Are fake online reviews killing consumer confidence?

Ninety percent of shoppers say reviews impact their purchasing decisions. They are as good as gold — when they’re real. There’s just one catch. They’re well aware that retailers buy fake reviews, and they’re suspicious of them. And with good reason. Roughly 16 percent of restaurant reviews on Yelp are fake, according to a 2013 study. And up to 15 percent of all online reviews are fake.

Sites like Amazon take reviewing one step further, with user-generated content (UCG). Amazon openly encourages consumer reviews and profits from them. As a result, many ecommerce retailers turn to purchased reviews to help them gain visibility and make sales on their sites.

Ecommerce is the main industry affected, but Samsung put itself in hot water in 2013 by paying for negative reviews of its competitor, HTC. Travel sites like TripAdvisor are also feeling the impact of fake reviews.

Consumer confidence in reviews has taken a major hit, putting marketers who hoped to use this virtual version of word-of-mouth marketing in a tough position. Some startups are directly tackling this issue, like Yotpo, which seeks user-generated content, and FakeSpot, the reviews and marketing solution for online businesses, which analyzes consumer reviews.

User-generated content is a potential cure, but on Amazon and other sites, many consumers have trouble believing in the credibility of user reviews. Ninety-five percent of consumers doubt the validity of reviews when they don’t see bad scores.

“As cliché as it sounds, this is super important, as user-generated content (UGC) is a reflection of your business and your customers. We’ve really dug into the numbers here and our research into the data has shown that the vast majority of reviews are positive — 4 stars or more. So it’s a simple numbers game; if you get more reviews overall, you’ll get more good reviews,” Tomer Tagrin, founder and CEO of Yotpo, told me.

With that in mind, marketers have turned to the blogosphere, forums, discussion boards and social media for help rescuing confidence in reviews, but the data tells a scary story. As of 2012, one-third of all online reviews and user-generated content discussing a product were fake. They were paid pieces of content designed to either degrade or praise a product.

There may still be a user-generated content answer to decreasing consumer confidence in reviews, however. Several startups have emerged with the goal of guaranteeing honest reviews, better sales and improved engagement.

Case study: The AmEx Instagram campaign

The rise of UGC has been a major boon for marketers. From fashion companies that use photos of their customers wearing their products to Instagrammed photos of food that increase restaurant sales, UGC is everywhere. But American Express is in a class of its own when it comes to rocking UGC.

In 2014, the company turned its Instagram feed over to customers. The #MyAmex campaign was an experiment, but a wildly successful one. Engagement increased by 23 percent, and the company doubled their Instagram followers for two weeks during the campaign, AmEx told Adweek. More than 10 million impressions were generated, and they gained 40,000 engagements. That’s a ridiculously profitable return on a practically free campaign.

“When it comes to ecommerce, the hardest thing to do is get customers to trust you, even though they can’t shake your hand or touch your products. UGC is crucial for building trust and giving that key information and social proof a customer needs to complete a sale,” Tagrin told me.

UGC can be highly profitable — but is it easy?

Challenges for vendors

If someone told you that you could instantly increase your brand presence, gain consumer trust and hit your quarterly sales goals without investing in expensive advertising campaigns or launching a massive cross-channel marketing campaign, would you think they were crazy?

Guess what? You can.

The American Express example above isn’t a fluke. Sure, their reach is wider due to their existing customer base, but many smaller brands are also successfully leveraging user-generated content in a way that is undeniably authentic and doesn’t face problems with declining consumer trust. In ecommerce, joining the UGC trend should be a natural decision.

One of the most difficult aspects of launching a UGC campaign is making sure your customers see it. There are several startups addressing this problem, like Bazaarvoice and Yotpo, which earlier this year received $22 million in Series C funding. Yotpo’s funding is largely a result of the company’s visionary stance regarding reviews. It aims to solicit honest ones from existing customers using a multichannel strategy, and it doesn’t just look for words — the company gathers photos, videos, Q&A answers and more, and it’s fully embracing mobile.

The funding Yotpo received is a sign from investors to ecommerce-centric startups that now is a good time to be thinking about ways to drive the creation of user-generated content.

Yotpo isn’t just focusing on the creation of UGC. The company studied 1.3 million reviews in the fashion industry across 3,000 stores and 12,410,892 purchases. As a result, they were able to identify the top pain points — fit, size and quality — ways customer service could be improved and how personal connections change shopping patterns in fashion. They’re just beginning to discover the wealth of data reviews can provide marketers, but the value of real reviews is proving itself quickly.

Many ecommerce vendors learned the hard way that fake reviews can damage their reputation and kill consumer confidence in the review process. Gathering reviews directly through a service allows companies to show customers that the review process is honest and purchases are verified, solving two major issues. Little by little, confidence in reviews can be re-established, but only if it’s clear that a gateway exists, preventing fake reviews and penalizing companies who buy biased reviews.

In 2015, Amazon realized the depth of their mistake in allowing open reviews from unverified purchases. The company has since adjusted its strategy, and profits are increasing. The future of honest reviews is bright.

Signs of hope

Despite lagging consumer confidence in online reviews, several signs indicate that trust can be re-established with a smart review process:

• Sixty-one percent of consumers read reviews before deciding whether or not to buy (Econsultancy).
• Consumer reviews are trusted up to 12X more than manufacturer product descriptions (eMarketer).
• After seeing how a brand responds to reviews, 71 percent of consumers change their opinions about the brand (Bazaarvoice).
• Customers who view user-generated content show a 133 percent higher conversion rate (Bazaarvoice).
• Social commerce increased its share of ecommerce referrals by almost 200 percent between 2014 and 2015 (BI Intelligence).
• 79 percent of customer trust online reviews as much as personal reviews (BrightLocal).
• Incentivizing rewards encouraged a 2,500 percent increase in reviews for one company (Sweet Tooth).

The rising problem of fake reviews presents an opportunity for brands and ecommerce merchants to embrace the power of user-generated content. As the aforementioned stats reveal, customers trust other customers. For brands that are looking to blast into the consciousness of consumers, it’s crucial to bank on authenticity and avoid fake reviews like the plague.