We’ve touched on many ways a business can use review platforms to achieve growth. Whether it’s through weaving reviews into an SEO strategy, diving into review insights for better business performance or using reviews to turn your customer journey into a conversion engine.
But what about risk management? A risk management strategy is essential for every business. It is a proactive approach to business risk management that considers all of the different types of risks an organization faces, such as financial, operational, reputational, and strategic risks.
When used well, reviews or customer feedback can help mitigate many of these risks. By strategically employing the valuable feedback embedded within your customer reviews, you can bolster your risk management strategy in several ways.
Revealing blind spots with negative feedback
While most companies don’t exactly desire them, negative reviews can be considered an early warning system because they are organic indicators of where a product is going wrong. Numerous examples exist of companies changing course due to customer feedback.
In 2018, McDonald's had a notable oversight in their packaging. They initially used plastic straws for their drinks, with their UK branch alone using 1.8 million straws daily. Greenpeace pointed out that these straws were among the most commonly found plastic items during beach cleanups.
In response, customers started an online campaign called “McDonald's is polluting our oceans”, which wracked up half a million signatures. Due to this feedback, McDonald’s UK, Australia, and other European counterparts decided to transition from plastic to paper; the rest is history.
Customer feedback or customer sentiment often indicates areas of risk that may not be the norm for some companies. In the modern business world, Environmental, Social and Governance (ESG) goals are interwoven within a business risk management strategy; according to the Global Risk Management Institute,
“ESG negative scenarios are getting more expensive and damaging. According to recent estimates by the Bank of America (BofA) Global Research team, “ESG disputes” have cost S&P 500 corporations more than $600 billion in market capitalization.”
Thanks to customer feedback, McDonald's could avoid this ESG shortfall and adapt to changing customer expectations.
Notably, customer input through any and all feedback channels can reveal and help avoid problems that aren’t always noticeable at first glance. Keeping a pulse on customer sentiment does more than just offer a glimpse into how an audience segment feels; taking care of problems as they pop up can save your organization from problems going viral or public on the internet.
Scouting for threats
Customers are great real-time barometers of early threats to an organization. Reviews, like seasoned scouts, provide invaluable intel to prioritize threats based on their frequency, severity, and impact.
One unhappy customer might be a blip, but constant complaints about a product or feature indicate a bigger issue. Regular mentions of a bug, a confusing interface, or a security vulnerability can give businesses first-hand insight into risks before their system flags it.
In early 2023, over 240,000 Microsoft users rushed to the website Downdetector to indicate in a customer feedback stream that they were having trouble accessing business and education tools during a major outage.
Monitoring your customer reviews in real-time helps your team identify issues and acknowledge or begin to solve them as quickly as possible. In instances like this, it can help your customers avoid needing to go to other sites or channels to voice their frustration, minimizing damage to your reputation in the process.
Reducing churn trend
By analyzing customer reviews effectively, you can transform them into powerful early warning systems, highlighting potential dangers like churn risk, satisfaction shifts, and even product liabilities.
But quality data is the fuel that drives this engine. As the ERMA survey points out, 58% of risk management experts fear poor data quality will cripple advanced analytics applications. That's why verifying the legitimacy of reviews, particularly those from third-party platforms, is crucial. Trustworthy reviews yield trustworthy trends.
One such trend, churn risk, emerges from negative feedback. Paying attention to the pain points highlighted in these reviews can inspire new retention strategies by analysing the specific complaints and frustrations expressed in customer feedback. Harvard Business School research shows a mere 5% increase in customer retention can boost profits by 25-95%.
Review platforms like Trustpilot offer a major asset: finding trends in churn risk. Trustpilot categorizes reviews based on customer demographics such as location, buying history, or product usage. These insights can assist you in identifying specific groups at a higher risk of churn.
With this information, you can determine if new customers face onboarding issues or if long-term users are unhappy with a recent change. This knowledge can help you tailor your outreach and improvement strategies to win back at-risk segments.
Mitigate distrust with transparency
Transparency is key to improving customer satisfaction; a Label Insight survey found that 94% of consumers prefer brands that practice transparency.
Openly acknowledging and addressing reviewer concerns showcases your commitment to transparency and accountability. This builds trust with stakeholders and customers, further strengthening a risk management framework.
Customers love transparency in all forms; to err is human, and negative reviews also count for a lot, especially in how they are responded to.
The quality of interaction between disgruntled customers and team representatives helps improve business risk factors like reputation. A study found that 85% of customers look for negative reviews to make informed purchase decisions, increasing to 91% among customers aged 18-29.
Customers also favour companies that respond quickly and efficiently. A BrightLocal survey found that “88% of consumers are likely to use a business if they can see the business owner responds to all reviews, whether positive or negative.”
Negative reviews can serve as an early warning system and reveal blind spots that a company may have missed.
Reviews can help businesses scout for threats and prioritize them based on their frequency, severity, and impact.
Analyzing customer reviews can help businesses identify trends in customer behavior, such as churn risk, satisfaction shifts, and product liabilities.
Transparency is key to improving customer satisfaction, and acknowledging and addressing reviewer concerns can build trust with stakeholders and customers, further strengthening a risk management framework.
Read on about more ways Trustpilot can grow your business here.