The Asymmetric Effects of Posting an Online Review on Future Spending and the Dark Side of Solicitations

Motivated by the prevalence of online review creation and solicitation, this paper examines whether posting an online review impacts the reviewer’s future spending on the reviewed brand. Identifying the causal effects of posting an online review is challenging because reviewers self-select into posting, making it an endogenous decision. I overcome this challenge by using randomized online review solicitations as an instrument for the endogenous treatment variable of posting an online review and establish that doing so decreases the average future spending by the reviewers on the reviewed brand. Additionally, I show that soliciting customers to post increases their propensity to write a review and thus in turn reduces their average future spending on the solicited brand. From a managerial standpoint, this finding suggests that online review solicitations can backfire, decreasing the average future spending by solicited customers. I therefore investigate whether the impact of posting (and hence soliciting) is heterogeneous with respect to customer satisfaction and loyalty. At the highest satisfaction level, posting does not change future spending regardless of customer loyalty. However, posting has a detrimental impact on future spending by dissatisfied reviewers. These adverse effects of posting emerge in the most loyal customers as soon as their satisfaction deviates from a perfect score (despite writing a positive review) and carry over to their future spending, even on nonreviewed brands of the company. Based on my findings, I present a set of guidelines for managers to follow when soliciting online reviews and responding to reviewers. This paper was accepted by Duncan Simester, marketing. Funding: This work was supported by the Singapore Ministry of Education Academic Research Fund Tier 1 grant [Grant C207MSS20B006]. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2023.01951 .