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How Critical Can Online Reviews Be for Your Business?

By Marketing Advisory, 3EA
How Critical Can Online Reviews Be for Your Business?

"Customer experience is the next competitive battleground. It's where business is going to be won or lost." - Tom Knighton

Some Surprising Facts About Why Positive Online Reviews Are Important -

Do you Know?

  • Google gives priority to companies that have highest positive remarks online. Thus, companies with negative reviews will not rank high on Google.
  • There is a likelihood of spending 31% more on products/services by consumers from businesses that have outstanding ratings & reviews online.
  • Online reviews are trusted as much as a personal recommendation by 85% of consumers.
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  • Yearly Cost of Unhappy Customers: INR 39,000 billion.
  • Opportunity Cost of Satisfied Consumers -> 'Highly Satisfied Consumers' add 2.6X More Revenue than 'Somewhat Satisfied Consumers'
  • Cost of Acquiring New Customer = 6X to 7X more than simply retaining an existing one
  • In Yelp rating, for increase in every one star, there is a rise of 5% to 10% in revenue of restaurants (which can also represent a loss of INR 13 million in annual revenue).
  • Companies having a 3-star or above rating on Google get 87% of the clicks.
  • Hotel and wireless businesses that work on the negative customer reviews and improve by 10% will probably exceed INR 700 billion (approximately).
  • No review at all on the internet is as bad as negative online reviews -> Consumers presume that the company is new, shut or not that exciting.

Various investigations have been done to help decide the precise effect that both positive and negative reviews have on the prominence, number of sales, product awareness/responsiveness, conversion rate and profitability of businesses.

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Revenue Lost Over a Negative Company Review

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In a research, it has been observed that about 80% to 86% of potential consumers will change their intention of going for products and services from organizations that have negative reviews, online.

In the regrettable case that these negative reviews spring up on Google searches, the organizations can conceivably lose around 70% of their future clients.

If we quantify this for a product worth INR 2,000, assuming that normally five products are sold everyday but now you are losing four owing to negative online reviews, you will incur a loss of INR 8,000 in sales each day. Subsequently, you will lose INR 29,20,000 in sales annually. This assumption is for a small scale company. Imagine the losses incurred by a large scale organization with more valuable clienteles or higher volumes of sales. The price of a negative online review can reach into the millions, even billions, every year.

The Dell Hell Case - To support the research results, I would like to state an example of Dell or as it is popularly known as the 'Dell Hell Case'.

"DELL SUCKS. DELL LIES. Put that in your Google and smoke it, Dell." - Jeff Jarvis, a furious Dell Customer.

The above rant is a part of a long and negative review posted by a 'citizen journalist', about his unfortunate experience with one of the leading computer & technology companies, Dell Inc. It grabbed eyeballs of numerous computer buyers from all over the world.

As a domino effect, caused by such strong statement made by Jarvis, Dell suffered bad critiques & faced drastic decline in its success rate. Had they known the criticality of breaking through the online barriers with their customers & paid heed to negative reviews, this would not have hampered their business so adversely, despite being market leaders.

To counteract the unpleasant effect of this single negative blog post, Dell reacted by initiating online reputation building and transparency projects to transform such a negative review into a positive campaign. The important take away from this example is that how Dell didn't allow a bad review to destruct its brand name. On the contrary, they accepted the inauspicious incident as a learning opportunity, thereby implementing a reputation management strategy to ensure that their image among customers is not hampered.

Customer service is an outstanding online reputation (listening should be the first priority) that helps drive consumers to your ROI/selling points (selling should be the second priority).

Ola Cabs Case - There's another very famous case of Ola Cabs in which a single dissatisfied customer was converted not only into a satisfied customer but also into its brand advocate with a lot of creativity and efforts, as it hampered the brand image immensely and ultimately its business. So, this is how important online reviews are.

In the infamous instance of Christopher Dietz and Dietz Development, (a small scale business dealing in residential construction services), a dissatisfied client made such a defamatory remark about him and his business on Yelp and Angies's List that their ability to attract new clients got paralyzed.

Acquisition and Retention Prices Get Affected by Negative Reviews

Mired capacity & talent acquisition and employee turnover could have an even greater effect on organizational revenue than lost money in sales. If you're not able to pull supreme talent for your business, then productivity and efficiency will be hampered. Moreover, you may lose out on more sales opportunities if rival companies hire better employees.

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How Can 3EA Help?

  • We map your consumer experience by finding bottlenecks in the process and identify where your business services get caught, using high-impact methods like Google Analytics, CRM Systems etc.
  • We frame strategies and set company KPI's around customer experience to prioritize customer services, thereby increasing your sales incentives and revenue.
  • Our R&D team studies consumer behavior and perception to direct product/service design and development.
  • We focus on channels for constant and in-depth capacity building, empowering you to enact promptly on addressing opportunities for improvement through customer feedbacks & surveys. We have come up with a tool to measure brand loyalty of customers - 3EA VoLT Score.

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Article by: Marketing Advisory, 3EA