Responding to Reviews: Should Businesses Focus on the Happy or the Unhappy?
Responding to Reviews: Should Businesses Focus on the Happy or the Unhappy?
Online reviews shape customer perceptions, influence purchasing decisions, and directly impact a business’s success. To address this, companies have increasingly invested in managerial responses (MRs)—publicly visible replies to customer feedback. But where should businesses focus their efforts? Should they prioritize responding to negative reviews to address complaints and rebuild trust, or should they engage with positive reviews to reinforce goodwill and encourage more satisfied customers to share their experiences?
New research by Jiajun Wu, Jun Ye, and Junhong Chu, titled "Soothing the Unsatisfied or Pleasing the Satisfied? The Effects of Managerial Responses to Positive Versus Negative Reviews on Customer Ratings and Financial Performance," published in the Journal of the Academy of Marketing Science, examines how different response strategies influence future customer ratings and financial outcomes. The findings challenge common assumptions about reputation management and offer valuable insights for businesses navigating the complexities of online reviews.
The Impact of Managerial Responses
To understand how businesses should approach online review management, researchers analyzed two key response strategies: engaging with satisfied customers by replying to positive reviews and addressing complaints by responding to negative ones. The study found that each approach influences future reviews in different ways.
The study draws on a large-scale dataset of over 150,000 online reviews and managerial responses, applying advanced econometric techniques to analyze how businesses’ engagement strategies shape customer perceptions and financial outcomes. By leveraging causal inference methods, the researchers were able to distinguish the direct effects of responding to positive and negative reviews, providing actionable insights grounded in data rather than anecdotal evidence.
Engaging with positive reviews tends to have the most immediate and noticeable benefit. Businesses that consistently acknowledge and interact with satisfied customers see an increase in future ratings. This strategy reinforces positive experiences, builds stronger customer relationships, and encourages others to leave favorable reviews.
In contrast, responding to negative reviews can have more complicated effects. While addressing complaints demonstrates accountability, it doesn’t always lead to an immediate improvement in ratings. In some cases, businesses that focus heavily on negative feedback may even see short-term declines in review scores as additional complaints surface. However, over time, a thoughtful and well-executed approach to responding to criticism contributes to trust and credibility, ultimately leading to higher ratings in the long run.
The study also highlights the importance of authenticity in review management. Generic, copy-paste responses diminish the effectiveness of managerial engagement, making customers feel unheard. Personalized, meaningful interactions have a much stronger impact. Additionally, competitor activity plays a role. When rival businesses also engage in responding to reviews, the advantage of managerial responses becomes less pronounced. If every company is replying to customers, review engagement becomes an expectation rather than a differentiator.
Striking the Right Balance
For businesses looking to maximize the benefits of responding to online reviews, the key lies in balance and strategy. Prioritizing responses to positive reviews can drive immediate improvements in ratings, while addressing negative feedback requires a long-term approach focused on trust-building rather than quick fixes. Personalization matters—customers value genuine interactions more than automated replies. And as the competitive landscape evolves, companies must continuously refine their approach to ensure their engagement efforts remain meaningful.
Managing online reviews is about more than just damage control; it’s an opportunity to build loyalty, strengthen reputation, and create lasting relationships with customers. By taking a thoughtful and intentional approach, businesses can turn online engagement into a powerful tool for long-term success.
About the Research
Soothing the unsatisfied or pleasing the satisfied? The effects of managerial responses to positive versus negative reviews on customer ratings and financial performance
Journal of the Academy of Marketing Science (JAMS), 2023; Volume 52, Issue 3
Authors:
Jiajun Wu
Jun Ye
Junhong Chu
From the Authors
How can the recommendations from your findings specifically be implemented?
Firms can implement these recommendations by developing a structured response strategy, prioritizing responses to positive reviews with personalized, appreciative messages. This could include assigning specific team members to handle positive and negative reviews separately, ensuring each type receives a tailored approach. For negative reviews, the recommendation is to acknowledge complaints sincerely while utilizing standardized responses to manage time and reduce the short-term negative impact. Companies should also monitor the response activity of competitors to adapt their own strategies accordingly. In competitive markets, firms might benefit from engaging more actively with positive reviews to distinguish themselves, while in less competitive environments, an even approach to both positive and negative reviews may suffice. Further, implementing feedback loops from negative reviews can help firms learn from customer complaints and continuously improve service. Tracking metrics related to review ratings and financial outcomes associated with response strategies can offer data to refine response practices further.
What outcomes would be expected?
Expected outcomes include an increase in customer satisfaction and positive review ratings from higher MR-P(managerial response to positive reviews) ratios. This increase is expected to drive revenue growth as favorable reviews improve the brand’s public perception. For MR-N (responses to negative reviews), while short-term impacts may see a slight dip in review ratings due to the visibility of negative feedbacks, long-term improvements in both ratings and revenue can result from the constructive feedback loop created by these interactions. Customers are more likely to trust brands that respond to complaints openly, potentially leading to enhanced customer loyalty. In a competitive landscape, firms that actively engage with positive reviews while maintaining a balanced approach to addressing negative reviews can expect differentiation benefits, as prospective customers often view responsiveness as a sign of customer-centric values.
Any other advice for practitioners following directly from the results?
This study highlights the different impacts of MR-P and MR-N on crucial service quality and financial metrics. Managers should prioritize responses to positive reviews due to their significant positive effects on future ratings and financial performance. For negative reviews, a 'listen carefully but give standard responses' approach is recommended to capture value while minimizing negative signaling effects. Customized responses to positive reviews are more effective and generate greater financial returns. For negative reviews, standardized responses are advisable to mitigate the short-term negative impact without excessive resource allocation. Firms should adjust MR strategies based on competitor actions. When competitors have low engagement, firms can use MR as a point of differentiation. However, as competitor engagement increases, MR becomes a standard practice, reducing its differentiation effect.
