Why bad reviews are good for your business
August 27, 2019
In this 4-minute read:
- Why negative reviews are actually good for business
- Bad reviews aren’t as damaging as you think
- 5-star businesses make less money
- Why fresh reviews matter
New business owners often take their first bad reviews personally, and it’s understandable. You’ve sacrificed and worked hard to create the best business you can, and some ignorant schlub comes in and complains online about this or that. How dare they?!?
Relax. Think of your first bad review like that first door ding on your new car. It’s going to happen anyway, so you might as well get it over with so you can enjoy the ride.
Now, we’re not saying that online reviews don’t matter. They most certainly do. However, Womply’s data scientists recently performed a detailed analysis of online review data and transactions for over 200,000 small businesses, and the study uncovers a few key points that illuminate the relationship between negative reviews and revenue.
Let’s take a look at some surprising insights revealed in the report:
1. Bad reviews aren’t as damaging as you think
Much as a negative review may bruise your ego, it doesn’t actually hurt your business that bad. In fact, businesses in the study whose online business reviews were between 35% and 50% negative still made nearly the same revenue as the average business.
Think about that for a second: Up to HALF of your reviews could be negative and you could still earn as much as the typical business in the study. Are half of your reviews bad? Chances are, they’re not. So, don’t freak out when you get the occasional bad review.
In fact, one bay-area restaurateur got fed up with (as he claimed) being “extorted” by Yelp’s online reviews policies, and started bucking the system by asking his customers for 1-star reviews—even giving 50% discounts for those who did so. The story caught like wildfire, his business grew by leaps and bounds, and now he’s profiting from his celebrity, charging $3,000 a lesson for private cooking events.
Of course, we’re not suggesting this is the right approach for your business. But it does show that a little clever publicity, even publicity based on “bad reviews,” can be very healthy to a business’s bottom line.
2. Any review—including a bad one—is valuable for your business
Large corporations spend billions of dollars every year trying to learn what their customers actually think about their products and services. Smart local business owners realize that online reviews give them the same thing—absolutely free.
In almost every case, a negative review is a chance for you to examine your products, your employees, your facilities, and your services and look hard at what might not be up to snuff.
One of Womply’s small business clients, The Gables at Chadds Ford, recognizes the value of online review sites—including the occasional bad review.
Cathy Centofanti runs the online side of the restaurant, and she points out, “We want customer feedback. Some companies pay a lot of money to know what customers think, and we get it for free from online reviews.”
Cathy reaches out to any customers who leave bad reviews and asks them for another chance. “They almost always take us up on it, and they always leave happy the second time.”
The Junction Kitchen & Provisions, another Womply client, used some bad online reviews to identify a key process that had changed in one of their most popular items—the biscuits (and you Southerners know how important biscuits are). The recipe process was fixed, the biscuits returned to their stellar quality, and the positive reviews resumed rolling in.
So, rather than take bad reviews personally, look at them as an opportunity to improve. You’ll be glad you did.
3. 5-star businesses earn less money than 1-star businesses
Yep, you read that correctly. Let’s look at the numbers:
You may be asking yourself, “How is it possible that 5-star businesses in the study make 10% less than 1-star businesses?”
Well, there are some nuances here. Truly 5-star businesses are rare—if they’ve been in business more than a couple of months. Everyone gets the occasional bad review, so potential customers searching a business online may be wary if they find absolutely zero negative reviews.
Plus, 5-star-rated businesses often haven’t been in business long enough to start turning a solid profit, and once they do, their star rating has almost always come down out of that rarified, 5-star air.
Womply’s data shows the sweet spot for maximum revenue is a star rating of between 3.5 and 4.5 stars.
So, when you get a bad review that takes your star rating down a notch, you might just want to say thanks!
4. Fresh, bad reviews are worth more than old, good reviews
Womply’s study shows a strong correlation between fresh online reviews and increased revenue. A “fresh” review is one posted within the last 90 days.
As you can see, businesses with more fresh reviews earn more money… and this is without regard as to whether the reviews are positive or negative.
When potential customers search your business online, they may look for fresh, recent reviews to provide the social proof they’re want, before they decide to patronize your business.
So, do what you can to encourage regular, genuine reviews from your customers, and don’t worry if you get a few bad reviews as a result.
Go deeper: learn how to get more reviews
Save time managing your reviews with online reputation management software
Keeping track of all your reviews on all of the relevant sites can take a lot of time every week—time that many small business owners simply don’t have.
A good reputation management software package can be hugely valuable. With Womply, you can read and respond to all your reviews from all the popular sites in one place with one login, saving you time every week. You can also get the kind of customer data and business revenue insights that help you make solid marketing and business decisions.
You can even see at a glance how your business compares with other similar businesses in your area! Fill out the form below for your free, personalized demo.
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