How Should Retailers Handle Bad Web Reviews? Not Like KlearGear

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Negative online reviews have been a problem for retailers since they began selling items online. Bad ratings on third-party review sites such as Yelp and TripAdvisor along with Amazon and shopping sites can literally cost businesses thousands or millions of dollars in lost sales.

In fact, 80 percent of online shoppers have changed a purchase decision based on a bad online review. That amounts to an alarming amount in lost sales and damaged reputations. Some retailers and hotels have taken matters into their own hands, suing the review sites over lost sales and damaged reputations. In one case, an owner whose hotel was listed at the top of TripAdvisor’s “Dirtiest Hotels in the U.S.”, sued TripAdvisor for $10 million.

However, we have never heard about the bad reviewers themselves being targeted – until now. Utah couple John and Jen Palmer have been in a battle with internet retailer KlearGear for four years now. If you haven’t heard of the e-commerce company, KlearGear has carved out a specialty niche, offering desk toys and T-shirts for geeks.

In late 2008, when the Palmers didn’t receive an item they ordered from KlearGear – most likely a gift for the holidays – they canceled their order and posted a negative review of the company on RipoffReport.com.

Then, in 2012, KlearGear billed the Palmers for $3,500, alleging that the Palmers violated the retailer’s terms of service that include a non-disparagement clause. The Palmers refused to pay the bill, so KlearGear reported John Palmer to a credit agency, reports MediaPost. As a consequence, the Palmers were denied credit and a credit card, they say.

In an interesting turn of events, the Palmers are now fighting back, with the help of consumer advocacy group Public Citizen. The group is demanding that KlearGear pay the Palmers $75,000 for “filing a false report to credit agencies”. The report constitutes defamation, intentional interference with economic relations and intentional infliction of emotional distress, Public Citizen contends.

KlearGear’s 2008 terms of service didn't even include the non-disparagement clause, which was added in 2012, according to Public Citizen.

The online retailer’s disparagement clause is the most short-sighted policy that we have ever seen from an internet retailer and – most likely – not legally sound. Why would you drag your own company’s name through the mud with the ensuing negative publicity in a case like the Palmers’ – and the other disgruntled customer fiascos that are bound to occur as part of the retail business?

There are much better ways to handle negative reviews online, and major e-commerce giants have already figured out how to do so. First off, the smart retailers try to prevent bad reviews online by stepping up their customer service and fulfillment systems. Consumers who post negative reviews have often already tried to go through businesses’ traditional resolution systems – via phone, email and social media – before posting bad reviews.

After bad reviews are posted, retailers should be closely monitoring all of their sites and social media feeds – along with all third party review sites – so they can respond to a customer right when the review is posted. Business consultants suggest reaching out to disgruntled customers directly or giving them contact information that allows them to communicate to someone who will actually help them.

You would be surprised how often complaining shoppers will delete their negative reviews or begin communicating positively about companies that once ticked them off. According to a survey by the Retail Consumer Report, when retailers took the time to respond to negative feedback, 34 percent of complainers deleted their negative reviews. Plus, 33 percent then wrote favorable reviews, according to Intuit’s Small Business blog.

“If a disgruntled customer posts a negative comment about your business or product on a big site like Amazon or Yelp, you might be tempted to ignore it, especially if you don’t think the claim has merit. However, it’s in your best interest to apologize, offer an explanation, and maybe even provide a gift (such as store credit),” Kathryn Hawkins wrote in the blog post.