Turning the Tables on Consumers

Pictured: Associate Professor of Management and Marketing Studies Colleen Kirk, D.P.S.

Whether they’re giving five stars for a great meal or one star for poor service, today’s consumers are eager to rate their interactions with providers. But what would happen if businesses reviewed them?

That’s the question that Colleen Kirk, D.P.S., associate professor of management and marketing studies, and her fellow co-authors explore in a new study published in the Journal of Consumer Research.

Many popular services offered today, including ridesharing, vacation home rentals, and others, contribute to the sharing economy, a peer-to-peer model that directly connects the buyer and seller. In the sharing economy, a platform will act as an intermediary to bring together providers offering a product or service with individuals looking to fill those specific needs. For example, Uber connects people who need rides with available drivers, much like Airbnb connects vacationers with those offering rental homes.

In buyer-seller relationships, there is an unspoken but perceived mutual understanding that both parties will deliver on their end of the bargain (a psychological contract). While traditional review systems have put the power in the hands of consumers, reinforcing the “a customer is always right” approach, some newer platforms, including Airbnb and Uber, use two-sided review systems in which providers review the consumer.

In their new study, Kirk and her fellow researchers create various scenarios in which consumers feel this contract has been violated, specifically when consumers receive negative ratings from providers.

“Our research is the first empirical examination of this novel phenomenon, in which consumers are reviewed by the people they purchase from. We show that in this age of a reputation economy, review systems are included in the terms of consumers’ psychological contracts with sharing economy platforms,” says Kirk.

When Bad Reviews Happen to Good Consumers

In one scenario, participants were asked to imagine using a fictitious ride-sharing service called Hail-a-Ride, which featured a review process allowing both the rider and driver to review one another. The “riders” were told that reviews would appear publicly on their profiles and asked to imagine that they had taken a ride to their friend’s house. During this “ride,” nothing out of the ordinary occurred, and everything seemed fine. They expected to receive a perfect score from their driver. Then, riders were given various scores—some good, some bad—and asked to respond.

When consumers received less than a perfect score, they tended to retaliate with negative reviews about the Hail-a-Ride platform. With each star dropped, consumers significantly increased their negative word of mouth by leaving the platform a poor review. In other words, when they felt they had held up their end of the bargain but received a negative rating, consumers felt betrayed and compelled to retaliate—the psychological contract had been violated.

Similar scenarios were conducted, including a fictitious book-sharing program called Students4Students (S4S), in which New York Tech students were told they were participating in a pilot program for a borrow and lending service for textbooks, school supplies, and other offerings.

The researchers promoted the program with realistic-looking materials and a website designed by Parisa Kellwick (B.F.A. ’15, M.B.A. ’20), an alumna of the Master of Business Administration, M.B.A. program who also graduated from New York Tech’s Graphic Design, B.F.A. program. 

The students preregistered in advance, created a profile, and selected New York Tech from a list of participating regional schools. The platform then matched them with another student (“Alex B.”) who ostensibly agreed to lend them a textbook at a set time.

At their appointed time, students picked up their book from researchers who seemingly facilitated the S4S pilot program at their university. The students then completed a sample assignment task and returned the book.

At least 30 minutes later, in a different building, the students logged into their S4S accounts and rated their lenders. They then received a notification that read, “Alex B. has submitted the following review about you,” which was followed by either a positive review (“I would lend my books to this student again. Five-Stars!”) or a negative review (“I would not lend my books to this student again. Two-Stars!”). Finally, an anonymous review website called SharingEconomyStories.com invited the students to rate and review the S4S platform.

Similar to the outcomes of the Hail-a-Ride experiment, the students who received negative reviews from the provider gave the S4S platform a poor rating.

Interestingly, when the researchers tested other scenarios that allowed consumers to respond to reviews, the consumers were less likely to react with negative word of mouth about the platform. This is likely because they felt as though they had a voice in the process.

What Marketers Should Know

The authors note that if the tables were turned on consumers in the real world, there could be negative implications. Much like a negative credit score can affect buying power, a poor social score could limit a consumer’s access to services. 

However, the authors also explain that reviews can be subject to the biases and idiosyncrasies of the seller. For example, a consumer asking for a second key when renting a house from Airbnb or shutting a car door too hard during an Uber drive could cause negative reviews from certain providers, but not all.

The authors offer up ways to offset these challenges, including making some reviews private and allowing the consumer to respond.

“Consumers expect fair (and usually positive) reviews from providers and will penalize platforms when they don’t get them. Some steps platforms can take to mitigate this risk include designing apps to allow for consumers’ voices in the review process, as well as training for providers that might reduce their focus on consumers’ less egregious behaviors,” Kirk notes.

In conclusion, the authors note that the study supplies valuable insight for marketers, who should understand that consumers can form negative opinions and feelings of betrayal about a brand or company when they feel their psychological contracts are breached.

“Psychological contracts are implicit promises that are perceived by consumers but not necessarily recognized by marketers. Therefore, it is crucial for marketers to take a broad approach toward evaluating and understanding the obligations consumers perceive in their relationships with brands,” Kirk explains. “This will become increasingly challenging as marketplaces become more fractured and, for example, with the metaverse, even completely virtual. Deep consumer insights are vital to mitigating the potential for consumers’ feelings of betrayal from a breach of their psychological contract with a brand.”

Kirk’s co-authors include Laura Schrier Rifkin, D.P.S., assistant professor of marketing at Brooklyn College, and Canan Corus, Ph.D., associate professor of marketing at Pace University.