The enormous influence of online reviews
Consumers are increasingly relying on online reviews to make decisions about where to shop, eat, and do business
Consumers are increasingly relying on online reviews to make decisions about where to shop, eat, and do business. Here's everything you need to know:
How important are online reviews?For small businesses in particular, they can mean the difference between failure and success. Any small business owner will tell you that social review sites such as Yelp, TripAdvisor, and Angie's List can be invaluable for attracting new customers. In a 2017 survey, 97 percent of consumers said they looked at online sites for information on local businesses, according to consulting firm BrightLocal, and 85 percent said they trust online reviews as much as personal recommendations. Because positive reviews have such a big impact on consumers' decisions, they can help smaller shops compete with their much bigger rivals, despite vastly different advertising and marketing budgets. Reviews "level the playing field between chains and independent businesses," said Brett Hollenbeck, an assistant professor at the UCLA Anderson School of Management.
Why are reviews so influential?Consumers want to know whether they can trust a business before they shop, and they want to be able to compare services and products. Think about your own buying habits. When was the last time you tried a new restaurant or bought a new pair of pants or a TV online without looking at the reviews first? These ratings are also more visible than ever before; a Google search for "plumber near me" returns star-rated results under a map, so reviews are front and center before consumers even click. A slew of positive reviews can be a springboard for success. Consumers are likely to spend 31 percent more at businesses with excellent reviews, according to BrightLocal. Even a one-star bump in ratings can add 5 to 9 percent of revenue to a small business' books. Conversely, bad reviews can deter would-be customers and damage a brand. A recent survey found that 22 percent of respondents would not spend money on a business after reading a single negative review. After three bad reviews, the number jumps to 59 percent.
How should businesses respond?Experts say they should embrace reviews, good or bad. "The biggest fear is not a positive or negative review; it's no review," said Ken McGarrie, of the consulting firm Korgen Hospitality. In fact, businesses can improve their image by engaging with reviewers — thanking those who left positive comments and apologizing and working with those who posted complaints. "Every business gets negative reviews. Yours will, too," said Valerie Vallancourt of Outsell, a marketing platform for the automotive industry. "Whether they affect future buyers' decisions is entirely based on how you respond." In one survey, 78 percent of online reviewers said that seeing a business respond to reviews made them trust that business more.
Is it possible to encourage positive feedback?Consumers are more likely to take the time to complain about a bad experience than they are to praise a good one. But small nudges can help. If you are a small business owner, inviting customers to leave "feedback," as opposed to a review, can be an effective strategy. And don't wait too long; customers are more likely to give you their opinion online right after a sale or visit. You can also follow up with an email asking for a review and noting how important feedback is to the services you provide.
Are fake reviews a problem?Yes. Some businesses try to cheat by buying or posting fake reviews — whether positive ones for themselves or negative ones for competitors. The big forums, including Yelp and Amazon, have systems that try to flag and block such fraudulent posts, as well as ones that highlight when reviews come from verified customers. Search consultant Jason Brown runs Review Fraud, a website dedicated to reporting businesses that buy fake reviews to the Federal Trade Commission. "It's about preventing people from getting taken advantage of," he said. Meanwhile, small business owners who suspect reviews are fake can flag them for the forums to deal with. But they might also opt to treat them as though they were real. "If a real customer posts a negative review of an unhappy experience with your business, and you incorrectly accuse the reviewer of being fraudulent, the hit to your company's reputation will go from bad to much, much worse," said John Swanciger, CEO of online small business resource Manta.
An end to 'gag' clausesIn 2014, a hotel in upstate New York went viral for all the wrong reasons. It had a stated policy of charging couples who booked weddings at the venue $500 for any negative reviews left by their guests. When the hotel tried to enforce the policy, more than 3,000 1-star reviews poured in from all over the country. That was an extreme response, but such "gag" clauses, buried in vacation-home contracts and other user agreements, were becoming increasingly common — until Congress stepped in. In December 2016, lawmakers passed the Consumer Review Fairness Act, which blocks businesses from inserting sweeping language into agreements that punishes consumers or threatens them with legal action for leaving a negative online review.