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It wasn't David Bain's finest moment. It was his small company's Web debut, its first online customer review - and he'd been publicly dissed.

The third-generation hardwood dealer and proud owner of Toronto's Rafina Hardwood Floors read with some consternation the company's first customer-written rating on Homestars.com, a website that offers customer reviews of local tradesmen, retailers and services in three cities, Toronto, Vancouver and Boston.

The customer complained that Rafina's wood wasn't good quality and a bad deal, and gave the company only one star - the lowest rating. It was potentially bad news for a business that specializes in high-end hardwood flooring for custom-built homes.

But Mr. Bain knew that the customer hadn't told the full story. It was midnight when he sat down in his pyjamas at his computer to respond to the review. He was concerned about the negative comments, but he stuck to the facts and ended his response by typing: "Let this be a lesson to all who think that you can get a top quality product for a steal of a deal."

The back story was that there had been some smoke damage to the customer's home; the insurance company was willing to pay for new hardwood flooring on the main floor, but the owners wanted to redo the second floor as well, for the same total price. Mr. Bain had suggested a lower grade of flooring from another company, but had warned the homeowners it would be inferior to his own high-end products. Now they apparently regretted the decision to use the lower grade - and were undermining his company's reputation in the process.

"I thought, 'We've got lots of wonderful customers - let them respond, too,' " Mr. Bain recalls.

As time passed, the good reviews began to add up on the website. One year later, the initial negative review is at the very bottom of a long page of enthusiastic positives. "I've never asked any of our customers to write a review, but they seem to want to," Mr. Bain says.

Indeed, growing numbers of consumers are turning to the Internet to post and read feedback about companies big and small, including their products, service and prices. Word of mouth has a wider impact than ever, and small businesses especially need to pay close attention to what customers are saying, experts advise.

Andrew Goodman, chief strategic officer for Homestars.com, has suggestions for companies trying to safeguard their reputations online:

Stay aware. Search the Internet frequently for your company's name to find out what people are saying. Check blogs, news and review sites.

Stay in the game. Reply to online reviews about your company; don't ignore them. Thank customers for taking the time to comment, no matter what they've said. Use your reply to note how you've made changes or improvements to your operations or products. If the review site doesn't provide a reply space, contact the site's webmaster and ask for an opportunity to respond.

Stay cool. Think before responding. Be gracious and positive. Remember that online content may be posted "live." If the review is the first time you've heard of a problem, say so, but stick to the facts.

Stay ahead. Listen to your customers' comments, use them to improve your services and offerings.

Stay the course. Don't let a negative rating get you down. It will eventually sink to the bottom of the page and most consumers will not read all the reviews.

Stay real. Don't even think of posting fake reviews, or filing a nasty review about a competitor. The damage that will do to your reputation will be very hard to repair.

Mr. Goodman says fake reviews are easy to spot; he cites the case of a national retailer that posted fake disparaging comments about its competition - but used its own company computers to do so. "Their IP address was on everything," he laughs.

Homestars.com's free site has some 8,000 registered reviewers. The firm takes care to screen reviews for possible fakes, such as reviews written by competitors or people who are not actual customers.

Mr. Goodman realizes reading reviews about your company isn't always fun. "It's a real roller-coaster ride - and you hope that the balance of opinion turns out in your favour," he says.

The frustrating part "is the loss of control [you have over your company's image] - and that's not going to go away. Remember that you don't own your brand."

It was an eye-opening lesson for Mr. Bain, but one that worked out in the end, thanks to the fact that Rafina's satisfied customers weren't shy about adding their comments to the website and reinforcing the company's reputation.

"I'm not a cheap flooring company," Mr. Bain notes. "One of the benefits of having all those reviews is that ... all the good reviews increase people's confidence. Then they don't have a problem paying the right price, knowing they're going to get good work. You can justify it by saying, 'Look at all the good reviews.' "

Web feedback on the rise

A recent survey by consulting firm Deloitte & Touche found that consumers are turning to online reviews of companies and products in large numbers - and

online reviews are having a

direct impact on purchase decisions.

According to the study by Deloitte's Consumer Products Group, nearly two-thirds (62 per cent) of consumers read customer-written product reviews on the Web.

Of these, 82 per cent say their purchase decisions are directly influenced by the reviews: they either stick with their original purchase intention or switch to a different product, based on the reviews.

New information technologies, such as online review sites, "provide a voice and a venue for anyone with something to say, allowing individuals to shape reputations of ... companies and their products," Deloitte noted in releasing the study.

"Consumer product companies need to determine how best to capitalize on this new landscape," Deloitte said. "Clearly, there will be consequences for those who don't."

Lisa Stephens