Why Do Smart Consumers Always Research A Business Before Choosing It?

We typically do our research before we purchase a home to check for termite damage; we choose a baby sitter based off of reference; but apparently it’s rude to check out a business before spending your hard earned cash there. Go figure.

The hidden costs of uninformed decisions

Many people suffer loss from their unawareness of the transaction occurring. Although most of these blind spots occur over a meal with inferior food and less than adequate service there are also more serious transactions in which a person can lose large amounts of money, for example an auto repair, a contractor, or monthly subscription based services to name a few.

Leaks become Pumps. Cracks become Holes. Simple repairs turn into expensive nightmares. At first glance a leaky pipe may seem like an easy fix costing a few hundred dollars to repair, but by the time you are done you may be throwing money down the drain for a total loss of $800. Or perhaps the loss of a single deposit for $500.

Information asymmetry in the digital marketplace

This inside out view of a business also takes account of its public image. The organisation’s own marketing is portrayed, highlighting the strengths and weaknesses of the way that the business represents itself. Then we consider the business’s website and advertising, viewing these aspects of the business within the context that the business itself has created in terms of public image or brand.

Smart consumers recognize this imbalance.

However, there is a big difference between being kept in the dark in personal relationships and in commercial transactions. In commercial transactions, the other party generally wouldn’t want to bring to your attention things such as a less than perfect legal history, bad business practices or a consistent stream of complaints from customers. In the past it was often up to you to investigate and find this information out for yourself. However, with the growth of on-line transactions, buyers are even more likely to go into a transaction with their eyes closed.

The modern research arsenal

Consumers have more ways than ever to vet a company. In addition to looking up reviews on specific sites, consumers can browse through the experiences of other customers who have dealt with a particular business, and companies can also be active participants in the online conversation by sharing how they would handle a code red or how they would handle a complaint on sites like Facebook. But in addition to all of these measures, consumers can also look up public records to find out whether a company has been the subject of business code enforcement issues or civil legal claims.

Where you look will matter. Searching the Better Business Bureau rating will give you some insight into if a company has had complaints filed against them, but that is just the beginning of your research. It is also important to review Google reviews as well as look into industry specific complaint databases. A smart researcher will search company complaints and reviews in a multitude of sources in order to acquire the most accurate information.

Don’t get too caught up in individual incidents. Pay more attention to patterns and trends. One bad review may come from an unreasonable customer, but 20 or more negative reviews from unreasonable customers are a sign of a larger problem.

Reading between the lines

When conducting research on a business, don’t just look at the star rating – read the responses to the reviews as well. See how they treat their poor reviewers with the same respect and professionalism that they would show to their excellent customers. See if they take ownership of their mistakes, and if they handle problems professionally. The way a business responds to negative reviews is generally the same way that they will handle a problem with a customer.

Pay attention to what’s not said.

They were vague about a few issues I had with service, defensive, and finger pointed at customers. Once I realized that I didn’t want to deal with it anymore and they weren’t going to change their ways for a new customer. Positive reviews can get old, and I go by recent feedback.

The psychology of research resistance

For the consumer, product research can be incredibly rewarding. Unfortunately, not enough actually do it. There are many reasons for this, not the least of which is a crowded schedule or an unhealthy dose of overconfidence. Many people rely on their first impression of a product, trusting their instincts that they have found something good. But others may not even start the research process because they fear that they will not find anything useful.

But there are also some people who suffer from an optimism bias — an unrealistic optimistic expectation, that bad things will happen to other people, but not to them.

I saw that information overload can cause research paralysis on games that cost money, but even for indie games with a price tag research can be stifled by feelings of risk or uncertainty of where to start looking. For me, the first step in my research is to watch a trailer for the game.

When research pays off

In business, valid validation of your research is seeing a project avoid becoming a disaster. For example, a contractor might validly say that, based on past experience with his clients, he knows they won’t do some nasty cheap work that could cost him future business. An online retailer might validly say that, based on his past experience with shipping and customer service, he will provide timely and quality shipping and excellent customer service to his customers.

After some research, we found a few red flags about these products that makes us wary.

We have also carried out much of the research highlighting some of the gems within the small businesses and the larger organisations providing services to councils, including examples of good customer service, organisations that will go that extra mile in resolving problems and a proven track record of delivery.

The informed consumer advantage

Business research is about to become a whole lot less paranoid and a whole lot less perfectional. Open your eyes, Western world. Market insight is key in today’s business climate.

Smart investors spend a few minutes researching an investment in order to avoid loosing hours and dollars of poor investment decisions. Hope is not a strategy and with all due respect to Ross from Friends, “it doesn’t automatically make something true just because you wish it so.” Although past performance is no guarantee of future results, it is your best indicator of what to expect.

Researching businesses: Can you really afford NOT to?!