How Customer Reviews Can Affect Your Business

4 min read · 2 months ago

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A business owner may not want to heed online reviews. Whether they’re good or bad, they could be seen as a distraction from getting work done. Yet, customer reviews are integral to your business success. This article explores how customer reviews affect your business and what to do about it.

With the internet, there are so many different ways for people to express an opinion about your business. They could give you a review on Yelp, post on your Facebook page, send a comment to your business website, post a pic of your product on Instagram, and so on.

What they say matters. Northwestern University’s Spiegel Research Center has found “online reviews have a significant and quantifiable impact on purchase decisions.” In fact, “about 95% of customers read reviews before making a purchase.”

That means it’s important for a business owner to manage online reviews. Both good and bad ones. Customer reviews play a role in:

  • Business reputation
  • Brand awareness
  • Customer loyalty
  • Business revenue
  • Search engine ranking

Let’s discuss each of these in greater detail.

 

Business Reputation

Customer reviews don’t play the same role for every business. Restaurants, hotels, medical, automotive, and clothing stores are the top five industries affected by online reviews, according to BrightLocal. But regardless of industry, “only 48% of customers would consider using a business with fewer than four stars.”

Even a poor online review can benefit your business reputation. It may seem counterintuitive. Yet, letting potential customers see your negative reviews adds to your credibility. People are more likely to trust your business. In fact, per Power of Reviews, 82% of consumers actively seek out negative reviews. Why? No one trusts every product is five-star-perfect. “Negative reviews provide a baseline for the worst-case scenario consumers could have with a product.”

Verified buyer reviews will have the greatest impact. Anonymous reviews are going to be taken with a grain of salt by the discerning buyer. 

 

 

Brand Awareness

Reviews are one way to get your brand noticed. Womply Research’s study of online reviews and their impact on small business revenue found “businesses that claim their free listings on at least four review sites earn an average of 46% more revenue.” 

The type of review matters as well. For one thing, written reviews make more of an impression than star/number ratings. Plus, when it comes to star reviews, 82.8% would not choose a business showing three stars or less (on a five-star scale).

It’s a good idea to set up alerts for new reviews or mentions of your brand on social media. This can help you respond in a timely fashion and be aware of what’s being said about your brand in the digital sphere.

 

 

Customer Loyalty

Engage with your customers by requesting their opinions. Sending an email asking them to review their purchases demonstrates you care. You might ask them to complete a survey, but make sure it is a short one. You don’t want to ask too much of those loyal customers taking the time to share their perspectives.

COVID-19 did help the business looking to gather customer input. BrightLocal’s survey found 72% of U.S. consumers had written a local business review in 2020. That’s up from 66% in 2019. Responding can have a positive impact on customer loyalty. Acknowledging what the customer review says, and taking the time to get back to them, helps that customer feel recognized and valued. 

Responding to remedy a situation that led to a negative review can also help turn someone’s perspective around. That can help stem the damage from poor word of mouth. Chatmeter has found “not replying to customer reviews puts companies at risk of increasing churn by 15%.” 

 

 

Customer picking up bouquet at at florist

Business Revenue

Displaying product reviews impacts your conversion rates. The purchase likelihood for a product with five reviews is 270% greater than the purchase likelihood of a product with no review,” according to the Spiegel research into customer engagement. 

Research published in Psychology Science found “given two products with similar ratings, consumers are more likely to buy the product with more reviews.”

Customer reviews also have more impact on higher-priced items. “When reviews were displayed for a lower-priced product, the conversion rate increased 190%. However, for a higher-priced product, the conversion rate increased 380%.”

Specifically, “higher Yelp ratings lead to higher sales,” according to The Harvard Business Review. Every one-star increase can mean a five to nine percent revenue increase. “This effect is greater for independent businesses, whose reputations are less well established.” 

Whatever you do, don’t penalize your customers for leaving a negative review. One New York State wedding hotel fined the bride and groom $500 for a negative review posted online about its venue. The couple shared their upset about this practice online, and the hotel’s Yelp rating plummeted to 1.5 out of five stars as others expressed disapproval of the policy. 

 

 

Search Engine Ranking

In 2018, review signals were weighted 15% in Google’s search ranking factors. This included quantity, velocity, diversity, and more. Replying to customer reviews isn’t just about building their trust. It also helps search engine credibility. As Chatmeter puts it, “What better credibility indicator than a business that goes above and beyond by publicly responding to complaints, as well as, thanking their praises.” 

Customer reviews are user-generated content. That makes it more credible in the eyes of customers (and algorithms) than what you write on your business website. Soliciting candid feedback can help add relevance to your site and strengthen your search engine ranking.

Local search results play a significant role. According to BrightLocal’s survey, “87% of consumers read online reviews for local businesses in 2020—up from 81% in 2019.” You can manage your business’s online listings and get notified when you get a review with Localworks or other business directory automation tools.

Ultimately, you need to give customer reviews two thumbs up. Whatever they say about you, these online reviews will have a real impact on your business bottom line. Start monitoring and managing the review discussion around your products and services today.