Can We Count on a Five-Star Review?
Some businesses are utterly shameless about begging customers for positive online reviews. Of course, you wouldn't know that if it weren't for this stellar newsletter, now would you?
Here are today’s highlights:
Business owners will have some new regulations to contend with in 2024.
The backlash against tipping has begun.
A survey finds employees feel pressured to take their work home with them.
Seventy percent of pet owners buy their furry friends a gift for the holidays.
There’s no denying that good reviews mean higher sales: “Online reviews help consumers ‘contend with uncertainty, things we need to purchase but have no firm understanding of, and no history purchasing,’ says Jason Greenberg, an associate professor at Cornell University who has studied online ratings in the restaurant industry. The cons? ‘There’s a significant economic return to good ratings, and an incentive to manipulate them,’ he says. Good reviews mean higher sales: Consulting firm McKinsey & Co. found that products with three- or four-star ratings on a major online platform had sales that were three times higher than those with one-star ratings. An increase of a single star in an overall rating on review site Yelp.com boosts a restaurant’s revenue by 5 percent to 9 percent, according to research by Michael Luca, an associate professor of business administration at Harvard Business School.”
“Luca can’t even order groceries without getting a request for feedback. He gets messages from shoppers for the delivery company Instacart saying, ‘Please it’s important to leave me a good review,’ he says. Instacart shoppers with ratings of 4.7 or higher out of five stars get priority access to picking up incoming orders.”
“Positive reviews have value for more than just hotels and restaurants: College professors, doctors, and employers are also subject to online critiques. The New York Attorney General said it recently secured a $100,000 fine from an orthopedic doctor that the AG’s office said suppressed negative feedback, hired contractors to post fake reviews, and asked friends, family, and employees to leave five-star reviews.”
“Some establishments use more subtle tactics, such as tugging on heartstrings, to draw upbeat feedback, including on customer surveys, which are often used by corporations to review performance at their stores. In Boston, a notice at one Bruegger’s Bagels shop said, ‘If you could fill out a survey with highly satisfied only, you will really be helping us out & get 2 free bagels!!’ (‘Highly satisfied’ was underlined.)” READ MORE
The backlash against tipping has begun: “As of November, service-sector workers in non-restaurant leisure and hospitality jobs made $1.28 an hour in tips, on average, down 7 percent from the $1.38 an hour they made a year prior. The data is according to an analysis of 300,000 small and medium-size businesses by payroll provider Gusto. The tipping slowdown is a gloomy development for all types of workers who rely on holiday tips as a chunk of their annual income. It reflects a broad frustration with the proliferation of tip requests at dry cleaners and bridal boutiques and even self-checkout machines that have sprung up since the pandemic.”
“Some businesses are raising worker pay in part as a response to lower gratuities. Dan Moreno, founder of Miami-based Flamingo Appliance Service, says he has noticed a slowdown in customers leaving tips for their repair people since the Journal spoke with him in July. The average base wages for his techs have gone up about 10 percent since then, though he hasn’t eliminated the prompt from point-of-sale machines.”
“In October, Chicago became the second-largest U.S. city to vote to require tipped workers to make the full minimum wage. The full federal minimum wage is $7.25 an hour, while the federal tipped minimum wage many bar and restaurant workers earn is $2.13 an hour. Legislation to get rid of tipped minimums is moving in eight states and measures are on the ballot in an additional four, according to worker-advocacy organization One Fair Wage.”
“Jokes mocking tipping’s proliferation have spread on social-media sites. In one image, a police officer holds out a tablet with different tip options after giving someone a speeding ticket. In another, someone pretends to ask for a tip for letting a stranger pet her dog.” READ MORE
A survey finds employees feel pressured to take their work home, which may create a hiring opportunity for smaller businesses: “While the hunt for more work-life balance has been a common theme over the past three years, few employees feel they've actually found it — even after the surge of remote work and increased flexibility after the pandemic. One reason? Regardless of where they are, workers are regularly taking work home with them, either literally or figuratively, and not always of their own volition. That's one of the takeaways from Slack’s Workforce Index Survey, which found 37 percent of all desk workers are regularly logging on outside of their company’s standard hours and more than half of the workers (54 percent) said it’s because they feel pressured to — not because they choose to.”
“The research, which involved more than 10,000 desk workers, also noted that workers rarely or never take breaks during the workday and more than one in four desk workers (27 percent), including more than half of executives, said they spend too much time in meetings that drag down their overall productivity. Employees who feel obligated to work after-hours registered 20 percent lower productivity scores than those who log off at the end of the standard workday, according to Slack.”
“But there were some important caveats. Employees who said they work outside of standard hours by choice — either to better suit their schedule or to pursue personal ambitions — reported no negative impacts and even a slight uptick in their wellness and productivity scores.”
“Experts say managers and leaders should take time off themselves and discuss it openly to help model the boundaries they wish their team members would have when they are away from the office or on vacation, The Playbook's Andy Medici previously reported.” READ MORE
Business owners will have some new regulations to contend with in 2024: “Small businesses will need to register with an agency called the Financial Crimes Enforcement Network in 2024, as part of an act passed in 2021 called the Corporate Transparency Act. The act was intended to get a look inside shell companies and crack down on attempts by ‘criminals, organized crime rings, and other illicit actors to hide their identities and launder their money through the financial system,’ Treasury Secretary Janet Yellen said in 2022. Businesses with more than 20 employees and more than $5 million in sales can qualify for exemptions. But that leaves an estimated 32 million small businesses that aren't exempt. The owners and part-owners of those businesses must register personal information with FinCEN, such as a photo ID and home address.”
“In an effort to have less discrimination and more transparency around the loan process, the Consumer Financial Protection Bureau this year said it would require banks to start reporting demographics and income of small business loan applicants. The aim is to create a database similar to what the mortgage industry has.”
“In October, the National Labor Relations Board issued a revised joint employer rule, expanding the definition of a ‘joint employer.’ This means that two companies that are both responsible for some decisions about employees—such as a franchiser and franchisee, although the rule goes beyond franchises—can both be held liable for unfair labor practices.”
“The Department of Labor in August announced a proposed rule that would let 3.6 million more workers qualify for overtime. The proposed regulation would require employers to pay overtime to salaried workers who are in executive, administrative and professional roles but make less than $1,059 a week, or $55,068 a year for full-time employees. That salary threshold is up from $35,568.” READ MORE
Wholesale prices held flat in November: “The cost of services, a big source of recent inflation, was flat in November. That might bode well for further declines in the rate of inflation. Inflation further down the pipeline was also soft. The wholesale cost of partly finished goods was unchanged while prices of raw materials dropped 1.4%. Both are negative compared to one year earlier. The PPI report captures what companies pay for supplies such as fuel, packaging and so forth. These costs are often passed on to customers at the retail level and give an idea of whether inflation is rising or falling.” READ MORE
The latest retail sales report shows the holiday season is off to a strong start: “Consumer spending showed unexpected strength at the start of the holiday shopping season, as Americans shopped in-person and online, shrugging off signs of economic cooling. Retail sales, which include spending at stores, restaurants and gas stations, rose 0.3 percent in November from the month before, on a seasonally adjusted basis, the Commerce Department said Thursday. Economists had expected sales to fall. Sales rose 4.1 percent in November from a year earlier, outpacing inflation.” READ MORE
THE PET INDUSTRY
Do you know what you’re getting for your pet this year? “Nearly 90 percent of U.S. pet parents spend more than usual on their fur babies during the holiday season, with 70 percent buying their pets gifts, according to a recent survey from personal finance company SoFi. This comes as overall pet spending has increased in recent years, fueled in part by a pandemic spike in animal ownership.”
“‘Dogs are the new kids for a lot of people,’ said Matt Caserta, who co-founded the pet photography company Pawtrait Pop-Up with his partner, Mary Sweeney, in 2021. ‘People love their dogs and they’re part of the everyday family. We love highlighting that.’”
“The company, which specializes in ‘school-picture, yearbook-look’ photos, got in on the holiday demand last year, doing about 30 private sessions, which were priced at $100. This season, he said, they’ve been slammed with requests to partner with small businesses for festive events and ‘Santa Paws’ shoots.”
“At Pet Friendly Dog Bakery in [Philadelphia], the holidays are the ‘busiest time of the year by far,’ said owner Steph Johnson, with December sales usually double what they are during other months. This year, the bakery started selling its own Advent calendars, which cost $17 and come with 12 pet-friendly shortbread cookies. Johnson said she was inspired by the store’s past success in selling more generic calendars in which customers had to hide their own treats.” READ MORE
TikTok is becoming Gen Z’s source for news: “‘News’ on TikTok, however, rarely comes from mainstream outlets like The Washington Post or NBC News, both of which are trying to build audiences there. The app's recommendation algorithm rarely pushes users toward these accounts, an August study from researchers at Northwestern determined. ‘We find almost no evidence of proactive news exposure on TikTok's behalf,’ the study concludes. Instead, young people on TikTok learn about what's happening from a hodgepodge of alternative sources, from commentary accounts like Russell's, to non-news influencers who occasionally dabble in current events when they enter the mainstream, to posts from people purporting to offer on-the-ground videos from breaking news events like a war or protest.”
“On TikTok's recommendation feed, there is little distinction between a report from ABC News and a rant about that report from a lifestyle influencer. That chaotic democratization is by design. A TikTok representative told Business Insider that the company treats all accounts the same when it comes to policing misinformation and promoting content.”
“There is one form of traditional news media that TikTok is proving useful for, and it happens to be the type of journalism most crushed by the news industry's shift to digital: local journalism. TikTok is a better place for local stories than national because people log into social media to look at content specifically tailored for them,’ said Matt Shearer, a Boston-area reporter who helped launch WBZ NewsRadio's TikTok account.”
“The company won a regional Edward R. Murrow Award for innovation based on its work on the app this year. ‘Any time I post a video about a small town in Massachusetts, everybody in that small town and the surrounding towns shares that,’ Shearer said.” READ MORE
THE 21 HATS PODCAST
What Are Your Goals for 2024? This week, Shawn Busse, Liz Picarazzi, and Jaci Russo discuss what they learned in 2023 and what they expect from 2024. After a tough year, Shawn is optimistic that his clients, having survived the turbulence of the past few years, are ready to spend money and try something different. Liz explains why she’s been willing to discount her products as much as 40 percent on Cyber Mondays and tells us about some new products she has in the works. Early in the year, Jaci, thinking she was going to have to staff up to handle two big new clients, dove into remodeling her offices — but those big clients have yet to sign on. “I might have jumped the gun a little bit,” says Jaci.
Plus: Liz talks about her Midwestern mom, who can’t understand how Liz can charge so much for her trash enclosures. And Shawn raises the issue of how much money business owners should spend on marketing.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren