The Role of Online Reviews in Services Sector and Implications for Services Firms

Abstract

Today, consumers share their positive and negative experiences about products and services using social media sites and online platforms provided by companies. Electronic word-of-mouth (e-WOM) usually spreads through social networking sites (e.g., Facebook), and it affects how consumers make their decisions on what to buy or recommend within their network (Simonson and Rosen 2014). In particular, online reviews have been noted as providing useful information (Yin and Zhang 2014) not only for other customers but also for companies searching for new ways to attract their customers to visit their websites. This chapter aims to investigate the role of online reviews in social media in the services sector and offers implications for services firms.

Two independent studies in a large emerging market of India were conducted to achieve the aim of this research. The first study consisted of two phases: in phase I, advantages and disadvantages of online reviews along with judgement criteria about online reviews were identified using data from a focus group with nine participants. In phase II, various factors that consumers consider before making their final decisions to book a hotel were identified through an online survey with 110 responses. The second study also utilized an online survey to collect the data from 223 respondents about the use of social media sites and online interviews on various travel aspects when planning and booking travel.

The results of the first study suggest the increasing role of online reviews in India, in particular among young adults. The main advantages sought from online reviews were to search for up-to-date information and comparisons of previous customer experiences. Negative reviews did contribute to discouraging potential travelers using those sites to book their trips. The results of the second study indicate that females use social media more often than males when traveling (e.g., they might look for “things to do” while at their destination). Our study offers managerial guidelines for services companies. For instance, companies should tailor their websites to fulfill the needs of specific customer segments (e.g., female travelers). Future studies might investigate how companies can strategically respond to negative reviews and minimize their impact on consumer decision-making.References available upon request.