Friday, 24 January 2014

Are crowd sourced product reviews really that helpful?

Several of my posts recently have been about setting up my new apartment.  This is the first time that I have lived on my own (and not in a share house) and so I am going through the joys of getting basic services set up such as gas, electricity, internet, contents insurance etc.  I have written a series of posts on how you should always shop around and that you can save significant amounts of money if you search for better deals on things like your power bills and your car insurance.

Getting the cheapest price is not the only also need to consider service quality

There is normally a price / quality trade off.  Customer service is often significantly over rated but you really do want good dispute resolution practices and a company that is prompt in responding to your concerns or issues.  The ideal situation therefore is to find a company which is reasonably priced but which provides an adequate service and deals with you in a fair manner.

We often look to 'unbiased' crowd sourced reviews on the internet before purchasing

The internet allows any one of us to express our views about both the good and bad about anything we buy and use.  It also provides you an opportunity to find out about the service level offered by different companies before you sign a long contract.  This is definitely a good thing as it allows us as consumers to make more informed choices about what we buy.

However...there is a natural bias when it comes to 'real' reviews which most people ignore

I only realised that there was a natural bias when it came to reviews when I came to sign up with an energy provider.  I found one (Red Energy) which appeared to give me the cheapest price and then I went online to look at what other customers were saying about them.

I was aghast at some of the things that their customers had to could one company be so bad.  No wonder they were so cheap!  I was relieved that I had stopped myself in time and I then went to look at the next cheapest company and was dismayed to find that they too had a litany of complaints about them.  And so it went on...every company I checked out had complaints.  I went to the expensive 'premium' service providers and they too had pages and pages of negative reviews.

That was when I realised that crowd sourced reviews have a natural bias
to them.  When we get good service we typically don't go and rant and rave about it - most of us have no real incentive to give the company a plug - we may do it verbally but the chances of us putting it online on a public forum is pretty low.  Conversely when we are angry at a company we want to tell the world about it - we want them to pay for what they have done to us.

The problem is, therefore, that it is hard to sort out which companies are truly bad and which companies are pretty good but have the normal array of disgruntled customers.

Worse...good reviews are often seen as a ploy by companies to make themselves seem better

If you have ever gone onto crowd sourced review websites you will often see a few positive comments (among the litany of negative ones) and they are generally slammed straight away as companies trying to make themselves look better by giving themselves a positive review.  And it is true that unscrupulous operators will often do this...but it is entirely possible that some of these are genuine reviews but we cannot separate them from the fake ones.

Use these 'real' reviews but don't base your decision on them

Make sure you keep in mind what the natural bias of these crowd sourced reviews are going to be when you read them and look for information about real issues or problems.  For example I found out that Bingle Car Insurance charges you an excess whether you are at fault or not which I was not ok with so I decided not to go with them.

These websites can be great for uncovering terms and conditions that you may not have noticed at the start but which are important.  Often times you may decide that you are actually ok with those terms and conditions.

In the end what I did for my energy decision was go with the company I first decided to use (Red Energy).  I called around a few people and found 3 or 4 who used them and got my own 'real reviews'.  They were generally positive and hopefully I will have a similar experience.

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