So far this year, I have mainly been focusing on the hospitality industry, primarily restaurants, and how the use of a well constructed and frequently updated social media campaign can ultimately benefit your business (Ashley & Tuten, 2014). It’s also worth mentioning that I’ve previously been employed in this sector and it is therefore an area of interest to me.
As we all should know by now, when it comes to a digital marketing campaign, there is an elephant in the room, you can either look after this elephant or simply watch it ruin your online presence right in front of your eyes. This is of course User Generated Content (UGC).
UGC websites have come to the forefront in recent years, with the rise of the likes of ‘TripAdvisor’ and ‘Yelp’, consumers are now able to have their own say on their experiences in various establishments up and down the country; guiding customers as to where is a good place to eat, and where to avoid.
The questions I therefore ask myself is:
Why is UGC of such importance to the Restaurant Industry?
The research carried out for the purposes of this blog made for an interesting read, so why not read on and see what your thoughts are on the topic.
An obvious way to start would be to define what User Generated Content (UGC) actually means. Cleary & Bloom (2011) refer to it as the media content created by members of the general public rather than by a paid professional. It essentially gives the opportunity for all consumers to communicate with and influence a mass audience. Daugherty et al. (2008) however point out that this was only possible due to the creation of the internet and Web 2.0 technologies including YouTube, Facebook, Instagram, TripAdvisor, among many others.
Why is UGC of such importance to the Restaurant Industry?
All products and services offered by restaurants are intangible prior to purchase, and from a consumer’s point of view, before the Internet, there were very limited pre-purchase assessment opportunities for them to go by when deciding where to go out and eat. Therefore, consumers are increasingly choosing to look at UGC and the most recent eWOM trends online to evaluate the pre-purchase information available to them Wang (2011).
There are many reasons why consumers choose go dine out, for example a first date, meeting up with old friends or a family occasion. Consequently, there is a certain level of risk associated when making the decision and due to the intangibility of the products in the restaurant industry prior to purchase, UGC allows potential consumers to reduce the risk and gain an insight as to whether or not a restaurant will fulfill their expectations.
With this in mind, it is clear that UGC is of great importance to the restaurant industry, and should arguable be at the forefront of all restaurant manger’s marketing plan. It not only has a significant impact of consumer behavior, but also the revenue intake of each restaurant. The effect UGC has the revenue generated by restaurants was shown in a study carried out by Michael Luka (2011) from the Harvard Business School. His findings were based on figures generated by ‘Yelp’, and can be summarized into three statements:
- A one-star increase in ‘Yelp’ rating scale can cause a 5-9% increase in revenue.
- The star ratings have more of an impact on restaurant revenues than individual customer reviews.
- The more customer reviews a restaurant has, translates to a larger impact of restaurant revenues, either increasing or decreasing depending on the reviews.
As previously stated, it is now easier than ever for consumers to publish their reviews online in the form of UGC, with social media websites such as Facebook and Twitter proving to be the best tool to do so. In addition to this, the increase in those that own a smartphone gives consumers the ability to post UGC wherever and whenever they want. An example of just how much power UGC has on organizations was shown in 2010 with the well known clothing retailer, GAP, who had to scrap their new logo due to their Facebook and Twitter pages becoming inundated with negative comment regarding the change (Haigh & Wigley, 2015). Social media is therefore not only revolutionizing the way in which we communicate with each other, but also how we communicate with organizations, including restaurants. Below is a recent example of how a consumer chose to use Gourmet Burger Kitchen’s Twitter page to show just how unhappy they were:
This example not only highlights the negative side of UGC, where restaurants have little control over the feedback consumers post, but also highlights the positive side as they are able to find out what went wrong, and help ensure it doesn’t happen again. Such negative UGC as this can however have a negative effect on the brand image. This shows just how important it is for businesses, especially those in the hospitality industry, to constantly monitor what’s being said about them online, and how it may be worth having a specialized team to deal with their online reputation 24 hours a day, 7 days a week as the internet simply doesn’t stop.
Within the world of business, there are clearly conflicting views when it comes to UGC. With UGC here to stay, not matter how much some businesses may hate it, they need to learn to love it. It is without a doubt that it has revolutionized the restaurant industry, giving small independent restaurants the opportunity to compete alongside large restaurant chains, both having marketing budgets at either end of the spectrum.
It has put the power back in the hands of the consumers, and restaurants cannot rely solely on their brand to bring in those hungry people anymore. Their online reputation is now the most important marketing tool to restaurants, and by ensuring they provide the best possible level of service and highest quality of food, means those high performing restaurants that were not getting noticed before, now can be. It is arguably a harder challenge for the large ‘well known’ chains whose flaws are now being easily exposed by consumers, but with constant monitoring of their online reputation, and by dealing with any issues consumers have in a professional and timely manner, they too can benefit from UGC as well.
Overall, those marketers working within the restaurant industry should act now to use UGC to constructively improve their restaurants, due to it being a fantastic opportunity for them to interact and engage with their consumers. I hope this blog posting has answered my initial question as well as showing the effect UGC has had on the restaurant industry as a whole.
Thanks for reading 🙂
Ashley, C. and Tuten, T. (2014). Creative Strategies in Social Media Marketing: An Exploratory Study of Branded Social Content and Consumer Engagement. Psychology & Marketing, 32(1), pp.15-27.
Cleary, J. and Bloom, T. (2011). Gatekeeping at the Portal: An Analysis of Local Television Websites’ User-Generated Content. Electronic News, 5(2), pp.93-111.
Daugherty, T., Eastin, M. and Bright, L. (2008). Exploring Consumer Motivations for Creating User-Generated Content. Journal of Interactive Advertising, 8(2), pp.16-25.
Haigh, M. and Wigley, S. (2015). Examining the impact of negative, user-generated content on stakeholders. Corp Comm: An Int Jnl, 20(1), pp.63-75.
Luca, M. (n.d.). Reviews, Reputation, and Revenue: The Case of Yelp.Com. SSRN Journal