How do Reviews Impact a Business?

Businesses can communicate the value of their products or services online, in person, and via social media. However, in today’s consumerist and tech savvy society, people can be hesitant to make a purchase solely based on what businesses say about themselves—that’s why reviews are so important. Reviews, both negative and positive, are powerful. They impact your business’s reputation, relevance, and profits.

Reviews are a way for customers to share their honest opinions and experiences. They are a valuable tool for consumers to make informed decisions about everything from where to have brunch to where to get their teeth cleaned. With reviews available on search engines, social media, e-commerce platforms, and review sites like Yelp, consumers have become increasingly reliant on one another to guide their purchasing decisions. This article will explain how and why reviews are so impactful and give you the necessary knowledge to use reviews as a marketing tool.

Do people really look at reviews?

The short answer is absolutely. Customers look at reviews and most of them act based on what they read. In fact, 93% of consumers say that online reviews have an impact on their purchase decisions. People also believe what they read in reviews, 88% of consumers trust online reviews as much as they trust personal recommendations.

Shoot for the Stars

A business’s ranking out of 5 holds a lot of power. It can bring your business into consideration, count you out completely, or be the deciding factor between you and a competitor. A survey conducted by Podium revealed that 3.4 is the average star rating required for a consumer to even consider a business. If you have 2 or fewer stars, getting your rating up should be a top priority considering that only 3% of consumers said they would consider using a business with 1 or 2 stars in a survey by brightlocal. On the other hand, there is such thing as a rating that is too high. A 5-star rating makes consumers skeptical of your business and the integrity of your reviews. Research shows that consumers are more likely to purchase a product with a rating between 4.2 and 4.7 and sales decrease from 4.7 to 5 stars.

How do reviews improve sales?

Considering how dependent consumers are on reviews, it isn’t surprising that businesses with reviews are more successful. In a study titled “The Value of Online Customer Reviews”, researchers studied the connection between reviews and sales. They found that sales conversion rates increased by an average of 270% when reviews were shown compared to when they were not. If a consumer is on the fence, a review can make a big difference–82% of consumers say that the content of a review has convinced them to make a purchase. Customers are also willing to spend more with a business that has “excellent” reviews, 31% more to be exact. Sales improve when your reviews do, a one-star increase on Yelp increases a business’s revenue by 5-9% on average.

Quantity of Reviews

Consumers gravitate towards businesses with higher ratings, but a 5-star score isn’t very impressive if your business only has 2 reviews. In this case, a 4.6-star option with 200 reviews seems more credible. Additionally, if you have a larger number of reviews, one bad review is easier to ignore and won’t bring your overall rating down as much. The average number of reviews that a customer reads before making a decision is 10. If you have fewer reviews, a customer might feel that there isn’t enough information available and choose another business with more reviews.

Negative Reviews

We’re not going to sugarcoat it, negative reviews can really hurt your business. A survey conducted by Cone found that 4 out of 5 consumers reverse purchase decisions based on negative reviews.

Receiving a negative review can feel like a punch in the gut, but it’s important to remember that no business is perfect all the time. Maybe a member of your customer service team was having a bad day, an honest mistake was made, or a product didn’t live up to the customer’s expectations. Regardless of what led to the negative review, even if you didn’t deserve it, what is important now is how you react.

Bad Reviews can be Good for Business

Bad reviews provide you with valuable information. They can inform you of problems and identify areas where there is room for improvement. If you use a negative review to make a positive change within your business, the long-term benefit can outweigh the harm caused by the review.

According to a survey by PowerReviews, “negative reviews provide a baseline for the worst-case scenario”. They help customers weigh the potential risks vs. rewards of doing business with you. For example, if a potential customer was looking for a romantic restaurant to take their partner for their anniversary, a 1-star review that says “we waited 45 minutes for our food” may not matter to them if they know the meal will be delicious. Leaving up bad reviews rather than deleting them shows that your business is transparent and trustworthy.

Bad reviews can even be good for sales. According to Revoo, “customers spend more than five times as long on site when they interact with bad reviews, trust the reviews they see far more and convert nearly 85% more often”.

Reviews and Local Businesses

If you are a local business owner, studies show that reviews can make or break your business. When it comes to local businesses, people are more trusting of the reviews they read because they come from members of their community. A whopping 98% of consumers read online reviews of local businesses. In a Statista survey, 79% stated “I trust online reviews as much as personal recommendations from friends or family”. The same survey showed just how impactful local business reviews are on an individual’s actual decision making. 94% of respondents reported that positive reviews make them more likely to use a business and 92% said that negative reviews make them less likely to use a business.

Reviews as a Marketing Tool

Accumulating reviews, interacting with reviewers, and providing customers with easy ways to review your business spreads the word about your product or service and promotes your reputation.

Encourage Customers to Write Reviews

Encouraging customers to write reviews lets them know that you value their feedback and helps bring in new customers. Ask them in person, send them a follow-up email with a link to write a review, or utilize QR codes to encourage them to do so.

Reviews Improve SEO

Search Engine Optimization (SEO) helps your business appear higher on the results page of search engines like Google. Adding customer reviews to your website adds relevant text and keywords to your website that can increase your website’s value in the eyes of Google, bringing more visitors to your website.

Respond to Reviews

Responding to reviews shows that you care about your customers’ experiences. Responses should be short and sweet—thank reviewers for positive feedback and keep reading to find out how to respond to negative reviews.

How NOT to Respond to Negative Reviews

The worst thing that you can do is respond to a negative review with aggression or in a rude manner. Ignoring the review altogether is the second worst thing you can do, refusing to address the comment communicates a lack of customer service and general carelessness to the writer as well as potential customers.

How to Respond to Negative Reviews

When potential customers are reading your reviews, they will also see your responses, so it is important to respond strategically in order to minimize the impact of a negative review. You can control the narrative, protect your reputation, and maybe even repair your relationship with the customer. Negative reviews can drive customers away, but a timely and sincere response shows that your business cares about its customers. Use the following tips to respond to negative reviews in an effective way.

Be Personable: Readers are more likely to sympathize with you if you write like a person rather than a corporation. Use pleasant and sincere language.
Take Responsibility: Own up to your mistakes and apologize.

Make it Right: Issue the reviewer a refund if they deserve it or offer them a discount on a future product/service if appropriate.
Continue the Conversation Offline: Providing the reviewer with contact info shows that you care about every customer. Discussing the reason for the bad review via email or over the phone enables you to find out more and reach a resolution away from the public eye, protecting your privacy and the privacy of the reviewer.

Set Your Business Up for Success with Smarketing

At Smarketing we understand the importance of reputation management and the role that reviews play in forming your business’s reputation. We implement strategies to help our clients encourage reviews and respond to reviews as needed.

Smarketing is a full-service marketing firm that offers traditional and digital marketing, social media management, website design, and branding. Marketing is crucial for setting your business apart from competitors, attracting new customers, maximizing profits, and helping your business reach its full potential.