How Positive Reviews Can Boost Customer Loyalty
5 minutes read
"We have found that online reviews have a significant and quantifiable impact on purchase decisions… These findings have powerful implications [for businesses] as they think about how to collect, manage, and promote online reviews of their products and services."
- Medill Spiegel Research Center, Northwestern University (Source)
Customer reviews are immensely powerful. In fact, they can make or break a business. Do you research a business before visiting? Have you ever purchased a product or service based on its reviews? On the flip side, have you ever avoided a potential case of buyer's remorse by heeding to poor reviews? If so, you are in good company. Between 85 to 95 percent (depending on the source) read reviews before buying something or visiting an establishment.
Why is this?
Well, if you'll forgive the following cliché: the internet has changed everything. Consumers have more information available than at any other time in history. There is no better example of this "anytime, anywhere" information system than the demographics of smartphone ownership.
According to the Pew Research Center, over 80 percent of Americans own a smartphone. With just a few swipes, anyone can get "insider" information on a business.
Companies such as TripAdvisor, TrustPilot, Yelp, and others were able to leverage reviews early on to build profitable companies because of the power of customer reviews. All of these companies – and several others – also have smartphone apps, making it even easier for customers to pull reviews on their mobile devices.
Now, Amazon, Facebook, and even Google are leveraging customer reviews to promote businesses and increase their advertising revenue.
The Massive Growth of Customer Reviews
Just how widespread is this customer behavior of browsing reviews? Very. Here are some noteworthy statistics:
- Percentage of customers who read reviews: 95
- Percentage of customers who read online reviews: 94
- Percentage of customers who won't buy until they have read reviews: 72
- Number of reviews a customer reads before "feeling able to trust" a business: 10
If you're a business owner, it's good business – and profitable – to remain aware of these trends.
Positive customer reviews boost attract new business, establish and maintain customer loyalty, and increase retention. Negative customer reviews… well, they do just the opposite. Thus, smart companies prioritize and promote positive customer reviews.
How Positive Reviews Boost Brand Loyalty
So, how do positive reviews boost brand loyalty? In short, positive reviews can demonstrate receptivity, stimulate brand awareness, and convey quality.
Positive Reviews Demonstrate Receptivity
Anyone who has ever owned a business understands those customer relationships are just as important – if not more so – than a quality product or service. It matters not what medium in which this interaction occurs. A proactive, receptive attitude towards customer reviews will therefore help to create brand awareness and encourage loyalty.
Posting (and responding) to customer reviews – good and bad – conveys a business' willingness to go the "extra mile." If you're an otherwise solid business yet fail to interact with your customers, you risk losing trust and, yes, money.
On the other hand, if a lesser-known business makes it a priority to prioritize customer feedback, they communicate a sense of openness and receptivity. Both go a long way in encouraging sustainable, organic business growth.
Positive Reviews Stimulate Brand Awareness
Building brand awareness must precede brand loyalty. There is perhaps no more cost-effective, compelling method of creating this awareness than positive online reviews. Put simply: shoppers trust the experiences of other shoppers. And, as we've seen, customers are far more likely to purchase a product or service if they read something positive.
Favorable customer evaluations of a product or service automatically enhance awareness of that brand, irrespective of whether or not a customer actually buys anything. This is an important point. The positive review(s) have done their job by planting the seed of brand awareness and brand recognition.
Positive Reviews Convey Quality
Many factors come into play when purchasing a product or service, perhaps none more important than quality. How does one determine the excellence of a product or service before purchase? Customer reviews, mostly.
As you've undoubtedly seen for yourself, happy customers are all too eager to post a positive review. These gleaming testimonials have a massive impact on the perception of quality. Just look at the following statistic:
Low-cost product manufacturers attribute a 76 percent higher conversion rate to positive reviews. Their high-cost counterparts report an astonishing 86 to 97 percent higher conversion rate.
And it's not just B2C, either. Ninety-two percent of B2B purchasers are more likely to buy after reading a positive customer review.
Regarding hospitality businesses, research shows that reviews are changing the entire game. In a study published in the International Journal of Information Management, the authors report that:
- Social media and other user-generated customer reviews are "transforming competition" in industries such as catering, lodging, and entertainment.
- User-generated reviews on social media are greatly enhancing competition and altering customer purchase habits.
- Higher-rated user reviews are associated with higher room occupancy rates.
- Customer reviews have a positive effect on hospitality revenues and gross profit margins.
Final Analysis: Customer reviews dictate buying behavior
There is no ignoring the potent effects of customer reviews on commerce. The sheer volume of consumers who depend on reviews to make a buying decision makes this point abundantly clear.
Positive customer reviews have the ability to not only influence but dictate buying habits. In other words, positive customer reviews can cement a sense of brand loyalty.
We must also account for the effects of negative reviews and their influence on brand loyalty. At the very least, negative customer assessments create some hesitation. The result of this is inevitably a loss of revenue; and, most importantly, a loss of trust.
So, in a few words: create a quality product or service, advertise a bit, and encourage customer reviews. The end result: a slew of positive customer reviews and many customers who are loyal to your brand and your business.
Now it's your job to keep that business.