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How to keep your online reputation pristine

Online review sites like Yelp can build your business or sink it - one bad review can scare off a stampede of potential customers.

By Lenora Chu

January 24 2008: 11:49 AM EST

(FORTUNE Small Business) -- It's a well-known customer service maxim that happy clients tell three people about their experience. Unhappy customers tell nine. Factor in searchable online review sites like Yelp, AOL's Yellow Pages and Angie's List, and those nine become thousands.

Cranky customers who post negative reviews can spell big trouble for businesses that depend on positive word-of mouth - even a single bad review can pull down rankings and scare away customers. But savvy business owners have come up with a few defenses of their own. It all boils down to plain vanilla marketing and customer service, with an online twist.

When property manager Wes Tyler first began monitoring TripAdvisor for reviews written about his Chancellor Hotel in San Francisco, he found that most were positive. But a few were excoriating, which he says "scared me to death."

One guest complained that the front desk refused a bribe for a room upgrade. Another swore that a single shoe was stolen from his room. Each reviewer assigned the Chancellor the lowest rating possible.

"The damage that one-dot rating does to us is really unfair," Tyler says. "It pulls down our overall ranking. You pull us down - you hurt us. Because that's just untold numbers of people looking at that site and making a decision to go elsewhere."

Instead of getting mad, Tyler took action. For every negative review, he began publicly posting the hotel's side of the story, using TripAdvisor's management response tool. If a complaint turned out to be legitimate, he set about making it right for future guests.

Some negative reviews focused on things the hotel couldn't change, such as room size or cable car bells ringing outside the window. So Tyler began using management postings to educate potential customers. Seeking intimate European-style rooms in the heart of downtown San Francisco? Come over to the Chancellor. Looking for large air-conditioned rooms at a chain hotel? Book somewhere else.

Tyler's view is that the days are long gone that a business should want a one-time sale if a customer is a poor fit and will leave dissatisfied.

"It's about managing expectations," he says. "I'd rather have happy guests than take someone's money and have them think, 'I never want to go back there again - I'm going to post about it.'"

Tyler also launched a campaign with TripAdvisor to take down bad reviews - and their damaging one-dot ratings - that had no basis in reality. In each case, Tyler instigated a series of e-mail exchanges with TripAdvisor administrators, explaining why a particular review was unfounded. In one instance, a guest insisted that the hotel was located next to a tenement housing building. In reality, the hotel is two steps away from Saks Fifth Avenue.

In four years, TripAdvisor has obliged Tyler by removing both of the reviews he contested. Tyler's strategies have paid off: The Chancellor now ranks in TripAdvisor's Top 10 in the San Francisco market.

"For an independent business that's not brand-affiliated, it's very, very important to be well-represented on a site where your potential customers are making decisions," Tyler says.

Silicon Valley wellness spa Preston Wynne Spas treats every negative complaint as an opportunity to create a deeper relationship with a client - and potentially turn them into a word-of-mouth marketing force.

"People who complain are already more emotionally engaged in my business than someone who hasn't written anything," says Peggy Wynne Borgman, owner of the business.

When Borgman first surveyed her spa's ratings on Yelp last year, four of five reviews were negative. She says she nearly passed out. Borgman regained her composure and quickly launched an online marketing campaign. First, she asked her loyal clients to hop on Yelp and write about the spa. "I told them we need a little love," she says. Then, Borgman used Yelp's messaging feature to contact each unhappy reviewer and invite her back for a complimentary visit. Each obliged, and all eventually revised their reviews. Two have become loyal customers.

"I'm not trying to bribe them," Borgman says. "I'm just trying to give them what they deserve. And I never asked them to repost - that would be completely inappropriate."

Borgman also began using a free online "clipping" service like Google's (GOOG, Fortune 500) Alerts that alerts her every time someone posts on the Internet about her business. "That way I know when something pops up that needs a response."

Within weeks, the spa's overall rating on Yelp improved from 2 1/2 stars to 4 stars.

Part of the challenge is getting customers to write in the first place. A Seattle window cleaning company discovered that many of its new customers were referred through the home services review site Angie's List - but only one in four clients eventually posted reviews.

"We have to get customers to write in to Angie's List if that's going to continue working for us," says Melinda Lucas, owner of Paneless Window Cleaning. "So I launched an employee contest." She announced that the window cleaner mentioned most frequently by name on Angie's List would receive a bonus at the end of the year.

"My employees have started encouraging customers to write in after they've finished the job," Lucas says. "It provides an incentive to provide better service, and already two of our guys have been named since we started the contest this month."

A New York City moving company asks every customer to post - even before the job has been performed. "From the first contact or phone call with a customer, we ask them to go online and write," says David Cohen, owner of Divine Moving & Storage. "You can't be afraid of these reviews."

It was this open, online dialogue that allowed Cohen to fix what needed fixing. When several reviews mentioned that Divine's movers showed up 15 minutes late, Cohen began requiring his workers to arrive a half-hour early. When a customer wrote that an item was scratched during a move, Cohen immediately sent out a carpenter to fix it

By listening carefully to his customers, both in person or online, Cohen said he became increasingly confident that his services are the best they could be. In 2007, Citysearch editors named Divine Moving the "best mover in New York."

"When you know you're good and your employees are trained, you feel confident," Cohen said. "It all starts with a good product."

Yelp co-founder Jeremy Stoppelman says a good online reputation boils down to showing customers you "listen and care."

"Nobody enjoys being told they aren't doing a fabulous job, but the reality is sometimes they aren't," Stoppelman says. "If it's legitimate, try and make a change. You can shoot the messenger, or you can do something about it."

One more thing, Stoppelman says: Don't forget to thank your "superfans." On the Internet, a tiny bit of goodwill travels at the speed of light.