A recent study in the US analysed the impact of reviews on revenue for small businesses and the results are extremely telling. Marketing and CRM software company, Womply, produced a research piece entitled “How online reviews impact small business revenue”, by examining the online reviews, and transaction data of over 200,000 small businesses across varied sectors, such as retail, mechanics, salons, restaurants, motels, and trades throughout the United States. The study revealed a number of key points that directly correlated to more revenue, depending on the particular actions of small businesses.
“Businesses that claim free listings on multiple review sites make 36% more revenue”
Small businesses that commit to reviews on a number of sites increase their revenue by over a third. Not surprisingly, businesses that do not make themselves visible on any review sites whatsoever, earn 24% less than average. It really is a case of the value in being seen as opposed to being invisible. The study established an average revenue for businesses of $US 301,000. Depending on how many review sites a business claimed (or didn’t), the revenue would then rise, or drop, in relation to the average.
(Source: “How online reviews impact small business revenue,” www.womply.com)
“People spend up to 58% more money at businesses that reply to reviews”
Replying to customer reviews is always a great idea – it illustrates the tangible appreciation a business owner has for the time and effort that a reviewer has made in publicising their experience and opinions about a business. But, replying to reviews also has a marked affect on revenue. While the study ascertained that 75% of businesses do not respond to reviews, of those who replied to only 20% of reviews posted, revenue increased 33% more than average. Businesses that do not reply see a decrease of 9%.
“When you consider the minimal amount of effort that goes into responding to a review and the sizable influence it then has on increasing revenue, then it isn’t difficult to see the benefit.”
The act of responding signals to consumers that the business is active and engaged, and more likely to be seen as one that takes a far greater interest in customer care and attention. When you consider the minimal amount of effort that goes into responding to a review and the sizable influence it then has on increasing revenue, then it isn’t difficult to see the benefit.
“How much does overall star rating impact revenue?”
Here’s where things get really interesting. Too many businesses get caught up in a 5 star rating, thinking that consumers are looking only for businesses that have an almost perfect reputation. The problem? No reputation can be perfect, human nature and experience means that perfection is not always possible. The study says that in terms of revenue, the greatest influence on increased revenue is 3.5-4.5 stars and that businesses with a 4 to 4.5 star rating earn 28% more in annual revenue.
(Source: “How online reviews impact small business revenue,” www.womply.com)
“Fresh vs. stale reviews: impact on sales”
Recent reviews are vital. They affirm the currency of a vibrant, visible and ongoing business. Consumers are used to the immediacy and currency of the internet and they want to believe and trust that what they are seeing in searches is as relevant and recent as possible. Old reviews raise red flags, even if they are good. And no business wants a negative perception from the get go, especially when it comes to reviews and more importantly when it is very simple to remedy – a commitment to accruing recent feedback.
The study categorised a fresh review as one posted in the past 90 days and revealed that the average number of reviews posted for a business within that time was nine. Currency is obviously a huge generator for customer engagement when you consider the following results:
- Businesses with no fresh reviews earn 13% less than average
- Businesses with more than 9 fresh reviews earn 52% more than average
- Businesses with 25 or more fresh reviews earn 108% more than average
A steady stream of recent or ‘fresh’ reviews then means much more than a 5 Star rating and generates a sizable amount of revenue as opposed to a review profile that may appear healthy initially, but the reviews themselves are considered ‘stale’ by consumers.
While studies on reviews and consumer behaviour have overwhelpinly cemented the importance of online reviews for a business, this study puts into focus the actual monetary value of implementing small changes that establish a healthy review profile online. When you consider the minimal investment in time, effort and money it takes to do this, it really is a no brainer for every sole trader and small business.
