On July 23, the digital marketing and CRM software company Womply published a study revealing the importance of having online reviews on the major platforms, Google, Facebook, Yelp, and TripAdvisor. The big takeaway is that negative reviews on Google hurt a business’ bottom line more than on the other platforms. Source: venturebeat.com, “Womply Study Suggests Bad Google Reviews Costlier to Small Businesses Than Yelp or Facebook.”
The article on Venturebeat.com summarizes the findings. According to Venutrebeat, “…Womply’s data science team conducted an in-depth analysis of transaction and online review data for more than 200,000 U.S. small businesses in every state and across dozens of industries, including restaurants, retailers, lodging places, salons, auto shops, and medical offices.”
Womply’s CEO is quoted as saying that small businesses typically don’t have access to data about their online reputation and how that affects their revenue. It appears Womply’s goal is to make it easily available through their software as a service.
According to Venturebeat, here are some additional findings:
It pays to have an open dialogue:Businesses that reply to at least 25% of their reviews average 35% more revenue than the average business.
Recent reviews have more value: Businesses with more than nine “fresh” reviews (reviews posted in the past 90 days) earn 52% more revenue than the average business. Additionally, businesses with 25 or more fresh reviews earn 108% more than average.
5-star ratings aren’t all they’re cracked up to be: The star-rating sweet spot for revenue is between 3.5 and 4.5 stars. In fact, 5-star businesses actually earn less on average than 1-star businesses.
It’s okay to have a handful of detractors: Businesses that average 35-50% negative reviews earn nearly the same as the average business.
Response rate matters: 75% of small businesses don’t respond to any reviews, which is a problem, since businesses that reply to more than 20% of their reviews earn 42% more revenue than businesses that don’t respond at all. Consequently, businesses that reply to at least half of their reviews earn $166,000 more in annual revenue than businesses that don’t reply to any reviews.
More is better: Businesses with more than the average number of reviews (83) earn 82% more annual revenue than businesses with review counts below the average. In addition, businesses with 200+ reviews earn twice as much in revenue compared to the average business.
More profiles claimed equals more revenue: Businesses that claim their free listings on at least three of the major review sites (e.g. Google, Yelp, Facebook, and TripAdvisor) average $107,000 more annual revenue than a typical business, and $179,000 more than businesses that don’t claim their listings on any review sites, a 60% swing in revenue.
Consumers are kinder than you think: Nationally, 81% of online reviews for a typical business are positive.
All this goes to show the importance of customer service and building relationships with your customers. This report is also a sign of Google’s power on the Internet, since its review platform is so easy to use and search engines have largely replaced the old phone book yellow pages. This should be a sign that every small local business needs a Google My Business profile.
You can read the Womply study here: “How Online Reviews Impact Small Business Revenue.”