Union Street Guest House

Union Street Guest House is a local business whose dishonesty grabbed national headlines in publications such as TIME and Forbes. Their approach to managing online presence and customer relationships offers us a few lessons.

Union Street Guest House (or USGH) is a boutique hotel in Hudson, NY that advertises itself as a niche venue for weddings and gatherings. In an effort to maintain favorable online reviews, they set the following policy:

“If you have booked the Inn for a wedding or other type of event anywhere in the region and given us a deposit of any kind for guests to stay at USGH there will be a $500 fine that will be deducted from your deposit for every negative review of USGH placed on any internet site by anyone in your party and/or attending your wedding or event. If you stay here to attend a wedding anywhere in the area and leave us a negative review on any internet site you agree to a $500 find for each negative review.”

Yelp users and media outlets found out about this, leading to an all out firestorm. USGH’s Yelp page received 3,000 bad reviews in one day, their reputation was tarnished at the speed of light, and their owner was left trying to justify USGH’s obvious missteps. He ultimately claimed that the $500 fee was a joke that was not meant to be enforced, however a couple of Yelp reviews claimed that they had indeed been charged. Regardless, this situation shows how the Internet can turn a local business’ dishonest PR tactic into a reputation-shattering national headline.

USGH’s dishonest tactic was never practical. All of USGH’s problems stemmed from them underestimating the power of the Internet – there was no way that their plan wouldn’t have backfired on them at some point. Whether or not their tactic made any sense comes down to a cost-benefit analysis, and in the end, the costs severely outweigh the benefits.

The Problem with Discouraging Negative Feedback

If you discourage negative reviews, you aren’t going to get more positive reviews. People who had a negative experience will simply tell others in different ways (mostly via word-of-mouth, which can be the most powerful source of customers for businesses). By disallowing negative reviews, USGH agitated their customers, so they were far more likely to voice their disapproval via other avenues. USGH saw having no negative reviews on their Yelp page as a major benefit of their dishonesty, but this benefit was severely outweighed by the fact that customer disapproval was displaced.

The Value Of Customer Feedback

USGH also seemed to view a negative review as an irreversible blemish. By forcing customers to express their displeasure via other mediums, USGH lost control of customer feedback. Managing customer feedback is crucial, and it’s critical to always keep tabs on it. USGH could have used negative Yelp reviews as an opportunity to win customers over – by responding directly to customer reviews and using them to improve their service, USGH could have expressed sincerity. Rectifying a customer’s bad experience is an easy way to win them over and organically replace a negative review with a positive one.

Local Marketing Mistakes

The Need To Manage Customer Relationships

Honesty is the best policy. USGH’s “joke” simply swept their issues under the rug – an unsustainable approach for any business. Especially given the interconnectedness of businesses and customers via the Internet, businesses need to be realistic. If service is good, reviews will reflect that. If customers are not satisfied, sincerely trying to improve will go a very long way. Using dishonest tactics to inflate your reputation will absolutely backfire. Being honest and trying to improve are the only things that you can control.

USGH is an extreme example of a business abusing their customer relationships to try and improve their online presence. A vast majority of businesses would never consider doing something along these lines. However, it’s clear that when it comes to your business’ customer relationships, you will earn what you deserve 99% of the time.