3 Stats Showing the Influence of Online Reviews

Until recent years, there was a general discussion on what the actual impact of online reviews were for converting potential customers into paying customers.

Some businesses thought positive online reviews were worth pursuing, sometimes even budgeting some marketing funds toward review gathering activities. Other businesses ignored the entire online review discussion thinking either consumers didn’t trust or use reviews, or other factors drove new customer decisions to become customers.  

In fact, consumers not only want to see reviews on your products and services, but they also look for nitty-gritty details in your customer reviews, according to research published by Fan & Fuel. Consumers, your prospects, are interested in learning about problems and experiences customers have had the research says. Further, prospective customers are interested in how you have responded to complaints, whether your product lived up to claims and the overall performance of your company.

According to their data, consider the following:

  • 97% of participants said customer reviews factor into their buying decisions
  • 92% of consumers hesitate to make a purchase when there are no customer reviews
  • 94% read reviews when available

Consumers Trust Online Reviews more than Ever

The acceptance of reviews is significant. To most people involved in a purchase decision, reviews are very important. The question is how do they influence purchasing decisions?

Consider the following before dismissing the process of review development:

  1. 88% trust online reviews as much as they do on personal recommendations.

Word-of-mouth has historically been a critical consideration when it comes to the credibility of a business. Now, the widespread accessibility of the internet makes online reviews as credible as a personal recommendation from someone you know. The reality is the number of online reviews coupled with the variety of comments make reviews even more useful to the buying decision. The significant factor to remember is consumers trust an authentic review with high-quality information. If a review seems scripted or if it is paid for, it will appear spammy and will likely have an opposite effect, turning prospects off.

  1. Online reviews produce an 18% Increase in sales (on average)

Consumers are more likely to purchase from a company with reviews than one with none. A website Displaying reviews will provide potential customers with more confidence in their purchasing decisions. A variety of positive comments and insights reduces doubts. Less doubts equate to a higher conversion rate. Additionally, positive reviews strengthen your brand credibility and implies reliability for consumers. Trusting your company, the brand, the product and the services results in more sales. Your conversion rates will increase from a combination of repeat sales, Referral sales and often a larger average order size. Trust does a lot – online reviews build conversions and repeat sales.

  1. 86% of buyer hesitate to do business with a company if it has a disproportionate number of negative online reviews.

Unfavorable online reviews can reflect negatively on your business relative to your product or service’s quality and reliability. But, keep in mind, the complete lack of negative reviews on a product or service page can call its credibility into question as well. All positive reviews may make the entire page is inauthentic. However, a negative review or two can confirm you are a real business. After all, no one is perfect all the time. Answering negative reviews can show commitment and proper concern for best possible outcomes.

Looking forward, consider the less than positive reviews as an opportunity to show your customer service skills. Resolving issues in negative customer reviews can have a very positive effect on potential customers. Going the extra mile to “fix” the problem shows you care about your customers. However, leaving them unanswered can hurt your reputation and your relationship with your customers.

Online Reviews Empower Consumers & Power Word Of Mouth Marketing

Online reviews are an important factor for many consumers researching or shopping online. Reviews help build trust between the consumer and the business. Further, larger volumes of reviews coupled with positive, detailed comments will help build immediate trust. Trust will convert casual online visitors to paying customers.

Beyond Yelp Reviews

The example of Yelp reviews helps business owners understand how positive feedback, or more Stars, can impact the bottom line. The challenge is having the discipline needed to encourage satisfied customers to provide reviews.

A business’s online reputation relies customers first getting online, finding your listing and finally publishing a review well after the actual service. The reality is, no matter how well intentioned, most customers don’t do it.

Despite this reality. it is important for businesses to start capturing reviews as part of your online reputation management plan. Consider the following –

  • 71% of consumers seek out reviews for every/almost every purchase
  • 70% of customers trust businesses with 6 to 10 reviews
  • 72% of consumers say they trust good online reviews
  • Anonymous posters are trusted as much as personal recommendations

Online Reputation Management Relies On Directory and Citation Sites

Positive online reviews is needed now more than ever. Further, the minimum of 6 – 10 reviews should be recent reviews. Online reviews from a year ago will have a limited impact. 

Reputation management is a business practice successful businesses will master to enhance their competitiveness. They will be disciplined and consistent to ensure their efforts will create flow of newer, more relevant reviews. People will see the dates of the reviews and so will search engines.

Reputation Management Google Reviews

Online Reputation Management – Good New & Bad News

Reputation management, as we know it today, is basically Business 101. The goal is to create satisfied customers and have them voluntarily share their good experience with other consumers.

Without a doubt – the more things change the more they stay the same!

Now think of this – prior to the internet, studies revealed satisfied customers shared their experience with 3 potential customers on average. Compare that with an unsatisfied customer telling 19 people about their “bad experience” – real or imagined. The bottom line is that translates into needing six satisfied customers to counteract one negative customer.

In short, this situation illustrates the essence of the online reputation management challenge. Each business must have a strategy to collect positive reviews. Positive reviews help CLOSE business and minimize negative Reviews. After all, if you have 15 or 20 positive Reviews for each negative one, it’s obvious a negative experience is not a normal experience.

The Bad News and Good News About Online Reputation Management

Online feedback on Google, Yelp and other review sites provide a platform for positive and negative reviews. The bad news is an unsatisfied customer will be “heard” by more than 19 people. The good news is the positive reviews are above and below the negative review. The more positive reviews the better. It’s better than equal time.

The VERY GOOD NEWS is most companies have many, many more positive customers compared to negative, unsatisfied customers. Additional good news is with consistent effort, businesses can encourage satisfied customers to write reviews and overwhelm any negative reviews – pushing the negative review back many positions or even pages. It’s really that simple.

Reputation Management As A Sales And Marketing Tool

Reputation management is defined by positive reviews on online directories and social media. An exact relationship between reviews and sales cannot be tracked completely, however, trends are emerging.

Michael Luca, an assistant professor in the Negotiation, Organizations and Markets Unit at Harvard Business School, has done studies trying to further define the impact of reviews on sales. Luca used Yelp to attempt to track reviews and their relationship/impact on restaurants in the Seattle, WA area. In short, Luca’s study provided a few takeaways from which most local marketers can learn. Including –

  • A one-star increase in Yelp reviews leads to up to a 9 percent increase in revenue.
  • This increase was experienced by independent restaurants – the ratings did not affect restaurants with chain affiliation.
  • In fact, in the study area, chain restaurants have declined in market share as the penetration of Yelp reviews has increased. This suggests online consumer reviews substitute for more traditional forms of reputation management (i.e. newspaper, radio and television).
  • Consumers do not use all available information and are more responsive to more visible quality changes.
  • Consumers respond more strongly when a rating contains more information. Consumer response to a restaurant’s average rating is affected by the number of reviews and whether the reviewers are certified as “elite” by Yelp. Consumer response is unaffected by the size of the reviewers’ Yelp friends network.

Beyond Yelp Reviews

The example of Yelp reviews helps business owners understand how positive feedback, or more Stars, can impact the bottom line. The challenge is having the discipline needed to encourage satisfied customers to provide reviews.

A business’s online reputation relies customers first getting online, finding your listing and finally publishing a review well after the actual service. The reality is, no matter how well intentioned, most customers don’t do it.

Despite this reality. it is important for businesses to start capturing reviews as part of your online reputation management plan. Consider the following –

  • 71% of consumers seek out reviews for every/almost every purchase
  • 70% of customers trust businesses with 6 to 10 reviews
  • 72% of consumers say they trust good online reviews
  • Anonymous posters are trusted as much as personal recommendations

Online Reputation Management Relies On Directory and Citation Sites

Positive online reviews is needed now more than ever. Further, the minimum of 6 – 10 reviews should be recent reviews. Online reviews from a year ago will have a limited impact. 

Reputation management is a business practice successful businesses will master to enhance their competitiveness. They will be disciplined and consistent to ensure their efforts will create flow of newer, more relevant reviews. People will see the dates of the reviews and so will search engines.

Harvard Business Article
Yelp Elite Definition
Building A Reputation Management Program

Online Reviews – How Many Stars Are Required?

Consumers using online reviews to help make purchase decisions has been a growing trend for several years.

In fact, according to multiple studies, online reviews are now the single biggest influence on consumer purchases.

Consider this – in a study done by the Local Search Association (LSA), a not-for-profit industry association of media companies, agencies and technology providers who help businesses market to local consumers, the importance of the Stars associated with online reviews is significant.

This is not a big surprise. However, what is an acceptable number of stars if you are a consumer? What do businesses think is the needed number of stars in an online review?

Consumer Perspective on Star Ratings with Online Reviews?

Consumers, when asked, “What is the minimum number of stars you require before you’ll consider a business?”, gave multiple answers. For example, the survey found:

  • 68% wanted 3.5 stars on average. The higher the average, the better.
  • 52% said at least 4 stars were required to merit consideration in a purchase. (Figure 11)
  • 48%, just under half, said they were willing to consider a business without any reviews.
  • Accordingly, 52% would disqualify a business that didn’t have “enough stars.”

Having no online reviews equate to surrendering over half of the buying public to the competition. And having poor reviews, under 3.5 Stars on average, means losing 32% of the people in the purchasing mode.

Online reviews, and the number of Stars associated with the review, influence buying behavior. The truth is, without a minimum number of Stars (3.5 as noted above), many consumers will not consider your business as an option.

Business Perspective On Star Ratings With Online Reviews

Business people were very perceptive when asked about Star rating requirements by consumers making buying decisions. Consider the following:   

  • 40% speculated that consumers wanted 4-Star ratings or above an average in online reviews.
  • 41% thought between 3 and 3.5 stars was enough (Figure 12).

Small Businesses Ignoring 52% of their Potential Market

Half of all small businesses have not yet embraced the trend of consumers relying on reviews. In the LSA study noted earlier, 28% of small businesses do not ask for reviews and 22% say they have none! This lack of attention will put this 50% of businesses in a difficult competitive position. Remember, only 48% of consumers (as noted above) were willing to consider businesses without online reviews. These businesses, whether they know it or not, are ignoring 52% of the buying public. Not a business model most businesses would knowingly choose.

In short, about 50% of small businesses are ignoring today’s “Word of Mouth” advertising, one of their most impactful sales strategies, by not having an online review strategy in place.