The Web overflows with free sites for consumers to rate and review products and services. Angie Hicks, Founder and CMO, Angie’s List, has faced that competition for 10 years and grown an online subscription-based service that lets consumers share their ratings of local service providers.

Angie’s List has attracted more than 330,000 paid members and expanded into 124 cities around the country. Members post more than 40,000 reviews a month. The service’s subscription model – it forbids anonymous reviews or paid entries and accepts only limited advertising for vendors – has been integral to its growth, says Hicks.

“Consumers are bombarded with information these days with all the different topics they choose to research. They’re looking for a trusted filter to get good information to make these decisions.”

Hicks shares her insights into growing a subscription-based service even when competing with a plethora of free competitors. Here are six strategies for refining the business model and marketing the service:

Strategy #1. Ensure the reliability and independence of UGC
Convincing consumers that an online service is worth paying for starts by demonstrating the value of the content. Hicks and her team differentiate their service from competitors’ with systems and policies that ensure trustworthy reviews and ratings.

“That’s our biggest differentiator, the rigor we take with protecting the data.”

Tactics to maintain the quality of user-generated content include:

- No anonymous reporting
All reviews must be written by registered members with a community profile. Members agree not to review companies with which they are involved.

- Using anti-spam controls
Members are limited to one review per category every six months.

- Staff approving every review
Team members read and analyze every review before it is posted to the site. They are trained to look for language that appears self-promotional.

The team also limits the role of vendors and service providers:

- Angie’s List does not allow vendors to pay for placement
A company review can only be added to the list by a member.

- Advertising options are limited
Only companies with existing reviews and a consumer rating of A or B may pay for promotion on the site. Promotions are limited to discount offers to site members. Any advertiser whose rating falls below a B has their promotions removed from the site.

Strategy #2. Supplement UGC with staff editorial content
A staff editorial team supplements member reviews with content to help consumers choose service providers. This content is published online in the “Angie’s List Tips” section, and in a monthly print magazine sent to members.

Typical articles:
o Research on local service providers
o How-to articles on choosing vendors and managing home improvement, automotive and personal service projects
o Consumer advocacy issues

“It really makes us more than just a site you can go to get ratings,” Hicks says.

Strategy #3. Provide value-added services in addition to content
To bolster the value of a paid membership, the team includes services that exceed the offerings of most consumer ratings sites. Enhanced member services include:

- Telephone support line to help members conduct searches
“Neighborhood Specialists” are available six days a week to answer members’ questions or help them start searches for service providers in their area.

- Complaint resolution service
Members in a dispute with a service provider can alert a team member who, in turn, will contact the company to work on a resolution. The team continually updates all members on the status of complaints, noting on the site whether it is:
o Pending
o Resolved
o Stalemate (the company responded but no acceptable compromise could be reached)

Companies that ignore resolution efforts are placed in the site’s “Penalty Box” for up to three months. They are removed from Angie’s List until they respond.

Strategy #4. Expand the scope of content and services
Online services evolve to meet consumers’ needs. Since the company’s founding in 1995, Hicks’ team has expanded its content and service offerings in several key areas:

- Service categories
Angie’s List began by focusing on home improvement and repair, covering roughly 100 categories, such as contractors and plumbers. Since then, they’ve grown to include 330 categories, including:
o Automotive
o Personal services, such as child care and elder care
o Weddings, parties and entertainment
o Health care

The team chooses new categories based on member feedback, such as direct requests to include certain services. They also monitor member activity to look for trends that require category refinements.

- Detail collected in member reviews
In the beginning, member reviews were basic accounts of customer satisfaction: Was the experience with a service provider positive or negative?

Over the years, the team refined its rating system to create a “report card” that includes letter grades (A-F) for the following criteria:
o Overall
o Price
o Quality
o Responsiveness
o Punctuality
o Professionalism

They also added a section where members can post a detailed description of their project and experience to help members find reviews most relevant to their own situations.

“For example, if you’re looking for a plumber, you can read reports to learn how old the house was and all the things that the member had done,” says Hicks. “All those things play a factor in what plumber might be the right fit for you.”

- Municipalities and locations covered
The service has a national reach with a local focus with the addition of metropolitan areas to the list. Since 2006, the team has expanded the site’s coverage from about 30 locations to 124 areas.

The team uses two primary techniques to develop content for new locations:

Technique #1. Market research
A telemarketing team surveys consumers in the area about their experience with local service providers. They also ask these consumers to share their experiences so there are ratings and reviews available when the list is added to the site.

Technique #2. Free trials for new locations
To build membership and online activity in a new area, the team offers consumers a one-year free trial. Trials are only offered to members in new coverage areas.

Strategy #5 Use multi-channel marketing for broad reach
Some online services rely heavily on online channels, such as search marketing, to attract new members. Hicks’ team uses a blend of online and offline channels for maximum reach.

“Over the years, we haven’t had a single silver bullet that’s allowed us to say, ‘This is the one that works the best.’”

Two successful tactics for the team:

- Encouraging word-of-mouth marketing
Word-of-mouth has been a “huge” driver of the service’s growth, says Hicks. To encourage members to talk up the service to friends and family, the team uses a quirky, low-cost incentive program that involves M&M’s candy.

The team tested a cash incentive, a combined cash and M&Ms incentive, and just sending M&Ms. They found that the candy alone had the best response.

“There’s something about receiving chocolate in the mail unexpectedly,” says Hicks, “And it gets people talking.”

The site’s membership sign-up form includes a field for members to specify whether they prefer plain or peanut M&M’s.

- National Public Radio underwriting
The team has a long-standing relationship with National Public Radio in addition to broadcast radio advertising in their market areas. Underwriting NPR programs helps reach the service’s core demographic – homeowners aged 35+ who tend to be more highly educated and have higher incomes than the average consumer.

Strategy #6. Use metrics and testing for key decisions
The mantra of “Test, test and test again” is one that Hicks’ team takes to heart. Advertising effectiveness, site changes and business model decisions are all based on testing and metrics analysis, says Hicks.

Recent changes implemented after testing include:

- Addition of monthly subscription plan
In the past, the service required an annual subscription. When the team considered offering a monthly plan, they worried about cannibalizing their annual memberships.

After testing a monthly option, they saw that members who chose the lower-cost monthly plan were almost all incremental sales. One-month memberships acted like a paid trial for the service.

“We lowered the hurdle for a trial and were able to expand outside our typical reach.”

- New homepage design
The team routinely employs multivariate testing. This year they introduced an entirely new homepage design that took the site in a new direction.

The previous homepage emphasized details and facts about the service, including:
o Headline that provided a basic description of the service, “Home service companies rated by real homeowners like you”
o Bullet points listing popular categories
o Scrolling list of metropolitan areas in the network
o Calls-to-action that provided visitors with a quick tour or more details about the service

The new design featured:
o Headline that appealed to visitors’ pain -- “Tired of lousy service?”
o Testimonial quotes from members
o Bullet points that detailed the benefits of using the service
o Text that emphasized reliable feedback from consumers
o Calls-to-action that provided a quick tour or took visitors directly to a sign-up page

Hicks concludes, “The biggest thing is to really understand the economics of your business, using the data to give you direction where you need to be headed.”

Useful links related to this article

Creative Samples from Angie's List:
http://www.marketingsherpa.com/cs/angieslist/study.html

Angie’s List
http://www.angieslist.com