How Influential Are Online Reviews?

by Rachel Hartman on April 3, 2014
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A quick search of your company’s name online might reveal several five-star reviews or a single one-star bashing. But what impact do consumer reviews really have on your business?

By and large, online reviews greatly affect people’s purchase decisions. According to a survey by Dimensional Research, 90 percent of respondents said their choices are influenced by positive reviews, and 86 percent said their choices are influenced by negative reviews.

Here are four reasons why:

1. Customers tend to believe online reviews. According to the 2013 Local Consumer Review Survey by BrightLocal, 79 percent of respondents trust online reviews as much as personal recommendations, up from 72 percent the previous year.

“Our No. 1 method for gaining new members is through referrals,” says Emily Williamson, marketing coordinator at Rainier Health & Fitness, a neighborhood gym in Seattle. It’s common for individuals to decide to walk through the gym’s doors based on what they read online. “We have great reviews both on our Yelp page and Facebook page,” she says.

2. An online presence can generate revenue. Small businesses with a free business owner’s account saw an average of $8,000 in annual revenue from Yelp, according to a study by the Boston Consulting Group, a leading adviser on business strategy.

“Certain industries have a greater likelihood of receiving reviews because of the nature of their business,” notes Jayme Pretzloff, marketing director for Wixon Jewelers in Minneapolis. “For instance, restaurants will receive tons of reviews without prompting their patrons to share their experiences online because it is very natural in a consumer’s mind to leave such reviews.”

Various categories, including home, automotive, and local services, saw even higher returns when advertising on Yelp, the BCG study noted.

3. Negative reviews can hurt business. “Social sharing platforms now give the unhappy customer a vast array of publishing and sharing power. They can rant and rave from the biggest soapbox imaginable for the entire world to hear,” Pretzloff says.

In addition, if businesses don’t respond quickly to negative feedback or concerns, customers may turn away. According to a study [PDF] by Oracle, 50 percent of consumers give a company only one week to reply before they stop doing business with it.

4. Solid reviews can motivate employees. Wixon Jewelers tries to respond to each review it receives as a way to thank clients for sharing their experiences. In these responses, Pretzloff tells customers their sentiments will be passed along to team members or the employee who assisted them.

“This is a great way to boost company morale, reward employees, and show clients that you value their opinion,” he says.

Rachel Hartman is a writer who frequently covers topics related to small businesses. Her work has appeared in The Costco Connection, Wells Fargo Conversations, Pizza Today, Bankrate.com, InsuranceQuotes.com, CreditCardGuide.com, and many other outlets.

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