The Problems with Five-Star Rating Systems and How to Fix Them

From investing in and advising dozens of marketplace businesses for more than a decade, we have found that while simple five-star systems are good enough at identifying and weeding out very low-quality products or suppliers, they do a poor job of separating good from great products or suppliers. This may not be a big issue for marketplaces offering commodity products and services, but it can be a serious problem for marketplaces where it is important to allow truly great providers to differentiate themselves clearly.

To read the full article in Harvard Business Review, click: The Problems with Five-Star Rating Systems and How to Fix Them.