How does the Customer rating works?

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Anybody that has purchased something can review it.
It doesn’t matter if it is a product or a service, depending on the website’s rules, anyone can gives his (her) opinion on what is being offered, and depending on the scale provided you give the oportunity to your customers to give a feedback of the product, service or delivery related.

So how does it work:

Well it depends. Some sites will ask the person to give specific information to verify if the product/service being rated comes specifically from them, other sites like, TopTenREVIEWS or YELP will allow customers to review any product without verifying. What happens after is basically pure mathematics, and algorithm is used  to filter out any reviews that they suspect are false or automatically generated. The remaining ones are posted on the website.

But is it a good idea? isn’t it too dangerous?

Well it depends on how the site manages both good and bad reviews.
In any case it is a good idea. It can benefit and boost the sales of a E-commerce company. It has been proved that 61% of customers read online reviews before making a purchase decision and 63% of customers are more likely to make a purchase from a site that has user reviews (http://www.econsultancy.com).
A positive rating is almost as important as the price. It can work as a decision maker. Customers always trust other customers, even more than certifications and advertising.

But what about the negative reviews?

A review that might seem negative to one person, can be a positive one in another person’s view.
“Take for example a review of a hotel that describes it as ‘not child friendly’. A couple looking for a romantic weekend getaway would not see this as a deterrent for booking, and would most likely welcome this fact” (http://www.digitalvisitor.com).
It also depends on how the company takes care of this. If the customer service department is aware of the negative reviews, and does everything in their power to give a reponse to the customer, it will give the impression that the company is serious and that they take care of their buyers.

So how do I encourage customers to review their purchases?

Easy, you just have to make it approachable and easy to do. Always remind them of the option to give their opinion.
Make it as easy as possible. Too much form filling may put off some customers.
Put the reviews where people can see them. If the product has a review, then show it!
Always publish good and bad reviews. It makes everything a lot more trustworthy.
Use reviews to deliver a more relevant user-experience. You can recommend other products in the future.

Customer Rating Online ★★★

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Customer Ratings Online

Our goal is to investigate the importance of consumer ratings of products and services
online. Today, consumers have a large quantity of information at their disposal
concerning products and services online. Not only can they find information about a
product or service from the company or vendor itself, but they are also able to access
information about other consumers’ opinions of and experiences with the product
specifically, and the company more generally.

This open and frank dialogue via the internet has changed companies’ relationships with
their customers – the consumer is no longer alone in making a decision about a good,
but is instead a part of a larger conversation with the global community online about the
quality of the service they receive and how things could or should be improved.

Of course, customer ratings are not only used to rate the products of large companies, but
are also employed in C2C markets like on Amazon, Ebay, etc. Thanks to these markets,
the C2C market is booming.