When looking for a restaurant, bakery, plumber, or lawyer, you’re likely to visit sites like Yelp or Angie’s List to help make a choice. In fact, recent research shows that 78 percent of consumers in the United States will read online reviews prior to making a purchase or decision. Meanwhile, businesses can use these review sites to interact more directly with their customers, through tools like new owner response features.
How does this online interaction translate into real-world performance? Dr. Subodha Kumar, professor of Marketing and Supply Chain Management at the Fox School, conducted a study to find out.
Kumar examines the impact of the adoption of the business owner response feature within online review platforms in his paper, “Exit, Voice, and Response in Digital Platforms: An Empirical Investigation of Online Management Response Strategies,” which was accepted for publication in the Information Systems Research, an A-level journal.
Businesses that use the response features saw an increased number of mobile “check-ins” through sites like FourSquare and Facebook. Although the feature has been beneficial for businesses that use it, the key to consistent success resides in the need for companies to stay up-to-date with ways to connect with their consumers, both present and future.
“Overall, the new features supported through digital platforms will help businesses develop the right engagement strategy, improve consumer experience, and generate more reviews and consumer traffic, which will ultimately open more revenue generating opportunities for both the digital platforms and businesses,” said Kumar. This strategy will essentially drive higher website traffic and, if done well, enhance customer relations.
The study also found that use of the online response feature impacted the performance of nearby businesses. For example, in analyzing the performance of nearby restaurants in direct competition, businesses that directly engaged with customers online increased their number of check-ins, while businesses that did not use the features saw a decrease. This spillover effect suggests that businesses must be aware of how their neighbors and competitors are engaging with customers online in order to optimize their own digital strategies.
With the growth of mobile check-ins, social media, and online reviews, the research possibilities are evolving as well. “A future research direction is to examine which types of online management responses are more likely to attract consumers and enhance business performance,” said Kumar.
Dr. Subodha Kumar recently joined the Fox School. He will be a part of the Data Science Institute, an interdisciplinary body that connects multiple disciplinary perspectives to increase collaboration in the fields of computer science, math and statistics, and business knowledge.