Increase Your Revenue 5-10% by Adding 1 Star in an Online Review: Harvard Study Confirms
Think about the last time you booked a room for a vacation, purchased an application for you or your business or hired a professional service. What do these experiences have in common? Chances are you sought out referrals and verified the reputation of the service provider before completing your purchases.
Studies have shown that before even visiting a business, 90% of consumers will check the reputation of that business. Consumers use generic review providers like Google and Facebook, or they utilise industry-specific platforms like TripAdvisor and GetApp.
You may be doing a fantastic job creating leads and opportunities for your business. However, an increasing number of those prospects are likely using the internet to review your reputation, and if your online reviews don’t meet the standard of your future client, your competitor will end up with their business.
Increasing your online reputation results in increasing your revenue
Professor Michael Luca from Harvard Business School published a study which demonstrated that a 1-star increase in ratings equals a 5-9% increase in revenue. By comparing the historical data from Yelp and the Washington State Department of Revenue, he discovered the link between consumer reviews and consumer purchases.
Surprisingly, he was also able to determine that consumers bought more from businesses that had a greater number of reviews rather than a small number of impeccable reviews. In other words, his study showed that when consumers look at a business reputation online, they care more about how many reviews a business has rather than whether those reviews are by “elite” or certified customers with large networks. The more reviews your business has, the more credible you appear.
Countless other studies have proved the same thing over and over again – consumers trust online reviews and those reviews heavily influence their purchasing decisions. In fact, 88% of consumers trust online reviews as much as a personal recommendation. A vast majority, 72% of consumers, will make purchasing decisions ONLY after they’ve read a positive review. If you can have both a high volume and a good score, you become the defacto choice for many consumers.
“Profit in business comes from repeat customers, customers that boast about your project or service, and that bring friends with them.”
W. Edwards Deming
Online reputation management should be a rigorous component of your Marketing Strategy. Your company should follow the following steps to manage its online reputation proactively:
- Set systems in place that automatically monitor all review sites relevant to your industry, and alert you when new reviews are published, which will allow you to engage as soon as possible with reviewers.
- Thank positive reviewers and reinforce some key points when appropriate.
- Negative reviews should also be acknowledged. You should try to thank the reviewer for the feedback when constructive, and try to reach out to him/her to find a way to mitigate this negative experience whenever possible. Some reviewers will delete their negative reviews once they realise you have been sincere and tried to find a positive resolution.
- Monitor the web to find mentions of your brand and products. Opinions and feedback are not only on structured review sites, but on social media accounts, blogs, and other public boards. You also need a tool to crawl the web for these mentions.
- Generate positive reviews. If you are looking for ways to learn from your clients and build your on-line reputation, you should embed continuous customer feedback across multiple touch points of your client experience. Provide them with a way to give feedback within your email signature and online invoices. When you receive positive feedback from your clients, you should have an easy and convenient route for them to share this review on public sites like Google, Facebook or whatever industry-specific site applies best to you.
- As you are collecting this information, look for trends. How is your performance improving over time? Is it any different in your various locations?
Akuting offers a free tool that will provide you with a clear comparison of your performance vs. your competitors’ performance.