Does your company have a disaster recovery program for negative word of mouth?

Over the Easter weekend, social networking sites and blogs exploded with negative publicity about online retailing giant Amazon.com. Angry customers are protesting changes on Amazon’s site that lost sales ranking data for hundreds of books dealing with homosexuality, meaning that these books can no longer be found via keyword or subject searches or on best-seller lists.

Amazon appears to have been taken by surprise by the outrage – #amazonfail was the top-trending term on Twitter, and a Google bomb initiated by a popular blog for romance readers successfully redirected searches for “Amazon rank” to a snarky explanation of the issue before Amazon responded at all.

The initial response was a terse press release explaining that the de-rankings were the result of a “glitch” in the sales-ranking feature. A skeptical public declined to believe this explanation, which is widely perceived as a cover-up for a change in corporate policy – or an overzealous application of the existing policy. And it seems likely that Amazon’s customer service reps are being flooded with angry calls and emails. A subsequent apology included a more detailed explanation that the glitch was due to "an embarrassing and ham-fisted cataloguing error," but conspiracy theories continue to circulate in the blogosphere.

No doubt Amazon’s slow response was due in part to the holiday weekend. It also seems likely that they didn’t have a good plan in place for dealing with a grassroots campaign of this sort. Ironically, Amazon has been a trendsetter in leveraging positive word of mouth, but it seems they were unprepared for the way that negative publicity can also spread rapidly on the Internet.

No one likes to think that a technological glitch or a bad decision by a single employee could result in a PR firestorm. But if something like this happened to your company, what would you do to contain the situation and turn it around?

Here are some suggestions for managing negative word of mouth:

• React quickly. Monitor user-generated content on your site, customer service complaints, and word of mouth in other venues. If you see a particular topic cropping up repeatedly, don’t delay. Proactively letting people know that you’re aware of the situation and that you’re actively seeking more information shows you care about your customers and that you’re eager to respond to their feedback. The Internet never sleeps! Identify an escalation point for issues that arise during off-hours so that your official response isn’t delayed until regular office hours.

• Be as transparent as possible. If you don’t have answers yet, just say so. Your customers are smart enough to recognize vague prevarication, and they’ll appreciate your honesty. When you’ve identified the problem, give a clear, understandable explanation of what went wrong and how you’re going to fix it.
• If you’re at fault, apologize. A clear admission of responsibility and a commitment to resolve the issue will go a long way towards counteracting the negative publicity.
• Don’t rely on traditional media to get the word out. Leverage the same tools your detractors used to get your story out there. Post about it in your corporate blog, tweet about it, and educate customer service reps on how to engage with your customers on social networking sites.

All companies hope they never have to deal with such backlash, but customer feedback – positive and negative – is valuable, and it's critical to not just listen, but to act.

I've been thinking a lot about the consumer in this economy, given that consumers drive about 70% of our economy in the U.S. and a large share of the world's economy (most notably China's).  We are the world's largest shopper.  This week's article by Mr. Cooper really hit the nail on the head, leading me to believe that the recovery is going to take a lot longer than initially assumed.  This may be old news to some of you, but I have been consuming the data as it becomes available and seeing consumer saving increase so dramatically is a real turning point.

I believe that social commerce will shine in a gloomy time like this.  Consumers have always feared "buyer's remorse".  With U.S. unemployment at 7.6% and rising, in addition to the multi-trillion dollar decrease in consumer wealth, purchases will be scrutinized like never before.  And I believe customer ratings and reviews, as well as all forms of customer-generated content (and word of mouth), will be leveraged like never before.  From reducing returns to increasing sales, it is clear that social commerce reduces buyer's remorse.  This isn't just a U.S. trend, as the economic problems are global and buyer's remorse is a common human behavior, and I believe this is the driver behind Sam's recent post on UK consumers flocking to social commerce.

If you missed Sam's post in November on Amazon, I recommend you read it.  They were one of the few retailers online that recently announced stellar results during such a challenging retail season.

Our clients have been stepping up their pace of innovation with social commerce.  You can see it reflected in our many blog posts in the last two months, especially the one from Heather about the unprecented number of holiday promotions we helped drive with our Community Managers.

This will be a huge year for social commerce.  Our company is signing clients at a faster pace than ever before.  Innovation is accelerating rapidly, and not just online.  The ROI is very proven.  And I'm proud of the way we are helping our clients in such a challenging time.

Come join us from April 27-29th in Austin at our Social Commerce Summit to discuss how the best are leveraging social commerce.  We sincerely look forward to seeing you there.

Retail growth, even online retail, is declining. However, the decline is steeper if you are losing market share and customers to Amazon. The Morgan Stanley reports customer satisfaction and recommendations are key drivers to Amazon gaining market share. I just heard Tony Hsieh, the CEO of Zappos, present and talk about how their focus on customer service (and they have a lot of reviews) has driven their sales to $1B.

Show this graph to your CEO, CMO and CFO if you're having a difficult time getting buy-in to social commerce initiatives. Every day you are not capturing your customer's voice is a day that you are not building a marketing asset and annuity that pays off, as evidenced by this graph of Amazon capturing UGC for 12 years. NOW is the time to begin or accelerate your use of social commerce to attract and retain customers.

ForeSee Results annual retail study suggests that sites with reviews garner 21% increase in customer satisfaction vs. sites that don't. The use of the data and content are driving retailers to improve product selection and merchandising, and to reach out to dissatisfied customers. And this user-generated content is driving real top-line and bottom-line numbers – natural search, conversion, AOV, lower returns, and many other financial benefits. See the case studies; see the stats and research.

Amazon has been featuring reviews for 12 years, but now many of our clients are embracing social commerce and we're helping them accelerate the impact of their customer voices to compete effectively. Because of our focus, as a partner we can deliver a superior user-generated content experience for contributors and visitors….faster moderation turnaround, more robust functionality, flexible integration with your partners, alerts/analytics, and best practices to drive contribution and marketing through our dedicated community managers. Plus, we go beyond reviews and help you change your culture, bringing customer oxygen across the functions of your organization.

Amazon is a great company. The impact of UGC and Social Commerce for them has been under-reported. It has been their best kept secret. No more. We've been at this for three years now with nearly 300 clients as of today. We passionately believe that the future of online shopping is here through customer contribution and leveraging influentials. Reviews are table stakes of retailers (those aren't our words), and there are other UGC applications (such as Ask & Answer and Stories) to take the impact of customer contribution to a new level.

Maintaining growth includes not losing market share. Your best customers are the ones you keep. Get them involved in writing and reading the most compelling content you can have on your site — the content that doesn't come from you!

I apologize if this comes across as "selling," but as a former retailer myself, I firmly and passionately believe this is something that deserves urgency and acceleration. The studies, results, ROI, and now the macro analysis of market share shown above reinforce my conviction that if I were in your shoes, I'd get the organization focused on Social Commerce to retain (and grow) your market share.

One of the Market Developers, Jeff Shoemaker, on our US Retail team sent me a link to something he knew I'd love.  He knows I'm a gadget guy and truly enjoy the insane cutting edge technology that gets released daily.  He knew I read Engadget, Joystiq, Dvice, Uncrate, XBOX360 Fanboy, PS3 Fanboy, and a few others religiously.  He knew I'd spend some hard earned cash on things that others might find to be a bit much.  So he knew I'd love a new product from Denon, the AKDL1 Dedicated Link Cable. 

What is it?  For a cable you'd expect $500 to get you something amazing.  This is a five foot long Ethernet cable.  Generally available for free from your IT guy or maybe $2 on numerous sites.  Now your true audiophile friends will weigh in here and say "$500 for a cable isn't that much, I spent $14,000 on bi-wiring my one ton Kharma Exquisites."  Oxygen-free copper and multi-layer wrapping is just the beginning – Wikipedia says that exotic materials like silver and "long crystal" or high-purity copper will get the best possible frequency response.  Right.  Of course that same article will go on to say that digital signals get an even hotter debate because of the "its on or off" argument around digital signals.  Yes, the Wikipedia article also says that SP/DIF signals transmit just the same over a coat hanger as they do ultra-high end cables.  Wild.

So I went to check out the 238 reviews on Amazon per the link that Jeff sent me.  With reviews titled "It Gets Me Closer To The Lord" and "Schroedingers Catbox" I knew I was in for a treat.  Some of my favorite excerpts:

• "A caution to people buying these: if you do not follow the "directional markings" on the cables, your music will play backwards. Please check that before mentioning it in your reviews."
• "I couldn't fit the dang thing in my computer. After about two hours of mulling it over I finally was able to figure out that this thing could be rotated 180 degrees and fit into the slot like a dream. I tried some cruddy $10 dollar Ethernet cord from Radio Shack, and even the 'click' upon inserting it into the slot sounded better."
• "At last! The quandary regarding the Copenhagen interpretation of quantum mechanics being applied to everyday objects is resolved. On behalf of the human race, I say "thank you, Denon".  To achieve said results, simply both purchase and not purchase the cable. It should also be noted that reading this review it will influence the outcome."
• "I'd note that "there is a sucker born every minute" but clearly Denon knows this. IMO their target customer would buy a Ferrari to use the door latch as a bottle opener."
• "There are holes in my ears where the hearing-stuff used to be, but it doesn't matter. Thanks to Denon, my aural drive has been completely satiated and I can live out the rest of my years in silent remembrance of the true dedication of these (I have twelve) link cables."

Clearly the internet snarkiness is getting the best of this product.  Why?  Because people aren't buying that an ethernet cable needs to cost $500.  Audiophiles will absolutely spend insane amounts on their true love.  Just like golfers will spend $500 on a new driver, every year, and driving enthusiasts will spend $100,000 on a car they love, and hardcore PC gamers will spend $1,000 on the latest video card.  But when they smell something that is just insane, they'll comment on it.  Bigtime.

What's the opportunity for Denon here?  They could respond to the community with the reasoning behind their pricing for that cable.  There are guaranteed some specs here that caused their marketing department to price a cable at that end of the spectrum.  They could also change the pricing on the product based on market feedback – and earn some customer loyalty points when it comes to future product consideration.  No matter what, the reviewers spoke passionately about what they think of this product.  I'm off to try that Ferrari bottle opener

First, there has never been more of an emphasis on gas prices in my lifetime, and certainly not in the history of eCommerce (being a relatively new field).  On my flight up to Toronto yesterday, I was reading a NY Times article, "American Energy Policy, Asleep at the Spigot".  I was amazed to learn that oil was just under $10/barrel in early 1999.  It has increased 1450% since then, closing at a high of $145/barrel last Thursday.  Not surprisingly, most Americans are downsizing.  But what is surprising is how quickly.  Ford's SUV sales are down 55% this year, and their sales of the Ford F150 truck, the best selling vehicle in the U.S. for 26 consecutive years, is down 40% this year.  Detroit is reeling from this – this is an unbelievably massive change in consumer demand.  To put it mildly, gas prices are dominating word-of-mouth conversations all over the country.

Second, a huge share of word of mouth is focused on the global problem of climate change.  With gas prices running this high, it is easy to feel both guilty and financially irresponsible.  This gives you a dual opportunity to strike now with this marketing message.

Third, home delivery is more efficient.  Jeff Bezos' clued me in to this in his recent appearance at WSJ's D3 conference.

MR. MOSSBERG: Are you seeing the effect of this economic slowdown? Or do you worry about it?

MR. BEZOS: As you can see from the last-quarter results that we just put out, we haven't seen that. You can never know for sure because I don't know what our growth rates would've been in a stronger economy. There are some things working to our advantage in this kind of economy.

Gasoline is expensive. Driving to the store is expensive. You take a 2,000-pound car to pick up five pounds of stuff. It's the least efficient transportation network in the world. So, there are some positive factors in our business in that regard.

To my co-founder's point about the importance of authentic green marketing, it is time for retailers online to emphasize this.  A very simple Web page devoted to educating consumers on why USPS, UPS, FedEx, and others are more efficient in their use of gasoline and, therefore, have less impact on the environment is all consumers need.  They are almost begging for this message.  Retailers should promote this message in stores, email, and throughout their website.

But here is the rub.  It is hard to do because most retailers online are part of a huge multichannel business.  And I know from experience that the store managers will not embrace this message for fear of losing their sales.  Just like the book Freakonomics educates us on the importance of incentives, incentives in these businesses need to change.  And that takes time.  So, this is probably an immediate word-of-mouth opportunity for online-only retailers, but I would love to be surprised and see multichannel businesses embracing this message and gaining share as a result.  I'm confident that the in-store message could be figured out (e.g., "buy accessories for this digital camera online instead of driving back – here is why it will cost you less and help our environment").

What do you think?

P.S., to learn more about why the time is now, check out my previous posts (post1, post2, and post3) on how Netflix attracted Blockbuster's customers with their simple marketing message, "the end of late fees".  You will find that the battle of these two giants offers many fascinating word-of-mouth insights.

Update 7/8: Peter Cobb, co-founder and SVP at eBags, just sent me the link to a recent email promotion (here) that they sent to customers, emphasizing free shipping and saving on gas.  I also like the fact that this campaign highlights eco-friendly bags.

Selections from the 1,000+ reviews that Killian has written for books, movies, and everyday products on Amazon.com. Subversive and delightful modifiations to a pervasive online art form. Includes an author's introduction and an editor's introduction.

I did a people search on Amazon.com and found Kevin's profile.  As of today, Kevin is Top 500 Reviewer on Amazon.com with over 1500 reviews, a reviewer rank of 119, and over 6,000 helpful votes from other Amazon.com users.  Wow!  

It's fascinating to see user-generated content entering the mainstream in this fashion.  Trust me, I'm not blowing this out of proportion just yet.  At best, Killian's book is consumer esoterica for the near to medium term.  I don't expect volume 2 or any imitators anytime soon.  But I take this news as yet another sign of the shift in attitude toward consumer-generated content.  The fact that a publisher got on board is a sign.  In all fairness, Hooke Press is a very small niche publisher, but they've chosen to publish reviews alongside poetry!  Telling comparison.  In addition, this news says at least a little something about how UGC creators feel about their contributions.  Sure, we all know that there are social motivations to having a personal website, a well-maintained Flickr account, or a fresh blog.  Clearly, Kevin is among the elite of UGC creators, having invested at least hundreds of hours in sharing his opinions with fellow Amazon.com customers.  It seems logical to me that he would want to leverage his contributions in another format and that he would think his reviews worthy of doing so.  

Per Andrew's note in the Boing Boing post, we'll see if Amazon hassles Kevin over the publishing rights to his reviews.  I hope not.  Kevin is pushing the medium in a new direction, and I wish him well!

Consumerist posted this about the Milk Reviews on Amazon.com…

Currently, over three-hundred people have reviewed "milk."

Nearly universally, the Amazonable milk holds great appeal for the customers, even to the point of possessing magical properties.

It turned one reviewer's pussy cat into Halle Berry, cured a sister's ovarian cancer, and others claim it can replace blood in a pinch.

While this is amazing, and the reviews are very interesting, the volume is not entirely surprising to us. We see certain products on our clients that get a lot of volume, even the lowest priced products. For example, within months of launch, every Golf ball on golfsmith.com has ratings and reviews. On PETCO.com, there are 244 reviews for a $.99 Greenies dog treat!

It's these products that pull the influencers in, get them engaged, and create runaway product hits. And…based on the diproportionate number of reviews within a category, can help you identify the runaway product hits that you can merchandise in all your marketing vehicles. It's faster to sail with the wind of the customer voice than to try to jibe against it.

There is another interesting finding in this study…

25% of online shoppers ACTIVELY (over 76% of the time they shop) seek out product reviews before they make a purchase.

73% of shoppers seek out ratings and reviews 25% or more. And so on. See the graph below.

I did some math with the numbers shown in the graph above. If you take the % of people from each piece of the pie X the average % of the time they seek out reviews, it concludes that online shoppers will seek out reviews for 48% of their purchases. 

What does this mean? 

First, and most alarming, it means that if you don't have reviews, 48% of your visitors have to leave your site before making a purchase because they are seeking reviews before purchase.  

One of the places they're going to get reviews is your competitor, Amazon. Notice on the graph that 25% of those who seek out reviews go to Amazon to check them. If you are a retailer (relevant to Amazon's categories who does not have reviews, you are giving up 12% of your highly considered shoppers to Amazon (25% X 48% = 12%).

According to a shop.org study, 56% of consumers still start their shopping on a retailer site. So it's not too late to keep them there!