Reviews aren’t just valuable to consumers, they have both monetary and operational value to business owners as well. There are basically two ways to classify why reviews are important to your business: what value reviews can add and what value reviews can take away.
Reviews are a key player in local SEO
The online landscape is basically prominent in every industry now – which means that your competitors are online and they are also trying to use the online landscape to draw customers in. Local customers will predominantly find you in one or both of two ways: through a search on Google or on a social media platform like Facebook. These platforms all have their own algorithms for indexing and ordering content, but they all value unique content and traffic. So reviews help feed the cycle that makes these platforms place you above your competitors. Simply put; new reviews equal fresh content and which results in more traffic which results in more visibility and thus more new business.
Reviews are important for business development
People think that the value in reviews lies with the 5-star reviews, but this couldn’t be more untrue. While it is true that 5-star reviews can increase your businesses revenue, negative reviews can actually carry some positive value. Any business owner who is concerned with growth can benefit greatly from the feedback that reviews provide. Keeping an eye on negative feedback allows you to crowdsource business development ideas from the people who matter most – your customers. Real, legitimate reviews are a one stop shop for customer retention, gauging customer satisfaction and building better relationships through showing you care.
Reviews heavily influence revenue
We all know that a negative review costs money – in fact there is a solid monetary value for a negative review. Businesses are at risk of losing 22% of consumers when they have one negative review. If there are three or more negative reviews, the chance of losing customers jumps to 59.2%. Four or more negative reviews can turn as much as 70% of customers away. Reviews can either make you money or make you lose money. But the takeaway here is that most people aren’t aware of how impactful reviews can be until they are having a negative impact on their own business.
Reviews = brand equity
Want to be the best in your field? Well, no matter how great your product or service is, or how much your existing customers trust your brand – if other potential customers can’t see this reflected online – then it is wasted. Reviews build credibility as consumers exclusively turn to review sites to gain a better understanding of a business. Positive reviews will not only cement you as a leader in your field but also strengthen the overall image of trustworthiness in the eyes of buyers as judged by the people they trust, their peers.
Brand equity is about perceived value and not so surprisingly, people who read positive reviews are likely to spend more. According to research from Bazaarvoice, customers who read consumer reviews have a 6% higher average spend than those who did not read reviews. So you’d better hope the reviews they read paint your business in a more positive light than negative.
On the flip side, the psychological effects of reviews as social proof not only play a major role in how many sales a business makes but also how much they can get away with charging people. A premium reputation means a premium price. This is because your services are perceived as being of higher quality – and if your reviews are real – then it is true.
Reviews are one of the most effective forms of advertising
No matter what you do for advertising, people will always listen to what is said about you more than what is said by you.
Advertising is everywhere. Every time you turn on the TV, when you’re driving on the highway, every time you open your emails and every time you scroll through social media. Marketing consultant Frank W Baker stipulated that we see between 300 and 3000 ads every single day. Another study by Walker-Smith at Yankelovich Marketing Research Firm says we’ve gone from being exposed to about 500 subtle ads a day back in the 1970’s to as many as 5,000 a day today.
So, it’s no surprise that studies today also show that 83% of customers say they don’t trust advertising. The traditional channels to reach customers aren’t as influential as they used to be, people pay attention to customer’s recommendations online more than ever now with 84% of people also claiming that they trust online reviews as much as personal recommendations.
If your Business development plan doesn’t include harnessing the power of reviews or being proactive with your online reputation – then you’re missing an integral piece of the puzzle.