Let's face it. People can be cheap and people can be dishonest. There is no way of getting a solid A+ guest every time you host a stay, no matter how scrupulously you pre-qualify the guest. But without hospitality at the foundation of your business plan, you are likely to fall short in the short term rental business.
My greatest joy in hosting is connecting with travelers. Hosting is a business of hopes and dreams. We are not landlords that simply collect rent. People plan and put money away so that they can have the best memories. If we fall down in one area we have failed the guests.
Always remember that you are in the hospitality business. Always.
Here is what Wikepedia has to say about hospitality: "The act or service of welcoming, receiving, hosting, or entertaining guests; an appropriate attitude of openness, respect, and generosity toward guests." And of hosting: "One which receives or entertains a guest, socially, commercially, or officially."
Without hospitality as a primary element of your short term rental business, you either need to hire a co-host or property manager to do it for you, or rethink being in this business. Here's why:
It takes roughly 40 positive customer experiences to undo the damage of a single negative review. The ratio is derived from a combination of human behavior, math, and logic. Here's how I discovered it:
A customer who has a negative experience is highly likely to share that experience by leaving a bad review.
A customer who has a positive experience, on the other hand, is unlikely to leave a good review. In my experience, only one in 10 happy customers leaves a good review.
Your company or product rating (typically out of five stars) reflects an overall average of good and bad reviews. So if your goal is to maintain an overall rating of four stars, you'll need four five-star reviews to make up for every one-star review.
Assuming that only one of every 10 happy customers leaves a positive five-star review, and knowing that it takes four five-star reviews to make up for each one-star review, you can figure it takes 40 positive customer experiences to make up for a single bad review.
All of this makes for a good-to-bad review ratio that is virtually impossible to ignore. I've witnessed this firsthand with my company, and it increases the importance of getting great reviews by providing great customer experiences.
Great customer experiences are priceless
There are myriad ways that positive customer experiences and ratings can benefit your business. Here are just a few.
Increased sales. In a study done by Zendesk, 88 percent of customers read an online review that influenced their buying decision.
Brand reputation. Good reviews amp up your brand's reputation without any additional work on your end.
Free marketing. Satisfied customers provide valuable word-of-mouth marketing and often prove to be your biggest advocates. According to a study by American Express, 42 percent of consumers said that a recommendation from a family member or friend would influence their purchase more than a sale or promotion.
Product and company validation. If you're raising money, investors and partners will unquestionably look at your ratings and reviews. A strong rating affirms that you have a great company that is worth investing in.
Promotional material. Great reviews can be used as testimonials on your website, in your marketing creatives, and as a part of your social media marketing campaigns.
There's only one solution
If a single bad review can undo the value of 40 good customer experiences, then the best solution is to focus on customer satisfaction. If it isn't already, customer happiness should be just as important to your business as the product or service itself.
Here are three keys to customer happiness.
Product quality. Your product, service, or app needs to provide the value you promise in a reliable way. It should work so well that 99 percent of your customers never call customer service.
Customer service. Great customer service not only prevents bad reviews, it also helps define your brand. The keys to the customer service equation include competent and compassionate reps, a manager who can effectively handle escalations, multiple means of contact (email, phone, chat, etc.), and convenient hours of operation.
Educating users. I'm an advocate of educating customers on how to use a product. For example, when some of our customers at SkyBell complained that the motion sensor on our video doorbell didn't activate immediately, we responded by explaining why we added a five- to 10-second delay. Once educated, our customers were grateful for the feature instead of frustrated.
When you focus on boosting customer happiness, it helps prevent the negative experiences that lead to bad reviews. And, according to the math, avoiding bad reviews is even more important than getting good reviews.
Positive customer reviews are one of the most important factors for your success, and the surest way to get them is by providing an outstanding customer experience. Take the time to understand the customer review ratio, and then evaluate your product, customer service, and education efforts. Doing so will help you master customer satisfaction and avoid the bad reviews that are so challenging to overturn.
Design with Ease
Be on the side of a positive customer service experience and value your guests and their safety.
Focus on Business Growth
I have been in the hospitality business since 1986. I’ve learned a few things during that time that might help make decisions .
When booking accommodations, travelers are swayed more by customer reviews than discounts. (Researchers at Florida Atlantic University and four other universities)
Satisfying a happy guest that results in my taking a loss is far better than a guest who feels you have wronged them which in turn creates a negative review.
When customers are unhappy, there's a 91 percent chance they won't do business with you again (Lee Resources).
Dissatisfied customers typically tell nine to 15 other people about their experience; some tell 20 or more (White House Office of Consumer Affairs). Negative customer experiences lead to bad reviews, and a bad review can do serious damage--the kind that takes more than a good review to fix.
Good customer experiences lead 42 percent of consumers to purchase again (Zendesk Customer Service Study).
Policies are good, and well needed. But at the end of the day, you often save more money bending them in consideration of circumstances. This is not to say you should let folks run all over you. It’s just a calculated choice between the lesser of 2 expenses. Read on:
2. It costs far more to gain new customers than to keep the ones you have. Ending what could be a repeat customer relationship is cutting off your nose to spite your face. I would rather give up the $2-300 in revenue from this one trip, than what could be multiple trips from a good customer. It’s just math. Are you “right” to stand firm on your policies? Sure. But it isn’t always financially sound in the long term.
3. It’s difficult to quantify how much money bad reviews cost any business, but everyone can agree that they don’t help. Bad news travels 5x faster than any good news, and the same goes for word of mouth advertising or online reviews. It is my opinion that bending a policy in certain situations is a better investment for a business than standing firm for that one time fee. Obviously each situation is different, and there are times when it’s justified to stand firm. But more often than not, you lose less money maintaining a stellar crop of reviews positive word of mouth.
If you let them out of their commitment, they are *only* going to feel valued by you and warm and fuzzy about the whole interaction. They will remember that the next time they look to book, and will likely tell others.
The Hotelier Perspective
If the situation were reversed what would you want or expect?
I have been a superhost on Airbnb since 2017 with two listings. I have coached other STR owners with their badly-behaving guests and poor reviews. I think we all have cursed many guests (to ourselves, most likely) because at times we find them to be unreasonable - so, you are justified in you anger.
However, I remind myself why I got into this business. When I opened my first Airbnb I decided to run a “hotel” (like it or not- that’s what it is). In other words I entered into the “people business” and people are... (you fill in the blanks).
As a result I always think about situations from that perspective. If I went to a hotel and the water went out, I would more than likely be upset and request some compensation. At the end of the day remember what makes or breaks your Airbnb business - a bad guest experience (right or wrong) and a subsequent bad review WILL cost you future revenue. You're better off issuing a refund to protect future income potential. Your refund is far cheaper than a bad review in the long run.
There does come a point when Airbnb STR owners need to let it go. Easier said than done. After all, this is your home, your investment, your pride and joy. But when a guest has done you wrong, and all possible resolution attempts have failed, you might consider fighting the natural instinct of standing up for what is right. You probably have a lot of success with your listing with suitable guests, and it may be better to call this a wash and move on.
Learn to be done. Not mad, not bothered, just done. Protect your peace at all costs.
Every business has transactions that don’t go well. Restore your space, claim your other successes and move on to provide great service to your next guests.