Introduction

Reviews offer a big payoff for local businesses.

Customers are willing to spend 31% more at a business with excellent reviews. And while word-of-mouth recommendations from friends and family are the strongest reputation builder for businesses, online reviews still have a powerful sway.

In fact, 88% of customers trust online reviews as much as personal recommendations.

In this guide, we’ll show you why prioritizing reviews matters and the impact of reviews—both positive and negative—on your business. You’ll learn:

The value of investing in review marketing and reputation management
How reviews impact your SEO and searchability online
Best practices for responding to negative and positive reviews

Why Online Reviews Matter

Online reviews play an important role in today’s customer journey. 97% of consumers report that they read reviews regularly before they choose to work with or purchase from a business.

online reviews

While online reviews are critical to a customer’s purchase decision, only 36% of small business owners invest in review marketing. Without actively requesting reviews from customers or following a strategy to respond to negative reviews, these businesses leave their online reputation to disgruntled customers and the occasional customer that is already accustomed to leaving a positive review. With this strategy, their true customer experience isn’t accurately reflected online.

But reviews do more than help future customers understand why they should visit your business. Reviews drive more action on the backend like pushing your business higher in search results, helping with brand recognition, and improving consumer trust in your brand.

Keep reading to learn why online reviews are critical for your business:

Improve Your Customer Experience

Reviews offer more than a path to new customers and a better representation of your customer experience online. Customer reviews provide real-time insight into how your customers feel about the experience they have with your business. They can help you understand what your business is doing right and what your business needs to fix.

responding to online reviews

Look for patterns and trends in the reviews customers post online and make an action plan to address those that come up the most often. If your business is spread out with multiple locations, reviews can help you determine which locations need more focus and support.

To improve the experience of requesting a review, consider using text. 90% of consumers prefer to communicate with businesses via text and 77% of consumers will leave a review if asked.

online review

Combine the review ask with the channel customers prefer and you’re likely to see a serious increase in reviews online.

text message review invite

Don’t forget to:

Include a link to the review site
Personalize your ask with the customer’s name
Send your review request right after a purchase or service visit

Get Found Online: SEO and Local SEO

Review quantity, velocity, and diversity all add strength to your business’s possibility to rank higher in search results.

One survey from Moz suggests that these factors make up ~10% of the total weight of the over 200+ ranking factors in Google’s search engine algorithm for local businesses. For local businesses, this information means that local SEO benefits can beat national chains. With consistent, authentic reviews, local businesses can rank higher.

For local searches, results are often ranked based on the relevance, distance, and prominence of your business to the search request. For relevance, it’s important that your Google Business Profile (GBP) and reviews are relevant to the search inquiry.

Keeping your GBP up-to-date with an accurate description of your business can help, but so can asking your customers to include specific keywords in their reviews. Distance can’t be adjusted (so be sure to always keep your address and business hours up-to-date).

local-seo-google-my-business-listings-example

And for prominence, reviews can help Google know how well-known your business is—a critical factor in ranking higher in results. With a higher quantity of reviews that focus on exactly what your business does, Google can see your business is relevant and well-known (and liked) in your community.

The top three to five Google search results get 75% of all the clicks. Don’t let your Google Business Profile go unclaimed or remain stagnant.

Keep your GBP up-to-date with pictures, an accurate description, updated business hours, and your phone number/text number. When you ask for Google reviews, ask your customers to explain what service or product they purchased from you to help with SEO.

Create a Customer Feedback Loop

Online reviews create a unique opportunity for customer feedback. Don’t wait to respond to negative reviews (or positive reviews—but we’ll get to that reasoning in a later section). Instead, respond as soon as possible.

Oftentimes, when disgruntled customers have resorted to an online review as a place to air their frustrations, it’s because other channels seemed blocked or ineffective. Follow up with each negative review, responding both publicly and individually to see how you can rectify the problem and make that customer happy.

If you notice patterns or trends in your customer feedback, implement those changes and reply with your action plans in your public reviews. Responding to reviews is nearly as important as getting a review in the first place.

90% of consumers that read reviews also read the responses from the business.

As you implement a plan to request reviews after each purchase or service visit, make sure to include a process to read through reviews and respond to those reviews online. Track your response times and try to get those responses down to 24 hours or less.

Grow Your Business

Because 95% of consumers read a review before making a purchase, reviews should be an imperative part of your business growth strategy. Customers are clear that reviews matter when it comes to finding your business (how far up you rank in online search results) and choosing your business (reviews help build trust and credibility for your business).

But most businesses fail to realize that reviews are often more critical to business growth than traditional marketing efforts. The truth? Research suggests that reviews are 7.4x more likely to be an important factor than traditional marketing. The reality is simple—consumers are reading reviews more than you might realize.

At least 23% of consumers have read an online review on the last day, 46% have read an online review in the last 3 days, and 65% have read an online review in the last week. And when customers find a business with higher reviews, 58% are more willing to travel farther just to visit that business, and 47% are willing to pay more for a service or product at that business.

online review

Don’t discount the importance of reviews. Implement a review process today—start requesting reviews from every customer to increase the quantity and the quality of reviews. Start with Google reviews and then expand your review strategy to the sites that make the most sense for your industry.

Understanding Online Review Ratings

To get a clear understanding of the ROI of online reviews, you have to understand online review ratings. From average star ratings to point systems, to using information from your customer survey scores, review ratings can impact what customers think about your business and the decisions they make to visit you or a competitor.

Review Star Ratings

Star ratings are most often referenced with Google reviews. These star ratings are presented on a scale of 1 – 5. Your average star rating is an average of all of your review ratings, from every reviewer who has posted a Google review of your business.

Your average star rating has a major impact on whether or not a consumer will move forward and click through to your website.

online reviews

For nearly 50% of consumers, an average star rating of less than 4 stars is automatically a pass. Higher average star ratings garner higher trust from future customers, so it’s important to improve your rating with a higher quantity of reviews.

Keep track of your average star rating and track progress as small as 0.01. When you start to focus your efforts on gathering reviews, you’ll see small changes to your average star rating.

Review Point-Systems

Review point-systems offer a faster way to collect customer feedback about their experience. Instead of asking for a full review, you can collect a customer review with a point-system.

This one-question survey asks customers to rate your business on a scale, most often rated from 1 – 10 (with 1 as the lowest score and 10 as the highest score).

Review point-systems are an effective way to collect quick customer feedback and publish your average score online. These metrics are a great option if you’re not having luck collecting traditional reviews or you want to post a quick, easy-to-read number on your site that proves your credibility with other customers.

Customer Survey Scores: NPS, CSAT, and More

Customer survey scores offer another unique path into the minds of customers. Your Net Promoter Score (NPS) is typically a metric that ranges from -100 to 100. It’s used to predict growth for your business, based on the loyalty of your current customers. NPS surveys ask customers to rate your business on a scale from 1 – 10 based on how likely they would be to recommend your business to a friend or family member.

NPS results are broken into three categories:

Promoters (scoring 9 – 10): Identifying loyal customers that will actively recruit new customers for your business
Passives (scoring 7 – 8): Identifying customers that could be persuaded one way or another on recommending you or a competitor
Detractors (scoring 0 – 6): Identifying customers that have had a poor experience with your business and are very unlikely to recommend your business to a potential customer

nps survey

A CSAT is a customer satisfaction score. This can be identified using a review point-system, an NPS survey, or a simple survey with a yes or no question asking customers if they would recommend your business. Oftentimes, businesses strive to keep their CSATs above 75%.

Your NPS results, CSATs, and other customer feedback can alert you to potential problems or positive reactions that your business will receive with a stronger focus on reviews. Take all of your findings and apply changes to your customer experience where necessary.

The Power of Positive Online Reviews

Reviews offer more for your business than an improvement to your online reputation. In this section, we’ll explore how reviews turn into revenue, keep your customers engaged with your business, promote repeat business, and help you build trust in the community.

Improve Customer Retention & Repeat Business

The cost of acquiring a new customer is higher than selling to an existing customer—but this isn’t a new finding.

Data shows that it can cost up to 5x as much to earn new business as it does to keep a current customer. And the probability of selling new products or services to an existing customer is at least 60 – 70% higher than it is when you sell to a new customer (which is only 5 – 20%).

With reviews, you can:

Leverage current customers to streamline acquisition costs for your business
Improve retention and repeat business by improving the customer experience

By asking sincerely for a review of your business, you’re showcasing that you care about the customer experience.

Respond to each review, thanking customers for taking the time to deliver real feedback. As you continue to build connections with your customers (through communication, in-person experiences, and review interactions), you’ll increase their trust in you, boost your chances for retention, and promote repeat business.

As you respond to reviews online, take the time to point out specific products or services that your customers are referencing in their reviews. Note features they might not have mentioned when you respond to their reviews, helping future customers see the full depth and benefits of your product or service.

Increase Revenue

Reviews account for more than creating first impressions and driving traffic to your website. Reviews turn into real revenue—they are proven to increase the amount spent by customers by 31%, allow businesses to raise their prices by 11% per one-point increase in average review rating, and improve the level of trust with 92% of consumers who specifically research your business.

online reviews

Don’t discount the value of a review management program as you make your marketing plans. Consider the real value that reviews bring to your business.

Consider asking your customers to write a review about a specific product or service that they purchased from your business. By asking them to mention the product or service by name, you can increase the likelihood that others looking for similar services/products will find your business online (i.e., SEO).

Gain Trust in the Community

Online reviews can help your local business gain trust in the community. At least 72% of consumers say that positive reviews increase their trust in a business and 70% of consumers consider online reviews more trustworthy than traditional advertising.

When customers take the time to post reviews about your business, they’re offering third-party insight and validation that your business is the right choice for future customers. And future customers need unbiased opinions to choose your business over a competitor.

You can’t expect your customers to respond to your review requests if you don’t gain their trust and loyalty in your customer experience. Improve your chances of a positive review by checking in with customers throughout their journey with your business.

Why You Shouldn’t Game Review Management

Posting fake reviews to boost your online reputation or overall star rating is not a path that will provide positive results for your business. Consumers are smart. And those that are reading reviews are looking for authenticity in each review that they read. Allowing fake reviews to be posted will jeopardize the trust and loyalty you’ve built with your current customer base and likely completely erase any opportunity with future customers.

54% of consumers say they would not buy a product if they believed fake reviews were posted for a business.

And when customers don’t see any negative reviews listed amongst the positive reviews for your business, they grow just as suspicious. 95% of consumers say they suspect censorship or faked reviews if they can’t find a bad review for a business. Resist the urge to delete or hide negative reviews.

Instead, follow the advice we’ve shared in this guide and reply to negative reviews with the intent to learn from your customers’ experiences and fix the problem.

If you’re gaming your review management right now, it’s time to stop. Go through your online reviews and delete those that have been posted inauthentically. Make a plan to move forward with only genuine, customer reviews, even if that means your star rating falls while you wait for more customers to post reviews.

How to Respond to a Positive Review

Just as responding to a negative review can help new customers see that your business cares about your customers, responding to positive reviews can create the same effect. And customers agree.

Nearly 80% of consumers say they feel that a business cares more about them if someone from the business replies to their review, even if that review is positive.

online reviews

Responding to a positive review is simple. Thank the customer for their business and the time they spent writing and leaving a review for your business. This small effort not only acknowledges the customer, but it can also help with both customer retention and new customer growth—especially when a new customer is considering your business vs. a competitor.

Assign a team member (or if your business is large enough, a specific team) the responsibility of keeping track of new reviews and responding to both positive and negative reviews online. For a positive review, your team can use a thank you response template, but personalizing the responses will help improve the interaction with the customer online. Don’t forget to route any negative reviews to a customer service representative that can help resolve the problem.

The Impact of Negative Online Reviews

Negative reviews can have a dramatic impact on your business, especially if you’re a local business that is competing against a national chain or big box store. If your GBP is full of negative reviews, lacks positive reviews, and shows a slow drip of reviews (instead of a consistent stream), you’re going to see the impact in a variety of ways.

First, your business is likely to suffer in local search rankings. Without a consistent stream of reviews that are full of relevant keywords and positive ratings, Google won’t see your business as an answer to a searcher’s request. Next, when a potential customer does land on your GBP, the lack of positive reviews will likely impact their decision to visit your business.

First Impressions: Why They Matter with Online Reviews

First impressions are important for nearly every interaction—meeting someone new, visiting a new city, walking through a new house, and more. First impressions are so important that research suggests consumers make up their minds about someone within the first 27 seconds.

For local businesses, first impressions happen online—and when a customer reads online reviews.

Because reviews are often the first impression of your business, your business must show up on the review sites that matter most. For local businesses, that means showing up in Google reviews, Yelp reviews, and Facebook reviews.

Google reviews are proven to make customers:

40% more likely to visit your business
56% more likely to click through to your website
29% more likely to buy from your business

Yelp collates information about your business, just like Google.

For many businesses, Yelp highlights the history of your business, services offered, hours, average customer star rating, and even photos of your business. And when businesses can improve their star rating by just one star on Yelp, they see an increase in revenue of up to 9%. That’s an incredible incentive to route reviews to more sites than just Google.

Facebook reviews also play a major role in the first impressions customers gather for your business online.

At least 74% of consumers say that they use Facebook to find more information about businesses (and that includes reading reviews from other customers).

Plus, with nearly 2 billion daily active users, Facebook has created a platform where customers are accustomed to seeing brands and customers interact and connect.

If you’re just starting with a review management process, start with Google reviews. Once you have a consistent stream of reviews on Google, branch out and consider Yelp and Facebook as your next priority for reviews.

Learning From a Negative Review

Negative reviews can create incredible learning opportunities for your business. And they can pinpoint (and fast-track) areas that need improvement.

While your first impression might be to ignore a negative review, that action is likely to do more harm than good. Don’t rely on your positive reviews to drown out the noise of a few negative reviews. Instead, reply to each negative review to learn from that customer, try to right whatever went wrong, and make an action plan to reduce the risk of the same problem happening again at your business.

Sometimes disgruntled customers can’t be pleased. In the situation where your response to a negative review (and your offer to fix the problem) goes unacknowledged, take the opportunity to still learn from the original review. Just as you gather learnings around customer product choices, seasonal shifts in customer preferences, and more, negative reviews offer an authentic view of the customer experience. Find a learning in the negative review, regardless of the outcome with the customer.

How to Turn a Negative Review into a Positive

The first step in turning a negative review into a positive review is responding to the negative review publicly:

Acknowledge the negative customer experience and clarify your intention to fix the problem.
Encourage feedback and engagement from the reviewer and outline your steps to make the experience a positive one.
When details get too granular, take the conversation offline with the disgruntled customer.

Once the negative experience has been resolved—whether that be a discount, an apology, a free product, or more—encourage the customer to post a new review, detailing their experience with your business.

Make sure your new review ask is personalized (always use the customer’s name), specific (ask for a review that updates the public on the customer’s experience), and easy to complete (send your review request in a text with a direct link to the review site.

As you outline your review management process, consider outlining what customer representatives that read and respond to reviews can offer disgruntled customers. Whether that offering is a discount or an apology, don’t make your team members have to ask their managers how to solve each customer’s problem. Have a basic plan to resolve customer issues and save the larger issues for escalation to management.

How to Measure & Improve the ROI of Online Reviews

Increasing your focus on reviews won’t deliver real results if you don’t know how to measure and improve the ROI of your online reviews. In this final section, we will discuss what review KPIs to focus on, how to monitor reviews so you can respond quickly, and how to act on feedback.

What Review KPIs to Focus On

To track true progress with your review management progress, you must first document the specific goals you hope to achieve. Get as specific as you can and consider breaking your KPIs into categories.

For example, you might consider the following goals:

Increase brand awareness: To track your brand awareness and how reviews play a part in increasing that brand awareness, track your total number of reviews, your increase in web traffic, and your search ranking.
Improve customer experience: To track your customer experience improvements that are tied to reviews, track your star rating, your total number of positive reviews, and the increase in the total number of reviews you’ve collected.

When you outline your KPIs, don’t forget to include customer acquisition, customer sentiment, and sales closed vs. the competition (by tracking your search ranking and total reviews compared to your competition).

How to Monitor Reviews to Respond Quick

Map out your desired customer review experience to identify how quickly you’ll send a review requisition and how your team will monitor those reviews (to improve your speed at responding to those reviews).

For many teams and businesses, monitoring new reviews can feel overwhelming and time-consuming. Consider implementing a solution that allows you to both send review requests automatically (reducing the load on your team) and get notified when new reviews are posted automatically.

A solution like Podium can help streamline the review request and review monitoring processes. Requests are automatically sent via text after a purchase or service visit.

And because all customer communication is routed to a single inbox, your team is notified automatically when review requests are completed and a new review is posted online.

How to Act on Feedback

Collect your customer feedback and reviews and aggregate the data to mine for specific findings. Because not all feedback is created equally and not all customer suggestions can be implemented, use a scoring system to understand which feedback should be implemented.

For example, if your customer reviews consistently bring up your slow payment process and identify that a large pain point for customers is checking out quickly, that feedback should urge you to review our payment process and brainstorm ways to speed it up.

online reviews

Let your team member or the team responsible for requesting and reviewing customer reviews aggregate the customer review data and search for patterns and trends.

Final Thoughts

Customers will leave reviews about your business whether you implement a review management process or not. In this guide, we reviewed the importance of reviews and how they can boost your search result rankings, increase revenue, and even build trust in your community. Responding to both positive and negative reviews is equally important. And tracking the right KPIs can help you see where reviews are impacting your business the most.

Streamline your review request process with Podium:

Send review requests via text, the channel 90% of customers prefer.
Automate review post notifications to save your team time and resources.
Use review request and response templates to improve communication with your customers.

The ROI of Online Reviews for Local Businesses

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