How Do Negative Reviews Hurt Your Business?

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Posted on: 06/18/2020
How Do Negative Reviews Hurt Your Business?

Due to the proliferation of mobile technology, customers have a bigger impact on a business's success or failure today than ever. Therefore, it’s crucial that businesses and companies take a proactive approach towards managing their reputation. Perhaps the best way to do so is by managing their online reviews.

The Impact of Reviews

While in the not-so-distant past, people were relegated to word-of-mouth referrals, today's consumer is much more likely today to simply read a few online reviews before deciding whether to visit an establishment or buy a product.

Research continually shows that roughly 90% of all customers conduct research about a business online before making a purchasing decision. 85% trust online reviews as much as they do a referral from a friend or family member.

Here are some other key statistics regarding the overall impact of online reviews:

  • 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 online reviews: 72%

  • Number of reviews a customer reads before “feeling able to trust” a business: 10

What about the negative reviews? Of course, these have an impact as well. Here are some of the ways in which negative reviews hurt your business, along with some statistics.

1. Driving Away Customers

In most cases, customers have several choices about where they want to buy. Why would they put their hard-earned money towards an inferior product, service, or customer service experience?

As far as statistics, an estimated two out of every ten customers are driven away by just one negative review. Three negative reviews may drive away as much as 60% of customers; four or more, 70%. A 2018 survey found that 94% of customers avoided businesses with a disproportionate number of negative reviews.

It’s worth bearing in mind that these statistics don’t take into account the negative word-of-mouth resulting from reading a bad review or reviews. In reality, these percentages may underestimate the actual damage.

2. Loss of Revenue/Profit

This one’s just common sense, really: fewer customers means less money.

In a study of more than 200,000 small businesses from across various U.S. states and industries, researchers found that businesses with a 1-to-1.5 star rating on Google earned 33% less than the average business.

While the research is less clear about the impact of negative reviews published on other mediums (e.g., social media), it’s assumable that the findings would be similar.

3. Loss of Reputation

If you’re a business owner, the only thing worse than a loss of money and customers is losing your hard-earned reputation. Negative reviews, fair or not, lead to potential customers trusting your business less.

The numbers show that about 50% of customers will question the quality of a business is they see a disproportionally high number of negative reviews.

4. Lower Search Engine Ranking

Speaking of Google, the company has become sticklers about recommending quality businesses to users. As such, the cumulative effect of multiple negative reviews is that they drive down your business listing.

However, Google has also mentioned that one or two bad reviews are not significant enough to affect where you’re listed under search results. Digging into the Google algorithm is beyond the scope of this article. However, anyone can find out more about the company’s internal SEO guidelines here.

5. Lost Potential

It takes a special person who’s both confident and comfortable with risks to open a business. However, these qualities aren’t enough to sustain that business.

Entrepreneurs can’t afford to ignore the massive effects of technology – or any other ubiquitous trend - on their business. Doing so - either out of stubbornness or ignorance - can most certainly cause an establishment to fail. Even if the business manages to hang on, it’ll never come close to fulfilling its potential.

How do you ensure that your business isn’t one among the countless casualties of a highly-competitive, tech-savvy marketplace? Read on.

Managing Negative Reviews

Now that we’ve acquired a pretty good understanding of the potential damage that negative reviews can inflict, let’s discuss how to manage them.

1. Know Where They Are

First, it’s essential to know where these reviews are. The primary review players are:

  • BBB.org (Website of the Better Business Bureau)

  • Google

  • Facebook

  • Yelp

  • TripAdvisor

  • Foursquare

Also, keep in mind any niche websites of your particular industry where customers may go to leave a review. Make sure to visit these sites as well periodically.

2. Be Sure to Respond

Second, let’s try to turn those negative reviews into something positive. Businesses can do this by replying (i.e., not ignoring) to the review. The benefits of merely responding to a bad review can reap enormous benefits.

According to a survey conducted by ReviewTrackers, “45% of consumers say that they’re more likely to visit a business if it responses to negative reviews.” [Emphasis added]

3. Don’t Post Fake Reviews

Yes, the temptation is there. No, you shouldn’t do it. By ‘it,’ we mean posting fake reviews.

Not only is posting bunk reviews unethical, but it’s also punishable. The site where the reviews are posted will probably - at some point - detect the presence of falsified reviews, something that violates the terms of service of virtually every online medium.

It’s worth noting that customers are on to fake reviews. So much so that all-5-star reviewed businesses often realize less revenue than their highly-rated-but-not-5-star counterparts.

4. Encourage Reviews

You may be wondering whether reviews are worth the “risk.” The answer to the question is “absolutely,” provided that your product or service is reliable and your customer experience is pleasant.

If not, that’s okay. At least you realize what your shortcomings are and can work on them. After you’ve corrected what needs correcting, encourage your customers, especially ones who seem particularly satisfied with your service, to leave a review.

In conclusion, negative reviews can certainly hurt your business. However, they don’t signal the end of the road, and can even be used to your advantage with a bit of know-how.

Finance Guru

Finance Guru