The rat­ings revo­lu­tion

Financial Mirror (Cyprus) - - FRONT PAGE -

“Bon­jour Mon­sieur, com­ment pour­rais-je vous aider?” (Good morn­ing, Sir, how can I help you?) asks the ob­se­quious concierge at my Paris ho­tel. I im­me­di­ately won­der what hap­pened to the city’s in­fa­mous haugh­ti­ness – es­pe­cially to­ward Amer­i­can tourists. If the French cap­i­tal is no longer Europe’s rud­est city, we can per­haps thank the growth of on­line rat­ing tools, such as TripAd­vi­sor.

Travel web sites have been around since the 1990s, when Ex­pe­dia, Trav­e­loc­ity, and other hol­i­day book­ing sites were launched, al­low­ing trav­ellers to com­pare flight and ho­tel prices with the click of a mouse. With in­for­ma­tion no longer con­trolled by travel agents or hid­den in busi­ness net­works, the travel in­dus­try was rev­o­lu­tionised, as greater trans­parency helped slash prices.

To­day, the in­dus­try is in the throes of a new revo­lu­tion – this time trans­form­ing ser­vice qual­ity. On­line rat­ing plat­forms – spe­cial­is­ing in ho­tels (TripAd­vi­sor), restau­rants (Za­gat), apart­ments (Airbnb), and taxis (Uber) – al­low trav­ellers to ex­change re­views and ex­pe­ri­ences for all to see.

Hospi­tal­ity busi­nesses are now ranked, an­a­lysed, and com­pared not by in­dus­try pro­fes­sion­als, but by the very peo­ple for whom the ser­vice is in­tended – the cus­tomer. This has forged a new re­la­tion­ship between buyer and seller. Cus­tomers have always voted with their feet; they can now ex­plain their de­ci­sion to any­one who is in­ter­ested. As a re­sult, busi­nesses are much more ac­count­able, of­ten in very spe­cific ways, which cre­ates pow­er­ful in­cen­tives to im­prove ser­vice.

Al­though some read­ers might not care for gos­sipy re­ports of brusque bell­boys in Ber­lin or mal­func­tion­ing ho­tel hairdry­ers in Hous­ton, the true power of on­line re­views lies not just in the in­di­vid­ual sto­ries, but in the web sites’ ca­pac­ity to ag­gre­gate a large vol­ume of rat­ings.

The im­pact can­not be over­stated. Busi­nesses that at­tract top rat­ings can en­joy ex­po­nen­tial growth, as new cus­tomers are at­tracted by good over­all re­views and sub­se­quently pro­vide yet more (pos­i­tive) feed­back. So great is the in­flu­ence of on­line rat­ings that many com­pa­nies now hire dig­i­tal rep­u­ta­tion man­agers to en­sure a favourable on­line iden­tity.

The sys­tem is not always vir­tu­ous. Ne­far­i­ous op­er­a­tors are known to pay fake re­view ser­vices to bol­ster rat­ings. Cus­tomers, too, can be disin­gen­u­ous or worse, en­gage in black­mail, which oc­curs, as TripAd­vi­sor ex­plains, “when a guest threat­ens to write a neg­a­tive re­view un­less a de­mand for a re­fund, up­grade, or other re­quest is met.”

For­tu­nately, tech­nol­ogy is coun­ter­ing this mis­use of rat­ings. Al­go­rithms can al­ready de­tect fake re­views by iden­ti­fy­ing con­sis­tently pos­i­tive (or neg­a­tive) opin­ions from the same re­viewer. Ge­olo­ca­tion track­ing can en­sure that only cus­tomers who have ac­tu­ally used a ser­vice can ex­press an opin­ion (as is the case with Airbnb).

In­deed, ob­streper­ous crit­ics are be­ing chal­lenged as a re­sult of an­other, rather sur­pris­ing devel­op­ment: while cus­tomers may ex­press an opin­ion about a ser­vice, the ser­vice provider can also rate its cus­tomers, as Uber has demon­strated. In­deed, it is not in­con­ceiv­able that pop­u­lar ho­tels might one day choose their guests.

Tra­di­tional re­la­tion­ships between con­sumers and pro­duc­ers are break­ing down in other ways, too. The rise of the “sharing econ­omy,” in which as­sets – such as a car, a park­ing space, or a spare bed­room – are shared within com­mu­ni­ties, not only gen­er­ates re­cip­ro­cal good­will, but also blurs the dis­tinc­tion between buyer and seller.

Not ev­ery ser­vice, how­ever, has been touched by on­line rat­ings. The im­pact of rat­ings de­pends on whether the typ­i­cal con­sumer ac­tu­ally reads on­line re­views be­fore mak­ing a de­ci­sion. While it is in­creas­ingly com­mon to do so when, say, book­ing a ho­tel room, it is much less so when de­cid­ing among, say, bars on a busy street (the en­dur­ing ru­de­ness of Parisian wait­ers at­tests to that).

Yet even ser­vice es­tab­lish­ments that rely on “curb ap­peal” to at­tract cus­tomers may soon find their days num­bered. The pro­lif­er­a­tion of “aug­mented re­al­ity” – an over­lay of dig­i­tal in­for­ma­tion (as de­vel­oped by Google Glass, among oth­ers) – prom­ises to trans­form ev­ery­day ac­tiv­i­ties into a dig­i­tal/phys­i­cal hy­brid ex­pe­ri­ence in which cus­tomer feed­back is in­stantly and seam­lessly avail­able to shop­pers.

The fi­nal hold­out against the raters will be ser­vices for which cus­tomers have no choice, typ­i­cally mo­nop­o­lies or gov­ern­ment agen­cies, such as air­ports. Sin­ga­pore’s Changi Air­port is a rare ex­cep­tion: it so­lic­its user rat­ings at ev­ery turn, via feed­back screens with cheery, touch-en­abled smi­ley-face emoti­cons that re­quest trav­ellers’ opin­ions on ev­ery­thing from the ef­fi­ciency of immigration ser­vice to the clean­li­ness of toi­lets.

Need­less to say, many de­vel­oped economies lag be­hind, at least for now. But the writ­ing is, lit­er­ally, on the wall – or at least on the screen. In­deed, if you are read­ing this on­line and dis­agree with me, you can ex­plain why in the com­ments sec­tion ac­com­pa­ny­ing this com­men­tary.

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