One Customer Review Site Is Playing With Fire. And All Retailers Could Get Burned

One of the biggest reversals in the last few years has been retail acceptance of posting customer reviews. Retailers have moved from a state of fear to one of wonderment, asking why consumer opinions hadn't been accepted years ago.

At a Wharton conference last month, General Manager/Senior VP Steve Nave said that the impact of customer reviews has been one of his biggest surprises. "The amount of trust [that customers show to each other] is amazing," Nave said.

It's for that reason that recent actions from a site specializing in consumer reviews are so baffling. The site, Yelp, has championed the power of customer reviews and it reports some 31 million consumers visiting its site last month. But Yelp then gave vendor advertisers the capability to select which reviews would lead certain pages and it also selectively—and secretly, in the sense that it didn't flag it to its visitors—removed various reviews.

The "amazing" trust that Wal-Mart's Senior VP spoke of is solely based on, well, trust. User-to-user reviews are extremely powerful marketing tools because they help sell lots of products. Even a sustained whiff of hanky-panky could be enough to kill the proverbial HREF goose that laid the golden margin.

This week, Yelp, pressured by various lawsuits filed by unhappy vendors, slightly softened its policies.

"We're adding the ability to see reviews filtered by our review filter and we're discontinuing the 'Favorite Review' feature that's part of our advertising package," said Yelp CEO Jeremy Stoppelman. "Why? Because while Yelp has seen tremendous growth in just a few years, we're still new to a lot of people. Despite our best efforts to educate consumers and the small business community, myths about Yelp have persisted. We've said all along we believe these incorrect notions stem from the combination of the filter and this advertising feature--and we're practicing what we preach. Lifting the veil on our review filter and doing away with 'Favorite Review' will make it even clearer that displayed reviews on Yelp are completely independent of advertising--or any sort of manipulation."

A nice gesture, but where was that sensitive thinking months ago, when the programs were launched? For a site that is entirely based on user trust, Yelp needs to stay light years away from even the slightest hint of vendor influence.

There's a history here. When Costco became one of the last major chains to accept customer reviews, it did so acknowledging that perception was king. And then incident after incident—from a relentless Belkin employee who repeatedly posted favorable reviews of his own products to Amazon, which had its own series of bogus and slanted reviews—undermined the necessary consumer confidence.

Will Yelp's site visitors forgive and forget? Can it regain trust? Of much greater concern, will incidents like this start killing the influence of legitimate reviews at E-tail sites everywhere?

It's a very frustrating situation. If a chain plays this one absolutely straight, there's no way to tell. Indeed, it's not only a matter of playing it straight. If clever vendor marketers try and game the system, there are relatively few things a chain can do about it. That chain's reputation is on the line, and unethical vendors that it has virtually no control over can destroy its standing. Sure, if a bogus review is discovered it can be removed. But the task of discovering it is quite difficult.