When did you first realize the impact of negative reviews? Some marketers don’t address the issue until foot-traffic declines and sales plummet. Franchisors that understand the relationship between reviews and revenue, however, can take a proactive approach to reputation management and mitigate the effect of negative reviews.
Below, reputation experts from SOCi examine the connection between online reputation and revenue.
How do ratings and reviews affect businesses?
Marketers know as well as anyone; it’s difficult to prove how individual marketing tactics impact revenue. Demand generation marketing channels drive visibility, traffic, and leads — all of which can lead to revenue. However, once you drill down into the individual tactics – such as reviews – it’s more difficult to prove the direct revenue correlation.
The easiest way to understand how reviews impact revenue is by first understanding how reviews impact other business factors. For instance, we know that reviews impact SEO — accounting for 6 percent of a business’ SEO ranking in local organic search and 15 percent of a business’ ranking on Google’s Local Pack.
Reviews also affect consumer purchase decisions. According to a research report created by SOCi and the Local Search Association (LSA), 66 percent of consumers consider positive reviews to be an important factor in their purchase decision.
Compare that to the report’s findings that just 33 percent of consumers consider advertisements to be an important factor in their purchase decisions. Yet, most franchises devote entire teams or agencies to paid media while spending limited resources on reputation management.
How much do customers care about ratings and reviews?
Revenue is directly tied to the number of customers that come into your business, and customers often use ratings and reviews to decide between your business and a competitor. The aforementioned research report found that 52 percent of consumers would disqualify a business that didn’t have “enough stars,” and that 66 percent of consumers expect a business to have at least 3.5 stars before they’ll consider making a purchase.
If your business has a star-rating of less than 3.5 stars, you could be losing 66 percent of consumers to your competitors. How much revenue would you lose if 66 percent of your customers started making purchases elsewhere?
The connection between ratings and revenue cannot be ignored; a Harvard University study found that a one-star increase in a restaurant’s Yelp rating led to a 9 percent increase in revenue. Business can raise their star-rating by encouraging satisfied customers to leave reviews, responding to all reviews, and using reviews to identify the root causes of the negative sentiment behind reviews. A social listening tool like SOCi can help your business quickly find common consumer complaints and resolve issues accordingly.
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Which reputation management strategies help drive revenue?
Positive reviews influence purchase decisions, boost brand authenticity, and ultimately drive revenue. In no industry is this truer than hospitality — specifically, multi-location hotels. Cornell University researchers studied this industry to determine how reviews on TripAdvisor affected revenue.
In this study, hotels with a proactive review response strategy earned twice the revenue compared to businesses that didn’t respond to reviews at all. To understand the connection between review response and revenue, consider the effect that a response has on a customer.
According to the research report created by SOCi and the LSA, 87 percent of consumers express a willingness to change a negative review depending on how the business responds. And according to the Cornell report, a 1-star increase in ratings (i.e, from 3 stars to 4 stars) led to a 39 percent increase in revenue for hotels on TripAdvisor.
Responding to reviews, when combined with a proactive approach to customer care, can lead to higher ratings and increased revenue. The same is true for earning more reviews. According to the same Cornell report, for each additional review a hotel earned, the business experienced a .04 percent increase in revenue.
How do positive reviews fit into a reputation management strategy?
Any reputation management strategy must also include a plan to leverage positive reviews. Sharing user-generated content (UGC) in the form of positive reviews helps maximize their impact. Businesses should leverage UGC whenever possible; 84 percent of millennial consumers say user-generated content has some influence on their purchase decisions.
Here are a few ways to repurpose positive reviews for your organic posts;
- Congratulate an employee who earned a positive review.
- Post about how your business turned a negative review into a satisfied customer.
- Post a positive review and tag the person who provided the review on Facebook.
Leveraging UGC in organic posts has a direct effect on consumer decisions; 74 percent of consumers say their purchase decisions are influenced by posts from companies they follow on social media.
How can you boost revenue by earning more positive reviews? Contrary to the popular belief that consumers only write reviews to complain about negative experiences, the report created by SOCi and the LSA showed that 47 percent of consumers are motivated to write reviews after positive experiences. Only 22 percent were motivated to write reviews based on negative experiences.
A customer who has a positive experience will be motivated to write a review. It’s up to the business to not only provide that customer with a positive experience but also engage the customer from purchase to review. You can do this by including links to various review sites on websites and social pages. When emailing customers, include links to your review pages. Finally, be sure to simply ask customers to leave a review after they make a purchase. Include a review prompt on the customer’s receipt, if possible.
If you develop any kind of strategy for earning more reviews, you’ll already be a step ahead of 50 percent of business owners who — when asked in the aforementioned report from SOCi and the LSA — said they “don’t ask customers for reviews,” or “don’t have any online reviews.” Reviews help lead to increased revenue, which is why every business needs a plan to increase its volume of reviews.