Do Online Reviews Affect Your Revenue?

In a world where anyone can publish their thoughts online, businesses strive to meet customer expectations to get the best online reviews.

Whether you have an online or brick-and-mortar business, the benefits of a good customer review are the same. A Bright Local consumer survey revealed that 91 percent of customers (18-34 years old) trust online reviews the same way they trust personal recommendations.

There is more evidence that online reviews drive potential customers to visit a website or store, but how many of these people make a purchase? Are online reviews directly related to your revenue? Here’s what we found out:

• People are 270 times more likely to buy a product with five reviews than those with zero
• The first five reviews have the most impact on conversions
• Fifty or more customer reviews per product can provide a 4.6 percent increase in conversion rates
• People are 31 percent more likely to buy from a business with positive reviews
• Reviews are the primary reason that users click on a company that appears in search results
• In a Harvard Business School case study for Yelp.com, the research found that a one-star increase in review ratings led to a rise in revenue (5 – 9 percent)

Based on these pieces of information, there are strong indications that online reviews do have an impact on revenue.

Moreover, both positive and negative reviews are related and can be directly proportional in terms of results. In other words, positive reviews drive more revenue and negative reviews decrease income.

The effects of positive reviews

The goal of any business would be to get the best reviews online to drive more sales. However, there are more benefits to getting rave reviews online than the obvious. Here are some effects that positive reviews can have on a business:

• Increase in sales
• Builds customer trust and loyalty
• Creates a conversation around your product/service
• Generates new leads through word of mouth or referrals
• Increases local search ranking
  

Remember that even though some positive reviews won’t lead to a sale right away, your business’s online reputation gets a boost. Excellent customer feedback without conversion is just as valuable and can bring long-term gains.

The effects of negative reviews

A Moz study reveals that one negative customer review can drive away 22 percent of clientele and three negative reviews can drive away 59 percent.

Here are some of the common effects of negative reviews on a business:

• Decrease in sales
• Loss of customer trust
• Damage to your company’s reputation

While it’s a dream for most companies, it is nearly impossible to get zero negative reviews. Unless you have a perfect product for everyone, your business is likely to get a few negative reviews from time-to-time.

Getting negative online reviews is not what a business owner should hope for, but these reviews can still convert into a sale.

Research revealed that people are more likely to trust a brand with a few negative reviews than those with perfect 5.0 ratings. As consumers get smarter, they are aware that reviews can be manufactured and are, therefore, wary of perfect reviews.

How to manage your brand’s online reputation

So what can businesses do to ensure that they get the best online reviews and decrease the negative ones?

There are several strategies that your business can use to get more positive reviews online and it is all under a method called online reputation management.

Online reputation management is a way to influence people and how they think about your business using ethical and legal marketing techniques.

Some strategies you can use to manage your online reputation include:

Monitoring your brand’s online reputation

You can use a free tool like Google Alerts or a paid one like Mention to monitor what people are saying about your business anywhere online, be it in their blogs, on social media or in interviews. This method is a vital part of your online reputation management strategy. When you know what customers think about your brand, you know what to fix and what to improve on.

Be transparent

Several marketing studies have shown that over 86 percent of consumers think that transparency is essential for businesses now more than ever. In the age of fake reviews, data breaches, and privacy violations, consumers are demanding more social responsibility from companies.

Companies like McDonald’s, Southwest Airlines and Panera Bread have included transparency in their brand’s marketing strategies to address customer feedback and win their trust. Being honest about your products and services might turn away some customers, but it is a better approach that will reward you in the long run.

Respond to negative reviews

Getting a negative review is bad for business, but ignoring it is even worse. Answering negative reviews tells your customers that you care about them. It also shows potential customers how you resolve issues with your customers.

In fact, 89 percent of consumers read responses to negative reviews and 45 percent say they would still consider doing business with companies that respond to negative reviews.

Marketing experts recommend that you respond within 48 hours. The response time has an impact on how consumers view your business. Being timely with your response matters a great deal, as it shows that you treat your customers with urgency and importance.

Encourage new customers to leave honest reviews

While you can’t avoid getting negative reviews, you do have an opportunity to improve your product by encouraging new customers to leave their reviews.

One way that most businesses do this is with email marketing. An automated email is triggered by a new customer making a first-time transaction, the email encourages them to give feedback on their new product or reach out should they have any queries. A few days after he/she made the purchase and received the first email a second email is sent in which you can ask your new customer to leave a review.

Note: Offering incentives in exchange for reviews violates Google’s Review Terms, so be mindful of this tactic when collecting reviews.

Conclusion

The facts are clear: online reviews affect your revenue significantly. However, this does not mean that your business is permanently affected — especially with negative reviews.

Businesses, just like people, are not flawless. It is near impossible to get the best online reviews every time. There is always room for improvement and the key to earning your customer’s trust is to communicate and be honest.

As a business, being transparent about your products, services, and operation is a solid, long-term strategy to ensure good reviews in the future. In addition, standard marketing practices like search engine optimization, publishing relevant content, and brand monitoring are all sound strategies to achieve a strong online reputation for your business.