In this 5-minute read:
- How much do negative reviews really impact small business revenue?
- Why bad reviews on Yelp are less damaging than you think
- How fresh reviews correlate with increased small business revenue
Your business’s online reputation can have a real-life impact on your bottom line. As online review sites have taken the place of word of mouth over the past decade, many business owners have worked hard trying to remove negative reviews on Yelp, Google, Facebook, and TripAdvisor.
What people say about your business online matters, but how much damage does a bad Yelp review actually do? Until recently, the answer was mostly speculation.
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However, Womply’s data scientists recently published a landmark study on the Impact of Online Reviews on Revenue examining revenue and review data for over 200,000 small businesses across the country. The study uncovered some surprising facts that may change the way you look at the occasional bad review on Yelp.
Here are 3 data points revealed in the study that show you shouldn’t necessarily worry about a bad Yelp review:
1. Negative reviews are actually good for business
Yes, you read that right. Womply’s study showed that businesses with zero or nearly no bad reviews earn far less revenue than the average. Have a look:
Businesses in the study whose reviews were 0% to 5% negative actually earn 21% LESS in annual revenue than the average business.
This may sound impossible, until you really think about what an absolutely pristine, 5-star review rating means to potential customers.
When you search a business online and you see nothing but 5-star reviews, what do you think? Well, the data suggests that people may be wary of these businesses, potentially doubting the legitimacy of the reviews, or questioning the credibility of the business.
Furthermore, if you conduct business in the real world, you ARE going to get some bad reviews… that’s just a fact of life. Truly 5-star-rated shops therefore are often those that are new, unproven, and may not be doing a lot of business yet.
Womply’s study found that businesses whose reviews were 10% to 25% negative earned the most revenue. Furthermore, please note that even businesses with 35% to 50% negative reviews earn essentially the same as the average business in the study.
The star rating that correlates most strongly with increased revenue is between 3.5 and 4.5 stars.
The study data suggests that even if fully HALF of your reviews are negative, you may not need to stress out as much as you thought—if you’re taking steps to get fresh reviews. Which brings us to our next point.
2. ANY fresh review is good for business (and authentic ones matter most)
Another key data point the study illuminates is that “fresh” reviews (good or bad) are more valuable than old, positive reviews.
Businesses in the study without any reviews within the past 90 days (known as “fresh” reviews) earn 20% less than the average business. Getting more than the average number of fresh reviews, on the other hand, correlates with a 52% increase in revenue.
Potential customers may put a premium on recent reviews and be more likely to spend money at shops with more fresh customer feedback.
In other words, any review posted within the past 90 days is valuable and correlates with increased revenue for small businesses—regardless of whether the review is “good” or “bad.”
3. Yelp businesses are more harshly reviewed, and bad Yelp star ratings do less harm than other platforms
It may feel like every online review you get is negative. However, Womply’s data shows that in fact, American consumers are overwhelmingly positive in their reviews.
Yes, Yelp reviewers are statistically more harsh in their reviews than people on other platforms. But this is paradoxically a good thing.
As you can see, Yelp businesses average lower star ratings than other popular review sites. So, why is this a good thing?
Because it means that a bad star rating on Yelp is less damaging than the same rating on other platforms. Let’s look at the numbers.
Note that compared to other popular review sites, a low rating on Yelp correlated with a relatively small drop in average revenue in Womply’s study.
This suggests that people may be more accustomed to seeing negative reviews and lower ratings on Yelp than on other platforms.
Bottom line? Small business owners might want to stop worrying so much about negative reviews and start focusing their efforts on getting a regular supply of genuine, fresh reviews.
Save time and do more with online reputation management software
Of course, working to get fresh customer reviews and managing those reviews on multiple review sites takes a lot of time… time that many small business owners simply don’t have.
Reputation management software can be a big help in this regard. Womply’s small business software collates all your reviews from all the relevant review sites, and allows you to read, reply to, and manage them in one place with one login.
You can even set up auto-replies if you so choose, and depending on the software package you select, use email marketing to build customer loyalty and encourage repeat visits from your best customers.
With Womply you can also get total visibility into your customer interactions, local competition, and business revenue trends so you’re never caught off guard. Learn more, plus get free reputation monitoring and customer insights when you sign up for Womply Free!