How Reviews Affect Your Bottom Line
How do customer reviews affect your business? In more ways than you probably imagined! The case for putting time & effort into your online reputation is actually a very easy one to make. In this article, we’ll explain the multitude of ways that reviews will ultimately impact the bottom line of your business. After reading this, you should come away with a new goal: to make customer service & your online reputation your number one marketing strategy.
So what is the bottom line for improving and increasing your reviews around the internet? Let’s do some simple math: Take your annual revenue and multiply it by .09 (or 9%), and that is the number you could stand to gain if you increased your average ratings by 1 star. Another way to look at it: You are missing out on up to 9% if you aren’t paying attention or actively managing your online reputation.1
EXAMPLE: If your business produces annual revenues of $500k, you are essentially giving up as much as $45,000 per year ($500k x’s .09) in revenue by not actively managing your online reputation. WHOA! What if you do $10 Million a year in revenue?! DUDE!
How is this? How can something so simple make such a huge impact on your top – and bottom – line? Let’s explore.
People trust online reviews.
It’s been found that fully 88% of consumers trust online reviews as much as personal recommendations from real people!2 Also, 80% of consumers have changed their mind about purchases based on negative information they have found online.3 What does that tell you? It’s all about trust. Reviews matter to people that could potentially do business with you, and negative reviews are costing you money.
People do their research.
Did you know that 85% of consumers say they read up to 10 reviews?2 And the trend is increasing every year. It seems obvious, right? People want to know that they are buying from a reputable company. They have a fear of the unknown or being taken advantage of. This is especially true in industries that have a lot of customer service horror stories, like automotive service, home service companies, or the like.
Your competition is smarter.
Don’t you think you have at least 1 or 2 competitors in your market that just seem to be on point with their customer service & online reviews? A market is only so big! If your average review rating is 4.0 and you have a competitor whose average is 4.5, you are losing business to them. Customers that could be calling your business are calling your competitors. You should be the one with the higher ratings because people do research, and people trust online reviews, remember? Who would you call – the Jeweler with 4 stars or the one with 4.9?
Size does matter.
I’ve heard a lot of business owners tell me “I have a 5 star yelp rating” or “We’re 5 stars on Google.” The next thing I do is verify that. What do I find? They are indeed a 5 star on Yelp! – they have 3 reviews, all of which were their employees or relatives (probably). They also only have 4 or 7 or some other insignificant amount of reviews on Google. And none anywhere else. This brings me to my point: the size of your online reputation matters greatly. So does your rating.
You’re not fooling anyone with your 3-review, 5 star Yelp! rating. Consumers are smart, ladies & gents. They know that businesses tend to put up “fake” reviews & ask their relatives and such to leave great reviews about them. They don’t trust a perfect 5 star review from just 3 reviews. Wouldn’t a 4.7 star rating from 77 reviews be more trustworthy? Yes. It’s more authentic, and this is why the size of your internet reputation matters. It all comes down to authenticity & trustworthiness.
A good reputation increase your advertising ROI
If people do their research and trust online reviews as much as a recommendation from a real person, and they make buying decisions based on this information, doesn’t it stand to reason that if you’re spending any money on advertising, you would see a better return on that advertising with an increased online review presence?
Let’s say you do print advertising in a local publication or send out mail. People don’t just always pick up the phone or go to your website to buy immediately. As is proven, they do research. It follows that – all else being equal – a company with a 4.5 star rating would have much better response and redemption rates than a company that had a 3.5 star average rating, right?
How about internet advertising? This is perhaps where solid reputation management makes the largest impact. For starters, they are already on the internet looking for someone to do business with, researching. They will see your reviews. If you do any search engine optimization (SEO) or pay-per-click advertising, it’s been proven to increase your click-through-rates when you can show positive customer reviews in SERPs (search engine results pages – see below).
In a study conducted over 2.5 million reviews, it was shown to have increased click-through-rate by 50% just from going from 0 reviews to 10 reviews, and 125% by going from 0 to 60 reviews!4
Right now you’re thinking, “What about when people actually get to my site? What then, dummy?” Well, your website, if optimized for conversions, should answer 3 essential questions: 1) What makes this company different? (trust factor) 2) Why should I call them? (trust factor) and 3) How do I contact them? It should also include a call-to-action. These combined are the ingredients for conversion success. This picture of a customer’s website shows the trust-building in action, using the Review Camp embedded reviews widget, and a customized header widget that appears on every page:
What about word-of-mouth & referrals? This is a form of advertising. If someone asked you for a recommendation for a mechanic, wouldn’t you feel more comfortable referring a company that has a great online reputation, rather than one that is non-existent or less than ideal? Of course! People love to share great experiences and will feel proud to share one that is backed up with a stellar online reputation. But for some reason they like sharing negative experiences more. People that have a negative experience with your company are 52% more likely to write about it on the internet than people that have a good experience!5
With all of these factors playing into your advertising ROI, online reputation management should be the FOUNDATION of your marketing & advertising strategy.
Make your employees proud
It’s hard to recruit great people, isn’t it? It seems like there is a huge shortage of excellence in the workplace these days. I often think that if there were 10 of me, my business would be 20X what it is now. But that’s a scary thought, and it’s probably a good thing there aren’t 10 of me…
Ponder this, though: employee satisfaction comes from a multitude of factors. One of those factors is being proud of where they work. Your team wants to work at a great place, that provides excellent value to their customers and does the right thing by them, plus has a reputation that matches. After all, the place they work is a reflection of who they are & their self-worth. What’s better proof of a great reputation than lots of genuine, high-quality customer reviews? A great online reputation will aid in recruiting the best employees, and keeping them around. All of this certainly impacts the bottom line.
The most important thing is to get started. Implement systems in your business that will help you get more genuine customer reviews & improve your customer service, which will ultimately win you more business. And remember, good reputation management (preceded by good customer service) is the cornerstone of any successful marketing & advertising strategy.
1 – http://harvardmagazine.com/2011/10/hbs-study-finds-positive-yelp-reviews-lead-to-increased-business
2 – http://searchengineland.com/88-consumers-trust-online-reviews-much-personal-recommendations-195803
3 – http://www.inc.com/michael-fertik/online-reviews-make-big-difference-small-business.html
4 – http://inchoo.net/ecommerce/customer-reviews-and-their-influence-on-conversion-rate-and-search-engine-ctr/
5 – http://www.tmprod.com/blog/2014/15-facts-online-reviews-mean-business-owners/