Peter Mühlmann: It’s ok to get negative reviews. A Actually negative reviews can be more valuable for you than positive reviews.

Stephen Cummins: Sure.

Peter Muhlmann: So for two reasons, first of all, we… we did an AB split test where we’re… we’re showing consumers a page with one negative review.

Stephen Cummins: Yeah.

Peter Muhlmann: And the other page has zero reviews. And then we do a split test that says “so which one are people more likely to buy from?”

Stephen Cummins: Okay.

Peter Muhlmann: And people are far, far more likely to buy from the one with one negative review.

Stephen Cummins: Okay. That’s interesting,

Peter Muhlmann: Right? And because it is better to know… Everybody knows that people aren’t perfect. Everybody knows that sometimes people make mistakes.

Stephen Cummins: Yeah.

Peter Muhlmann: The… the notion that… that, oh, you have to be perfect is actually not believed by your customers.

Stephen Cummins: Welcome to 14 minutes of SaaS! The show where you can listen to the stories and opinions of founders of the world’s most remarkable SaaS scale-ups! This is episode 121 of 14 Minutes of SaaS, the second of 3 episodes where I chat with Peter Muhlmann, CEO & Founder of Trustpilot.

And then we have such a multitude of emerging markets. So people say, “Hey, I have a doctor on the iPhone, people want to know, Does it actually work?”

Stephen Cummins: Yes.

Peter Muhlmann: People saying, “I have this self storage company for you, people will want to know, does it actually work?” And all though we… we try in our go to market approach to be rather disciplined about which industries or sub-sectors we’re… we’re… we’re approaching…

Stephen Cummins: Yeah.

Peter Muhlmann: Because… because  the dynamic. So that… that if you have most… content that most companies within that industry becomes more relevant for the consumers and for the businesses. So there’s a self reinforcing effect there.

Stephen Cummins: Absolutely.

Peter Muhlmann: But sometimes we just see whole industries  just self select to go on. So for example… just some… some oddity, the mobile phone recycling industry at… at some point, all the companies at once decided

Stephen Cummins: They hit some tipping point.

Peter Muhlmann: Yeah, exactly. That they needed to use us; that was the leading company in… in the category that started to use us and then five or six others wanted to… just went on board.

Stephen Cummins: So, is that a strategy? Where you can get one major company in one industry to get in and then this kind of fomo for the rest of them.

Peter Muhlmann: That can certainly help.

Stephen Cummins: Okay.

Peter Muhlmann: That can certainly help.

Stephen Cummins: And how do you… you know, because obviously brand equity is built around trust,

Peter Muhlmann: Yes.

Stephen Cummins: Not just the name but the nature of reviews. What are the things you do to try to protect that? Because nothing is 100% watertight but what are the things you do to try and protect that at the moment in terms of…

Peter Muhlmann: Yeah, so we… we invest enormously into ensuring the integrity of the content on the site.

Stephen Cummins: Yeah.

Peter Muhlmann: So, there are many dimensions and so the first of all is just ensuring that people are as unsuccessful as entirely possible in manipulating the system. Because since consumers care so much about this, of course, sometimes people will also try to have more sinister motives and try to write fake reviews of them. So the way you should think about this is very much like a bank is preventing credit card fraud. So, you may go to a supermarket and use your credit card there and then your bank says, like, “we blocked it because five minutes later it was used in China, there’s no way you can have traveled to China in five minutes.”

Stephen Cummins: Yeah. Yeah.

Peter Muhlmann: So, so that’s weird. So what… what they, the banks are doing is they’re looking at data of what typical behavior looks like and then they have statistical patterns that are catching anomalies.

Stephen Cummins: Yes.

Peter Muhlmann: And so we do the same. So, let’s say that there is a company in London and usually they have a UK based audience or a company in Paris that usually has French customers. Then suddenly, they’re getting a ton of reviews written on the other side of the world. That’s weird.

Stephen Cummins: Yes.

Peter Muhlmann: And now that’s just one data point. And then we have hundreds of these data points that we look at and so what that means is that it can be virtually impossible for us to detect if your friend goes in and writes a glowing review off your podcast but if you want to have hundreds of good reviews, so that it actually matters, it’s very hard not to trigger the data points.

Stephen Cummins: Absolutely.

Peter Muhlmann: The other one we’re… we’re… we’re trying to do is we’re actually telling the businesses it’s very much a mind… that it’s okay to get negative reviews. Actually negative reviews can be more valuable for you than positive reviews.

Stephen Cummins: Sure.

Peter Muhlmann: So for two reasons, first of all, we… we did an AB split test where we’re… we’re showing consumers a page with one negative review.

Stephen Cummins: Yeah.

Peter Muhlmann: And the other page has zero reviews. And then we do a split test that says “so which one are people more likely to buy from?”

Stephen Cummins: Okay.

Peter Muhlmann: And people are far, far more likely to buy from the one with one negative review.

Stephen Cummins: Okay. That’s interesting,

Peter Muhlmann: Right? And because it is better to know… Everybody knows that people aren’t perfect. Everybody knows that sometimes people make mistakes.

Stephen Cummins: Yeah.

Peter Muhlmann: The… the notion that… that, oh, you have to be perfect is actually not believed by your customers.

Stephen Cummins: Yes.

Peter Muhlmann: They… they know you’re just a human and sometimes you’re a little…you may…but not knowing everything. That’s really what… what scares people. So, it’s a little bit, like, think of yourself as if you’re buying a digital camera and it’s a really cheap one.

Stephen Cummins: Yeah.

Peter Muhlmann: You probably know, maybe the battery life isn’t so good. Maybe the camera isn’t so good either, but you’re okay with that because it’s really… really cheap. And you just like to know where it’s not as good and then be okay with that decision. And… and the other reason that negative reviews are really valuable is that … it can signify a mindset in how you respond..

Stephen Cummins: Yes

Peter Muhlmann: And… and so we find that responses to negative reviews can be more powerful than 10 positive reviews.

Stephen Cummins:Yes.

Peter Muhlmann:  Again, because people always know that things go wrong. So it’s not about they want things to never go wrong, but it’s how does the company react.

Stephen Cummins: Okay. Will, the company go to war with… with you as a customer and say, “Yeah, but you forgot to read page 17 of the terms and conditions where it clearly says that you have no right to complain about this.”

Stephen Cummins: Okay. Okay.

Peter Muhlmann: Or are they the kind of company that says, “Really sorry that you had a bad experience; let’s fix it and here’s a bottle of wine and some flowers” that… that… that is much more powerful than ten good experiences.

Stephen Cummins: Absolutely. And, you know, I did notice something pretty powerful and positive that you did. Which was an obvious thing a company is going to do, of course, is come in and start flagging every negative review and I saw you built something into the platform this year. I think, to actually combat that which is obviously very strong… a strong thing to… to do as well.

Peter Muhlmann:  Yeah, because again, I think… I think what… what consumers… it’s really important that they realize is that how a company is using the online media will really say a lot about how, what… what its’ mindset is.

Stephen Cummins: Okay.

Peter Muhlmann: And so in this case, for us, the… the thing is that so everybody can go in and write a review on Trustpilot. And of course, it has to be like that because it should be up to you if you want to write a review of the business, not if the business wants you to write a review of a business.

Stephen Cummins: Yeah.

Peter Muhlmann: So the openness of the platform is paramount. But then because of that, there has to be an opportunity for businesses to say, “actually this person didn’t buy from us or this person wrote some crazy things that are not okay to write.”

Stephen Cummins: absolutely, right? Absolutely.

Peter Muhlmann:  And we will then take a look at that. Now, some companies then abuse that and takes it too far and just says everything is wrong. Every single negative, like, is either written by the competitor or just didn’t happen.

Stephen Cummins: Understood.

Peter Muhlmann:  Until we started to flag that and that’s actually been really popular by consumers.

Stephen Cummins: Absolutely. No, no, that… that makes total sense. Now, there’s no doubt you bring value to the market and, you know, on the consumer side, I can see it. And even on the small business side, I see it because you’re kind of evolving because you were so early in this. And by the way, I believe the consumer, I totally buy… believe what you said, the consumer leads the B to C leads B to B by the nose always, they’re always more innovative and they’re always ahead.  Well because you were in there your user base, a huge method you user would be in the consumer or a small business space.

So I’m gonna… I’m gonna give you a challenging question, but before I say, it… I will say that there’s no doubt that you bring value to the market. You’re $193 million investment. You’re almost $100 million A&R, I believe,  you’re knocking on that door. And you’re, yeah, you’re growing your staff 20% year after year…more than that. But on the B to B, you know, I’m a B to B SaaS guy and, so, I had a look around and I… I did find a category CRM and I had a look in there and, you know, I saw a bias towards the smaller companies because, you know, for example, I looked at Salesforce and it has an incredibly low review and the reviews are really about… they’re just one thing they’re not like they’re not going into a huge amount of detail. Now we’re talking about a largerB to B enterprise play. And then I looked at Pipedrive, which by the way is a great company, and it gets great reviews in there.  But Pipedrive would be for smaller businesses, small to lower medium sized businesses. I’ve interviewed one of the founders; brilliant company, but as a CRM isn’t even a complete CRM. It’s a serum for salespeople and a brilliant one and it spotted a hole in the market which Salesforce wasn’t addressing for sure. But, you know, Salesforce is a phenomenal CRM there. It doesn’t really have anything close to it. I know because I’ve worked in the domain for years and years. It gets absolutely torn apart on the platform. And… and I think part of the reason is that,you would be more on the small business side of the consumer side and when you get to that enterprise scale, you probably need a bit more depth and a bit more, a much deeper feedback. I know the flip side of that is that might be a barrier to people actually giving reviews. What would you say to that?

Peter Muhlmann: Okay. So there’s a lot to answer to there. So first of all…

Stephen Cummins: It’s because I tried to be diplomatic there…because I’ve looked at some of the other categories and there’s brilliant stuff in there. But this was something that I flagged personally.

Peter Muhlmann: Yeah. No, there, there was so much to go into there. So so let’s start. So…the easiest thing is just the quality and the indepth of the reviews. So, something that you will definitely see from us is that we want to invest into creating a higher quality of review. So that, for example, if you’re writing something, we will start nudging the user and say, “hey, but what about this? Or what about the delivery” and… and ask you to comment deeper… that’s some work with that will likely start next year and that can hopefully add some more flavor to the reviews?

Stephen Cummins: Is that part of why you’re here? Nope?

Peter Muhlmann: Nope. That’s just a part of the response.

Stephen Cummins: Okay.

Peter Muhlmann: And then the other part of it is that we do see that the larger companies are sometimes slower in picking up… and engaging on the platform. Whereas, the smaller companies are more fast moving and understand that it matters.

Stephen Cummins: Yes.

Peter Muhlmann:  So, so, what you will see is that for… for some of the very… very large companies they maybe say, like, “Okay, we’re engaging on Facebook and we’re engaging on Twitter and that’s it.” And it’s going to take Trustpilot another couple of years before we get to that size. But I will say though that the large companies in today’s world are wrong when they’re taking it for granted that they can just rely on the power of the brand.

Stephen Cummins: Okay.

Peter Muhlmann:  Because imagine for example, that in… in… in… this doesn’t matter which country you live in. Imagine that you’re a customer at the largest bank or you’re a customer at the largest CRM system…

Stephen Cummins: Yeah.

Peter Muhlmann: Being offered in that market… or customer anything…we’ll just say the largest.

Stephen Cummins: Yeah.

Peter Muhlmann:  And if you have a problem, how good to expect the customer service is going to be from 1 to 10?  How much do you expect that they care about you? And it doesn’t matter if you’re a B to B or B to C. And so the answer is that actually you don’t expect that they treat you as anything but a number. And so, I think that the opportunity for the large companies here is that they need to engage so that they show that they care.

Stephen Cummins: Okay.

Peter Muhlmann:  Because if… if… if… if… if there’s one thing that I see these companies do wrong, it is; they don’t engage and so the question is …it may not be that… that… that we are a 100% accurate reflection of… of that product.

Stephen Cummins: Well nobody’s 100%…

Peter Muhlmann: Exactly nobody… nobody is.

Stephen Cummins: There’s no perfection here.

Peter Muhlmann: But… but I certainly think that everybody would be wiser and smarter if the company would engage and… and share their story and show how they deal with those complaints.

Stephen Cummins:  Okay  Okay. Okay. and you’re saying starting next year, so is that… is that an area? Because I mean you’re so widely spread? And the barrier to kinds of submitting reviews is… is… is low, which the, on the positive side, it’s you know, you have a tremendous volume of reviews which makes for a kind of a fairly democratic situation and certainly makes your business stronger because there’s an awful lot of data there. So are you going to go after that space a little bit? A bit more bit deeper on the I’m… I’m talking with the midsize to, kind of, enterprise B to B? Kind of type…

Peter Muhlmann: So, so, so the… the type of… of setting, where we do really well is when they have a lot of customers.

Stephen Cummins: Okay.

Peter Muhlmann: So, so we’re not, so, so for example, I mean, this is not B to B SaaS. This is the very opposite of B to C Saas.

Stephen Cummins: Of course. In the next and concluding episode 3 with Peter Mühlmann, we learn why markets beat the team beat the product. Our only sales people will be our customers.

Peter Muhlmann: But one hundred million dollar mining equipment is never going to be something where you will add a great deal of value because it’s a really a one time investment people are making

You’ve been listening to 14 minutes of SaaS. Thanks to Mike Quill for his creativity and problem solving skills, to Ketsu for the music and to Anders Getz for the transcript. This episode was brought to you by me, Stephen Cummins. If you enjoyed the podcast, please don’t forget to share it with your network, subscribe to the series, and of course give the show a rating

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