With the increase of online shopping, competition is getting more fierce by the day. There is no doubt that offering the best customer service will put your company one step ahead of the competition.

After the huge success of Zappos.com, many internet startups are trying to follow the “best service” rule. But, is it really that easy?

By working with many ecommerce companies along with my own company, I have witnessed in first hand, how hard and costly it can be to try to run a company with great service.

Business planning and forecasting is the key before implementing an important service decision. Most of the business owners are pretty good at forecasting. Before implementing a new service option such as free overnight shipping or a 365 days return policy, it is not rocket science to come up with all the variables, and forecast how this new policy will impact your business both financially and from other aspects of the business.

Before getting all excited and adding more costly service options, many business owners don’t think about calculating the cost of unethical customers. Let’s talk about a real life example.

An Unethical Customer Gets a Free Replacement for a 15 Year Old Sweater with Land’s End Lifetime Guarantee

Megan Writes In: A friend of mine had a sweater from Land’s End that she’d had for about fifteen years. It was getting pretty old and beat up simply because of normal wear and tear. A few weeks ago when she unpacked her winter clothes, she found that one sleeve had finally worn off the sweater. she called up Land’s End and complained, invoking their lifetime guarantee. They sent her a replacement one – not exactly the same, but pretty similar. She was quite proud of this “free” sweater. I was less than impressed. What do you think about this?

Read the full story here if you are interested in the details. There are literally thousands of customer stories similar to this one all over the web, some true and some not.

How to Calculate the Cost of Unethical Customers

When Zappos.com started offering “Free Shipping Both Ways”, don’t you think that they were smart enough to guess many customers would purchase several pairs of shoes, try them and send the ones they don’t like back? Of course, they were and they did their homework. In business, in order to implement a new rule you might need to sacrifice from another one. If you will offer free shipping both ways, you have to forecast the cost as accurately as you can and implement it into your price matrix.

Especially with new business rules, without any historical data, it might be hard to forecast these types of cost. Your regular return rate can be less than 2%, but with a policy update such as free shipping both ways might increase your return rate to over 10%. If you are implementing a policy update to your customer service which might bring in high cost, you might seriously think about gradual implementation. Instead of offering the new service policy to all of your customers, start offering it to small groups of customers from different demographics, and calculate your cost with a smaller data group.

When to Say NO to Unethical Customers

Even the companies with best customer service offerings have limits and rules. Do you think Zappos.com never say NO to a customer? Of course they do.

When dealing with customers, you have to come up with business rules and train your staff appropriately. Let’s say, if a customer returns over 20% of the merchandise within a given period, one of your customer specialists should call the customer, and try to resolve the problem on the phone. Be fair, offer all the warnings to the customer, but when it is time to draw the line, don’t hesitate to draw the line.

Even if you do your best, you can never satisfy all of your customers. Some of the customers are very hard to satisfy and some are simply taking advantage of your policies. Sometimes, there’s a very thin line between the unsatisfied customers and the customers who practice unethical methods to take advantage of your service policies.

The correct step is to make the right business decision at the right time to say NO to unethical customers and move on.

Have you ever had an unethical customer you had to stop offering your services? I’d love to hear your stories.

Today is Sunday, August 10th 2009 and I am at Affiliate Summit East in New York City.

This year, instead of taking offline notes, I have decided to take all of my notes right here at kirtok.com. This is going to be my first live blogging event. Let’s see how this will go. (I will be adding pictures and videos later on).

It’s 12.08pm, and the first session of Affiliate Summit is starting in a minute.

Mike Allen, President of Shopping-Bargains.com will be presenting, and I believe Kris Jones of Pepperjam will be managing the session.

Dynamic Shopping Session Has Started

After opening remarks by Kris Jones, Mike Allen has taken the stage.

Important points from Mike’s Speech:

• Creating a brand and equity as an affiliate marketer
• Using ready to use tools or creating and customizing your own tools
• Deliver something unique
• Continue to innovate and try out new things
• Failing is part of this game

Anthony Bajoras of AffiliateReporting.com Takes the Stage

Anthony is the CEO and co-founder of Affiliate Reporting.

• Managing multiple affiliate campaigns, networks, traffic channels, etc. He’s talking about the importance of statistics in affiliate business
• You have to be able measure and understand what is working and what is not working in affiliate game.
• How important it is to analyze the data in depth
• Measure Everything (PPC, SEO, Channels, etc.)
• Review Often… (3 minutes a day at least, do it more often if you are serious)
• Use the right tools that fit with your affiliate business.
• Listen what the data tells you. That’s something I always mention to new beginners.
• Inaction is costly Cool wording. Take action !!!

12.31 pm: Anthony is done with his presentation, Kris asks a couple of questions to Anthony about his affiliate software.

Sal Conca, Senior Media Manager of Net Exponent takes the stage

• Talking about understanding the needs of the affiliates before serving them
• Content is king. Social Media, reviews, podcasts, blogs, etc.
• Duplicate content problem for product feeds. Content syndication is different than duplicate content.
• Affiliate Managers are teachers. Constant communication and education is the key to affiliate manager success.
• Quality of Orders from affiliate manager’s perspective. This is the key to a long term successful relationship between publishers and advertisers.
• Importance of conversion rates. Testing significant changes for success.

12.40pm Kris is asking a question to Sal for additional tips to advertisers about optimizing product data feeds for search engines.

Sal is explaining the importance of customized feeds, and helping the affiliates for taking the right route.

Jessie Jones, CEO & Founder of PopShops.com takes the stage

• She’s worked for Expedia.com and Microsoft before starting PopShops.com
• She has started building niche sites and needed to automate the process, and decided to get her own tool built.
• She’s started PopShops.com to help her build niche websites, it wasn’t planned as a business (a software/tool to sell)
• She’s giving an example. Search Google for “Budget bridesmaids” and see an example of a PopShop store.
• Do you have an idea? Launch ASAP. You can build on top of it later on.
• Focus on A/B Testing

12.50pmKris takes the stage back from Jessie Jones. I will be adding pictures and videos later on today.

Kris is starting the Q&A Session

• Question to Jessie Jones about number of external links on a web page. Jessie mentioned the importance of following Google guidelines.
• Question about a PopShops.com API. Jessie says, you can integrate popshops with wordpress via API or use a plugin.
• Presenters are talking about both free and paid tools available to affiliates in the market.
• Anthony Bajoras talking about how important the passion is in affiliate business
• Mike mentions the “low hanging fruit”. Go for it first, then harvest the rest of the tree later on
• Sal Conca says 80-20 rules applies to affiliates if not the 90-10 rule. There will be top affiliates and others, just like in any business.

Last question was taken…

I think the session was ok for beginners in affiliate marketing, but unfortunately I didn’t take anything out of the session.

I totally understand that Affiliate Summit and similar conferences usually focus on beginners, but IMO, there should be some advanced and in depth discussions.

It was my first live blogging. I will be live blogging, during the Affiliate Summit East till tuesday evening. I will be adding pictures and videos later tonight.

Do you read the customer reviews of a specific product before purchasing it? Do negative reviews affect your purchasing decision? Negative customer reviews is a widely discussed topic for e-commerce, let’s take a look at how we can create some great value from negative customer reviews.

Amazon is the e-commerce leader for a reason. When Amazon started promoting customer reviews heavily, many e-commerce authorities started discussing the topic back in the years. Main discussion was about the negative customer reviews.

Amazon has been doing usability tests to its customer reviews section to make it useful for prospective customers.

Many small online retailers still don’t think like Amazon. In some specific cases, they are right. What if you are a small online retailer, and one of your best seller products only has 1 review and it is negative? Would you approve it or not?

Fake customer reviews are another issue in e-commerce world. Even some big names still encourage fake customer reviews, even pay for them. And there are authors hiring an army of freelancers to write positive reviews for their books at Amazon.

Who should the consumers trust?

Let’s put aside the negative factors of customer reviews, and talk about how we can create a value from even negative customer reviews.

How to Create Great Value from Negative Customer Reviews

• Lower Your Return Rates: Let the negative reviews show up and lower your return rates. Many e-retailers are lowering their return rates by offering the negative customer reviews.
• Correct Your Mistakes: Maybe your product picture isn’t accurate enough, or it doesn’t show the real color. Let the customer complain, and correct your mistakes. E-commerce giant Oriental Trading Company’s CEO Sam Taylor has some great case studies about how they have corrected their mistakes after some negative customer reviews.
• Sell An Alternative Product: Let your customer write negative reviews, and offer alternatives to the product. Amazon is doing this successfully. Look at these negative reviews. Amazon has a section called “Items mentioned in these reviews” on the right hand side. If somebody writes negative, and offers another item, Amazon shows it to the readers. What a great cross-sell opportunity.
• Gain SEO Value: Many people search online with adding negative keywords to the product name such as “Horrible Product Name”, “Terrible Experience Product Name”, etc. First of all, customer reviews already add SEO value to your product pages (more unique content, more fresh content, and Google loves it). But now, your product page has a chance to show up on search engines with negative keywords also. That’s absolutely fine, don’t worry. You might have 90 positive and 2 negative reviews on a product, and a prospective customer might search with a negative keyword, come to your product page from a search engine, and purchase the product after reading all the reviews. This is a proven method tested on my clients’ sites. It works, trust me.

Some Research About Value of Customer Reviews

Here’s a recent article from Lightspeed Research “The Value of Online Reviews for Shoppers“. Some highlights from Lightspeed Research’s article:

• According to the results of the online survey of 1000 people carried out in August, 72 per cent of British consumers read a review for a product or service on the Internet in the last 30 days.
• 37 per cent had read a review in the last week.
• At 75 per cent men were slightly more likely than women (69 per cent) to read online reviews.
• Perhaps surprisingly, the youngest people in our survey, 18-24 year olds, refer to them less than others at only 63 per cent compared to 71-76 per cent for the respondents aged 25+.
• 75 percent of respondents would be deterred from buying after reading three bad reviews

More recently, Forrester Research‘s recently released report called ‘Myths and Truths About Online Customer Reviews’ asked consumers how they would react after reading negative customer ratings and reviews on a retailer’s site.

Their findings were as follows:

• 47% search for an alternative product
• 37% read professional/editor-written reviews of the product
• 26% continue to shop for the product regardless of the negative ratings/reviews
• 18% look for a retailer/manufacturer that offers a money-back guarantee
• 7% contact the retailer for clarification of the issues raised in the negative review
• 7% contact the manufacturer for clarification of the issues raised in the negative review
• 6% post a follow-up question for the author of the negative review

Let’s take a look at this result closely: 37% of shoppers turn to professional/editor-written reviews after reading a negative entry. Reviewer’s credentials and reputation are strongly taken into consideration when reading reviews.

Consumers want to hear from somebody they can trust, has inside industry knowledge, is reliable or has a professionally trained eye.

So, my recommendation is; You should have professionally written reviews by industry experts on your site as well as customer reviews. You want unbiased and honest reviews.

Let all the negative reviews about the product show up and take this as an opportunity to connect with your customers and solve the problems with your product or service.

Add Product Specific Criteria to Increase Conversions and Lower Return Rates

This is not related to negative customer reviews, but since we are talking about customer reviews, I’d like to present a great usage of customer reviews.

Macy’s (and many other retailers) are adding product specific criteria to the customer reviews to be rated. Let’s take a close look at this product page first:

You can see where I am going with this, right? Such a great information for the prospective customer. After checking out product specific criteria, I know that this shoe runs large. If my shoe size is somewhere between 8 and 8.5, now I know I should get the 8. Lower chance of returning the item. I will be happy as a consumer to receive a pair of shoes that fits, and Macy’s will be happy that I’m satisfied with my purchase.

Whether it is negative or positive, unbiased and honest customers help the consumer to make a decision. Most important take for online retailers is to help the consumers make the right decision by letting them read both sides of the story.

If you have enough resources, you would even think about starting a customer video reviews section. Online video is the future, and don’t miss this opportunity by letting your competition taking the lead.

Sources used in this article:

There are tens of social internet startups launching everyday. It’s sometimes hard to track all of them. But once in a while some great social internet startups are born and they make us happy.

What is the big question everybody is trying to answer nowadays?

How to integrate social interaction (web 2.0) and ecommerce.

That’s exactly what ShopTogether is trying to do. Bring social interaction to online shopping.

The idea is simple. DecisionStep, parent company of ShopTogether, assumes; People like to go shopping with friends and/or family members. That’s why ShopTogether was born, to let you shop with your friends, or with anybody you like. They are different than many other startups. ShopTogether is not a seperate website. Online retailers integrate ShopTogether to their sites.

Below are the screenshots from Netshop.com site which uses ShopTogether:

ShopTogether asks you to enter a name

You have 2 options; Invite Friend, Join Friend (passcode is created for you):

DecisionStep is not a new player in the field. They have been in business since 2000 and they have other products which help online retailers such as Interactive Product Explorer, and Dynamic Brochure Generator.

Netshops.com has been using ShopTogether since June, 2007 as well as some other major online retailers.

As a frequent online shopper, I don’t see myself using ShopTogether, but ShopTogether might be the answer to ladies’ question of “Can we go online shopping together?”