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There once was a time when business could be transacted with a simple handshake or a signature.  A failure to meet a commitment might get you a complaint to the Better Business Bureau. There was little need to know whether or not a person had a good reputation (or even if the rumours were true)!

Today, things are considerably more complicated.  Millions of online, realtime transactions occur among parties that won’t ever know each other – person-to-person (P2P), business-to-business (B2B), business-to-consumer (B2C) and even machine-to-machine (M2M).  There can be considerable risk – the quality of the products or services may be unknown, the legal jurisdictions of the buyers and sellers may be different, and certainly there is little basis for trust, at least at first.  Your reputation has never been more important.

If you disagree, I’ve heard of a Nigerian banker that wants to make you an offer.

Internet-scale systems of engagement must have the ability to identify, characterize and properly qualify the communicating parties (i.e., the users, providers, administrators, brokers, developers, objects, things, etc.).  The following “-tion’s” are examples (but not a complete list) of what is needed:

  • Identification – unambiguous identification of each party including names and any other mechanism that could be used to uniquely distinguish one party from all others;
  • Location – the place where the parties can be found, either physically (e.g., an address) or virtually (a cyberspace pointer), either currently or permanently;
  • Authentication – certification that the correspondent is truly the intended party or party’s;
  • Authorization – assurance that the party has permission to enter into an agreement and to do what is expected from the transaction;
  • Relation – a specification of the relationships between the parties and their responsibilities within the scope of the transaction;
  • Description – a clear definition of each party’s offerings and qualifications including what it can provide, what services it provides, etc.;
  • Protection – the degree to which privacy, confidentiality, verification and remediation is required and will be provided during the transaction; and
  • Reputation – a rating of each party from various perspectives and to various degrees including trustworthiness, past history, recommendations, and believability.

One of the topics on this list that has yet to garner much serious attention is online reputation and its management.

What is an online reputation?

A reputation provides an answer to the very general question:  Do I know enough about you (a company or an individual), your qualifications and your past performance to trust what you say, what you offer, and/or what you promise to do?

Since an online buyer will almost never meet the seller (and vice versa) and they might not even know where the seller is, knowing the seller’s reputation (and vice versa) can be very important.  For many buyers it is the seller’s reputation that is the key factor in their buying decision.

Your reputation is what others say about you based on their perception of you.  It’s what people can find out before they meet you and it’s the only thing they’ll know if they never do.  People often say “your reputation precedes you” when they’ve heard something about you that impacts a choice or decision they need to make.  This is pretty much equivalent to making sure you have good references for a job application!

An online reputation is not just a simple history or certification, although these may be contributors.  Instead, it is (or should be) a calculated rating that can be seller-specific (i.e., for a single site) or multi-sourced.  Ideally, your reputation should also be validated and secure – that is, well protected from inaccurate source data and from third-party hacking.  It is also important that it not be based on any single source and that it be refreshed frequently.

How is a reputation quantified?

A reputation can be simple hearsay (i.e., a rumour or folklore) or it can be evidence-based (i.e., a calculated rating or ranking).

A reputation can be generic or it can be specialized for a specific use.  For example, a credit rating is a form of reputation used by banks and other lenders.  One example of this is Equifax.

Before the Internet, a reputation would most often be qualitative, based on information passed around by “word of mouth.”  For example, you might assume a restaurant is worth visiting based on hearing that a famous chef works there (i.e., he has a good reputation).  Conversely, your friend may say the restaurant is poor due to a lack of service, so then you need to make a choice.  Now, the restaurant might be rated on Yelp or Zagat with reviews posted literally as the meal is happening!

Online reputations should not be based on informal hearsay.  They should be based on reliable and accessible source data and be calculated in a consistent manner.

Automating online reputation portability

Ratings can be established by customers, by experts, by organizations, or by regulators (the Toronto DineSafe system, for example) and can be very simple or, if more data is available, more comprehensive.

As cloud-based “Reputation as a Service” becomes more available and more sophisticated, many data sources will be combined to create a consolidated, quantified, trustworthy rating.

There are several important requirements for an online reputation system:

  • Fairness – the algorithms used to derive the reputation should be balanced and fair – the rating should also reflect the risk associated with the transaction;
  • Accuracy – the rating should represent the current reality and should be update-able – a single event should not colour a reputation forever;
  • Transparency – the source data for the reputation should be traceable and contestable – a person or company should be able to access and repair any incorrect data that is used to establish the reputation;
  • Portability – there should be no need for a separate (and potentially different) reputation for each marketplace; and
  • Security – your reputation is a valuable credential that should be kept safe and secure by a reputable “trustee” on your behalf.

In many ways, online reputations can be compared to the public keys used in security services, and they should be managed and accessed in similar ways.

One of the most important types of reputation is the track record of the seller of a product or service.  Every buyer asks questions such as:

  • Will my purchase be completed as promised?
  • Were the products other people bought delivered on-time?
  • Was the product I’m buying equal to or better than its description?
  • Were there any complaints from other buyers?
  • Were the social media comments from other buyers valid?

Although there are millions of people selling items through online marketplaces such as eBay and Kijiji, the seller’s reputation for being trustworthy, reliable and consistent does not currently follow them across multiple outlets.

One company that is trying to change this is eRated.  eRated allows sellers to import their existing identities and reputations into a service that allows them to take them from one marketplace to another.  This can reduce barriers to entering new marketplaces and can allow sellers to quickly increase their sales success rates.

According to eRated, some 90% of online merchants appear in more than one market. Tapping into the belief that a user with more good ratings is more trustworthy than one with only a few good reviews, eRated lets an online seller connect its accounts across different marketplaces so that all of the data for sales in those different marketplaces appears in one place.

This includes not just transactional data but social data — in other words, how that merchant is “rated” across different marketplaces.

The benefits of “curated” reputation

It can be difficult for anyone to build a good reputation but easy to lose it.  Do you monitor what is being said about you online?

Reputation management is the practice of making people and businesses look their best.

Managing reputations was once the job of public relations firms and corporate marketing departments.  Mostly, it was accomplished through advertising, sponsorships and client references.  In some cases, people seeking to damage a company’s reputation would be taken to court.

Now everyone has to curate (i.e., manage) their own online reputation.  It’s something we all have to be aware of because it directly affects our capacity to buy and sell (credit ratings, for example).  Probably more importantly, it represents how we’re seen by other people online (including recruiters and hiring managers!).

So what’s reputation management all about?  When you sell, buy, swap or lend online, each party has the opportunity to rate how you did (either informally or formally, or both).  They will take into consideration whether your product was on time, whether it arrived in good condition, and how responsive you were to queries.  As the buyer, it’s mostly about whether you provided payment.  While all of this is taken for granted when you shop in person at a store, online we depend on what others have said about us to build our reputation.

There’s no secret to having a good online reputation.  Anyone operating online should behave ethically and treat others as they would expect to be treated themselves.  If you do, then you’ll get the reputation you deserve. And you should not have to build up a new reputation for every store you visit – your reputation should be cumulative and be accessible to anyone who wants to “check up on you.”.  This is what eRated helps to automate.

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