As a business owner, you instinctively know that customer feedback has an impact on your bottom line. The real question is to what degree these testimonials are affecting profit and if it’s severe enough to warrant your attention. Will that one negative review on Yelp really cost you any customers? Do positive comments do anything to actually drive up sales and demand? With so much idle chit-chat online, it can be difficult to know what requires your attention and what can be ignored. To help provide some clarity, let’s explore how customer chatter can affect your bottom line. We’ll tackle the good, the bad, and the not-so-ugly.
What do the numbers say?
The rise of review sites and an increase in internet usage together have transformed the way consumers interact with each other and with businesses. According to one BrightLocal survey, 93% of consumers use reviews to determine whether a local company is good or bad. When comparing older and younger cohorts, it’s clear how this attitude has solidified over time. While only 41% of consumers aged 55 and older leave online reviews, this number nearly doubles to 80% for those between 18 and 34. No matter how you slice it, the numbers certainly suggest that customer feedback is worth your attention.
How does online chatter benefit your bottom line?
Improved search engine ranking.
One of the surprising advantages of customer feedback is its positive impact on your company’s search engine ranking. Google decides where to list your website for related searches depending on a variety of factors. Every time your business name is mentioned online by a customer, your site gains a little more credibility in the eyes of the ranking algorithm. More feedback leads to a higher ranking which directly correlates to more leads and a steadier bottom line.
An increase in demand.
A revealing study from the Harvard School of Business found that restaurants gained a 5-9% boost in revenue after their Yelp ratings increase by one star. This relationship between positive customer feedback and increased demand was echoed in a similar analysis in the hotel industry. According to the Boston University study, hotels with a one-star higher rating across established review sites saw a 25% higher demand even with a 9% increase in prices.
How can customer reviews hurt your bottom line?
A decrease in brand loyalty.
Much to the dismay of business owners, customer feedback isn’t always positive. Clients won’t be satisfied 100% of the time, and companies will make the occasional mistake. While some negative feedback here and there is no issue, problems start to arise when these bad comments become more apparent and commonplace. In fact, 42% of customers say that negative reviews are enough to make them consider using another company. A major drop like that in your clientele base would have a considerable impact on profits.
Damaged reputation.
A decrease in sales isn’t the only way customer chatter can affect your bottom line. Companies that suffer from a poor reputation also deal with employment issues. A CareerBuilder survey found that 71% of workers wouldn’t apply to a business with negative press. This leads to increased hiring costs which end up eating away at your bottom line from the other side. You don’t have to make front-page news to suffer a damaged reputation either. The right number of negative reviews has the same effect.
Can you do anything about it?
As eye-opening as this information may be, it doesn’t seem very useful to owners who feel like this online chatter is out of their control. This is a common misconception that leaves many businesses vulnerable to the unpredictable nature of online discussion. To avoid being a sitting duck, companies need to proactively manage feedback to improve their online image and steer clear of avoidable damage. When you’re present in the discussion, you have greater sway over the tone and direction it takes.
If you’re finding it difficult to establish any solid footing in the quagmire of current online review sites, consider using hapigood for a simpler and more constructive solution. hapigood takes the struggle and frustration out of managing customer feedback by providing businesses with a dedicated place to organize and oversee all of this content.