It is very rare today that we meet a local business that doesn’t care for their online reputation. In fact, about 100% of the businesses we are in touch with are up-to-date on their latest reviews in Google (My Business), Facebook, Yelp, and sometimes, the Better Business Bureau. This concern is supported by all kinds of research data on reviews and consumer purchase decisions. But are local business good at handling bad reviews? Soliciting new reviews? Making their reviews as efficient as possible? That may be another deal.
Consumer reviews: Big deal?
About 100% of the business owners we work with keep themselves up-to-date on consumer reviews published on their business in Google and Facebook. The percentage is a bit lower for Yelp, with a consensual view that Yelpers are more critical in their reviews than Facebook or Google users. As far back as 2007, a study by TMP Directional Marketing showed that:
82% of Local Searchers follow up offline via an in-store visit, phone call, or purchase, emphasizing the importance for marketers to integrate their on- and offline information. Of these, 61% made purchases.
More recently (June 2017), the Spiegel Research Center at Northwestern University published a study on the impact of online reviews on sales. Among the data produced by their research:
With nearly 95% of shoppers reading online reviews before making a purchase, reviews have transformed the way consumers make purchase decisions.
According to BIA/Kelsey, an ongoing survey tracking consumer behavior shows in 2019 that 97% of all consumers now use online media to research a product or service in their local area. Although “online media” (search engines, yellow pages, vertical sites, comparison shopping sites) is not just reviews, there is ample opportunity for people to check out your reputation when they find your business in Google or Facebook. Likewise, in their annual 2019 consumer survey, Bright Local found that 82% of consumers read local online reviews for local businesses.
To our knowledge, all consumer research studies published in the last 4 years show online reviews are a determining factor in consumers’ purchase decision. Bottom line: Yes, consumers do cre about reading what their peers say about you. So you better get those reviews!
Star power: What should you aim at?
Some of the business owners we work with are extremely concerned about their online reputation and will go to great lengths to fix a service or product issue when they discover a review written by a dissatisfied customer. Some others do not mind a few bad reviews in a sea of good ones. And a very small minority of business owners say they “feel they can’t do anything about their reviews”. In their 2018 research study on local business online reputation, Bright Local showed that the average local business has a 4.4 star-rating in Google. The study also finds that Google gives prominence in its local search results to companies with higher ratings.
We find an illustration of this data in a sampling of local plumbers and HVAC contractors in Google’s local search results:
These two screenshots show that on both searches, the top 3 local results are highly rated by consumers, with the lowest rating shown by Google being 4.6 stars. From all accounts, Google prefers to display highly reputable businesses in its top 3 local search results. One way to set the bar for your business in terms of star-rating is to type your main keywords in Google, and look at the star-ratings of the top 3 competitors offered in the top local search results by the search engine. That is a crude indicator, but it seems to be very valid and there is nothing wrong with aiming for the stars anyway. Bottom line: There is more than just a customer angle to getting reviews. Google will also give you props, leading more customers to you.
Bad reviews: counter-intuitively necessary?
In 2015, the Spiegel Digital and Database Research Center at Northwestern University co-published a research paper with PowerReviews showing that in fact, consumers pay attention to bad reviews. The data confirmed prior research published in 2014 by PowerReviews, and showing that 82% of shoppers specifically seek out negative reviews. Essentially, consumers read bad reviews to gain a better understanding of the product they are considering buying. The same research paper referenced here showed that in 2015, consumers considered the sweet spot to make a purchase decision was 4.2 stars to 4.5 stars. This seems completely counter-intuitive, as people would think that a perfect 5-Star score would be more desirable. It seems that consumers consider that a perfect score is “too good to be true”. This data is corroborated by another research study published in 2019 by Womply Research, which shows that businesses with a 4.0 to 4.5 rating were earning 28% more in annual revenue that the rest of the statistical sample (over 200,000 local businesses in consumer-facing categories). The following graph shows that the sweet spot in terms of revenues is a rating comprised between 3.5 and 4.5.
The data is counter-intuitive, but it reflects the fact that consumers are aware that reviews can be manipulated by businesses, and that a deal too good to be true is indeed probably… too good to be true. It may also reflect a tendancy in human beings to try to find confirmation in our beliefs (confirmation bias). Since reviews are most often read after the reading the description of the product, consumers form a first opinion about the product/service before they read its reviews. Peer reviews then help them confirm this opinion (“I hope to read good reviews which confirm me in my pre-selecting the product for purchase”), rather than challenging it (“I want to see how wrong I am in pre-selecting this product for purchase”). Bad reviews may be looked at as “not applying to me” or “disgruntled customer” and partly discarded. Naturally, too many bad reviews in ratio to the number of great reviews will change their initial perception of the product/service and cause them to shun it. We’ll also note that the sweet spot vary from industry to industry. There is no direct comparison possible between a plumber’s rating and a hotel’s rating or a hairdresser’s rating. Bottom line: a solid rating (compared with your local competition) is more credible than an extremely high (and somewhat improbable) rating. This sucks for us, as 100% of our clients have given us 5 Stars! We definitely need to call back those who hate us, and ask them to drop a really bad review (to help us make more money).
Reputation management starts with responding to reviews
The same Womply research paper reveals a mind-blowing finding: consumer spend up to 49% more money with businesses that reply to their reviews! Likewise, businesses that reply to more than 25% of their reviews earn 35% more revenue than average. You would expect most businesses to be pro-active in replying to their reviews: a “Thank you!” note to great reviews, and “I’m so sorry, what can we do?” to bad reviews. Not at all. Womply shows that 75% of businesses DON’T respond to ANY of their reviews! And among those businesses that actually reply to reviews, the average response ratio is about 21% (which means that even those who respond, don’t even respond to 80% of their reviews).
Correlation is not causation, and so the figures above don’t say that it is BECAUSE a business does not respond to their reviews that their revenues will automatically be lower than those of their competitors. But if you consult your own experience, you will certainly find that there is a certain “feel-good factor” in seeing a business respond nicely, politely and in a personable manner to the reviews people wrote about them. These replies portray a powerful “I care for you” story. If this business cares enough to respond to reviews, good and bad, they will probably care about me when I buy from them. Bottom line: Show you care, respond to your reviews.
What can we do to help?
Vanguard Web Design Tucson offers a variety of services to help you increase your reviews, increase the quality of your reviews, and handle your reviews, good and bad.
- Increasing your number of reviews to be even more credible: We put in place a system that enables you to give a chance to all customers to review your business after transacting with you.
- Increasing your star rating to beat or keep up with your competitors: Is your current rating heartbreaking? It’s faster to get a bad review than a good one. People like to vent when they are not happy. We put in place a program that helps you “bump your rating” quickly and in a legit way.
- Pro-actively handling your reviews to increase your revenues: We implement a program to answer your reviews for you, as soon as they get published. We also help handling the bad reviews when they come.
Click here to schedule a call with us for a strategy meeting about your reviews. Handling your online reputation the right way is absolutely worth your time, both in terms of revenues and in terms of asset value and goodwill.