The Financial Power of Local Reviews

The fact that businesses succeed or fail based on word-of-mouth reviews has been actual for generations. Today, consumers have access to fantastic information at their fingertips.  Online reviews have grown in popularity and become a vital part of the business landscape. Marketing today depends on a business’s online presence, and online reviews hold great power. 86% of all consumers and 95% of those aged 18-34 read online reviews before deciding upon goods and services. Those same consumers read an average of 10 reviews before making a buying decision.

Search engines and even social media platforms make it easy for consumers to search for businesses in their local area. Consumers will often decide on a local company before ever visiting it.

Positive Reviews

Online reviews are so critical that 91% of individuals between the ages of 18-34 trust them as much as a personal recommendation from a friend. These online reviews directly impact a business’s bottom line. A study conducted by Harvard Business School concluded that if a company increased its Yelp star rating by just one star, its profit could increase by 5%-9%.

The impact of positive reviews on a business include the following:

  • Increased likelihood that a consumer will find a business at the top of a search engine or review site and therefore purchase from that business;
  • Increased perception of trustworthiness and prestige of a business; and
  • Increased business revenue.

Most business owners know that a customer is more likely to leave a negative review after a bad experience versus leaving a positive review after a good experience. For this reason, a best practice for business owners is to find a creative way to encourage or incentivize satisfied customers to take the time to publish a positive review.

The best time to ask for a positive online review is immediately after a client or customer has had a good experience. Some salons will offer a complimentary nail polish bottle as a customer is checking out from their manicure as an incentive to leave a good review before they leave their establishment. Other businesses may have a sign indicating, “We’re on Yelp!” to remind customers that leaving a positive review can make a difference in their business.

Negative Reviews

The old saying that any press is good press does not hold true with negative online reviews. Unfortunately, unhappy customers are more likely to leave a review, as they are often more motivated emotionally to vent their frustration and attempt to save other clients or customers from their negative experience.

These negative online reviews can cost a business dearly in customer goodwill and revenue. Four or more negative articles can potentially cause a company to lose up to 70% of new customers or clients. Even having only one negative review can dramatically impact a business.

The impact of negative reviews on a business may include the following:

  • Decreased likelihood that a consumer will purchase from a business;
  • Hesitation to use a business or service if no reviews or too many negative reviews are present; and
  • Decreased revenue and profits.

The good news is that a local business can turn a negative review into a positive experience. Most review sites will allow a business owner to respond to a negative review. Businesses should make a sincere effort to respond to the original review with either an apology or a gesture of goodwill. Most clients and customers love when a business owner will go the extra mile to redeem themselves after a negative experience.  If the outreach is sincere, oftentimes the original reviewer will post a follow-up response that is glowing, turning the negative review into a positive one. Local business owners should never underestimate the power of humility and great customer service.

Monitor Review Sites

While there are many online places to post a review, there are a few that drive traffic more than others. Some of the largest and most important include:

Once a local business determines the platform on which it receives most of its online reviews, it should monitor those reviews at least once a week.

Ethics of Fake Online Reviews

Business owners should never attempt to elicit online reviews that are fake. This unethical practice can lead to the complete removal of a business on many review sites.  Additionally, if a business intentionally writes or obtains fake reviews, they can be fined. Besides the fact that online fake reviews are unethical, most clients or consumers generally can spot a fake online review from a mile away.

Online Review Monitoring Services

Local businesses can streamline the monitoring process by hiring a company such as BirdEye to monitor their online reviews and increase positive reviews online. Companies such as this will monitor online reviews, social channels, and surveys for a business. This can be a great resource for busy businesses to leverage the power of local reviews. Users looking to vet a business in their local area can simply search by field, like “legal” or “accounting”, and the city they are in to generate results and reviews. Users can also use it to search reviews for certain businesses directly. For instance, a person looking for a divorce attorney in the San Francisco Bay area could search “Schoenberg Family Law Group reviews” and read through dozens of Facebook and Google reviews on that firm.

While the global connectivity created by the internet has been criticized as actually disconnecting people from their local communities and connections, it has not changed the generations-old power of local, word-of-mouth reviews—it has simply amplified the accessibility and power of both negative and positive reviews.