings system – that is always on – can go a long way in helping garner these customer insights. That is where point-of-payment rating systems come in.
Q: How can ratings negatively or positively impact small businesses?
Whenever we speak to small business owners, one of their biggest frustrations is the impact that a single negative review on the likes of TripAdvisor, Yelp or Facebook can have on their business. Our independent research* has shown that although 78 percent of review website users don’t fully trust what they read, 64 percent still turn to these sites for recommendations.
Small business owners know the important role that reviews can play in retaining faithful customers and attracting new customers or potential clients – it’s one of the reasons why there are often incentives offered for customers to write positive reviews. What we see at TruRating is a high volume of ratings and an average response rate of 88 percent, meaning that the overall affect that “grumpy” outliers have doesn’t affect ratings results. What does this mean for businesses? If ratings are consistently positive, a few low scores won’t unfairly skew consumer opinion; however, if a business consistently receives lower ratings, the negative feedback is validated and the business owner can fully trust the necessity of making changes for the better.
* Independent research: TNS conducted in the UK, 2013
Q: How can businesses improve their operations based on customer feedback?
Keeping an eye on customer ratings provides an invaluable window for business owners to identify the small operational decisions that could be having a big impact on the bottom line. By aggregating, measuring and analyzing ratings performance, managers and business owners can identify specific issues that might be affecting success in near real-time.
Businesses can also link consumer ratings to average spend. This allows them to see how much more happy customers spend, and on what. Furthermore, if a business owner is unsure as to whether or not to roll out a new operation, the change can be made in a single experiment outlet and the consumer reception can be monitored. From here, a business case can be successfully made for that initiative.
Q: Are positive ratings/reviews a good marketing tool for businesses?
Positive reviews and ratings are an important marketing tool for any business – and small businesses are particularly tuned in to the make or break effect that a single review can have. By collecting feedback during checkout, businesses help ensure that the ratings they garner are in-the-moment and genuine. Therefore, this information can be trusted as the foundation upon which marketing strategies are built. For businesses, these ratings help take the guesswork out of marketing and help accurately measure marketing success.
One of the next advancements businesses are seeking is the ability to display ratings and scores to customers right away – this is a marketing widget that is currently in the works to help integrate ratings across company websites and social properties.
Q: What are some challenges with current feedback methods (e.g. online reviews)?
I used to be a lawyer at Which?, the Consumers’ Association, and it was there that I noticed that two markets in the review and feedback space were failing. The first, consumer review websites, were failing because consumers used them but ultimately didn’t trust them. There were also issues with accurate representation – 1 percent of the website’s user base would provide 99 percent of the content.
The same applied for the second market – direct reviews and consumer feedback to businesses. I would say that, on average, businesses only hear from around 1 in 1,000 of their customers – and that’s mostly complaints, which makes it very hard to use feedback to enact meaningful improvements.
Q: What are the biggest benefits for merchants when using a point-of-payment rating system?
The core benefit of a point-of-payment rating system is that ratings are validated by genuine paying customers at the moment after the checkout experience. In fact, Gartner found this method to be 40 percent more accurate than feedback given at a later date. A close second would be that customer feedback ties directly to transaction value and basket-level data. This is unique because many other online, delayed feedback systems don’t require the disclosure of any specific transaction or basket data. You can say, for example – the food here is terrible. My question would be, what food, why, how much did you order etc. – answering these questions leads to meaningful impact on business decisions.
Q: What aspect of the consumer experience is most important to merchants that they want feedback on? Any “custom” questions they ask for the most?
We’ve found that the types of custom questions that a merchant wants to ask will depend largely on the size and sector of their business.
For quick service food and drink businesses, often of most interest is finding out how consumers felt about queue time and the clarity of the menu. In retail environments where the purchase is more considered, business owners want to gauge the friendliness of their staff, the presentation of different options and how the benefits of a product were explained; their focus is on what kind of relationship was established between customers and their staff. Similarly, in specialty outlets business owners often want to know how in depth the knowledge of their staff was – whether or not the customer felt they were pointed in the right direction to a product that met their specific needs.
TruRating is a free app available on the Verifone Carbon POS. For more info on Carbon, click here.