There is no question that internet-based components of business are dominating performance across a wide swath of industries. Millennials are now the largest consumer base, and they put a lot of faith in their technology. As such, it’s important to understand the specific nature of how online business reviews affect decision making and business models.
We’ll gloss over the irony of using customer surveys to determine how online surveys and reviews impact customer decisions. Instead, let’s focus on the numbers. Jump starting the conversation, 90 percent of respondents admit that their buying decisions are influenced by online reviews. More specifically, 88 percent trust an online review just as much as they would a personal recommendation from a friend. Adding to the significance is that 66 percent of customers find even local businesses online before setting foot in a store or office.
It’s clear that online reviews are being used, but how much do they impact an individual’s choice? As much as 80 percent of shoppers say they would try a business as long as it has four stars (out of five) or more on a trusted site (like Yelp). Conversely, only 14 percent would try a business that has only three stars. Keep in mind that a three-star rating would still put a business in the top half among competitors.
Since online reviews hold so much sway over consumers, it’s no wonder that star ratings can have massive impact on revenue streams. For starters, 83 percent of business owners can correlate revenue growth with a one-star improvement on review sites. Let’s break this down. First, we’ll acknowledge that correlation does not imply causation. It is just as likely that the improved practices of these businesses that led to improved ratings were the root cause of revenue growth. Regardless, the star rating is a reliable indicator of revenue trends. Also, it’s worth noting that this statistic holds for all industries and refers to businesses that sell products, services or a combination of the two.
Following from that, 78 percent of businesses can correlate revenue drops with a single-star decrease. The loss or gain of a single star averages a nine-percent growth or loss in revenue per star.
Seeing the impact of online business reviews on the success of any business should make one thing abundantly clear. You need a proactive strategy that enables you to track and manage your star ratings. Doing so can give you opportunities to grow from criticism and to show excellent customer relations when you respond appropriately to negative feedback.