Why you don’t want a 5-star rating on Yelp and Google (and more shocking facts)

In this 5-minute read:

  • Groundbreaking study reveals surprising facts about the impact of online reviews on small business revenue
  • How much more money do 5-star businesses make? (hint: they don’t)
  • How much do negative reviews really impact small business income?

The digital age has come to main street, and even small, local shops are waking up to the fact that a business’s online reputation has taken the place of word of mouth.

Like it or not, what people say about your business in online reviews can have huge impact on your real-world revenue. 

Attract more happy customers and keep them loyal with reputation management software. Learn more, plus get free reputation monitoring and customer insights when you sign up for Womply Free!

But in a recent landmark study on the Impact of Online Reviews on Revenue examining revenue and review data for over 200,000 small businesses across the country, Womply’s data scientists uncovered some surprising facts that may change the way you approach your online reputation management efforts. 

Let’s have a look at some shockers revealed in the study:

1. 5-star rated businesses earn less than 1- to 2.9-star businesses

At first blush it may seem impossible that a 5-star-rated business would earn 29% less than the average business in the study, while 1- to 2.9-star-rated businesses earn only 12% less than average.

shocking small business facts

However, businesses with zero (or very few) negative reviews are generally less established than businesses with a “healthy” mix of good and bad reviews, and they may look iffy to potential customers who may expect to see some negative feedback online.

In any case, it’s clear that a pristine, 5-star rating should not be the end goal of your small business online reputation management efforts.

Womply’s data shows the sweet spot for revenue to be between 3.5 and 4.5 stars

2. Failing to claim your online listings is more damaging than a bad star rating

A report from a couple years back showed that only 44% of Google My Business listings had been claimed. 

Hopefully that statistic has improved since, but the data suggests that failing to claim your business’s free online profiles is one of the most damaging things to small business revenue. 

shocking small business facts 2

Businesses that haven’t claimed their profiles on any review sites sites earn 24% less than the average business in the study, and a whopping $179,000 per year less than businesses that have claimed 3 or more listings—representing a 60% swing in revenue.

As noted above, 1- to 2.9-star-rated businesses earn only 12% less than average.

It’s easy (and free) to claim these review site listings, so it’s should be a no-brainer for every small business owner to claim—and keep current—every relevant online business listing.

Learn more in our free step-by-step guides:

3. Businesses with 35-50% negative reviews earn more than those with 0-5% negative 

It turns out, negative reviews don’t really hurt a business as bad as we all thought. In fact, businesses in the study with up to 35-50% negative reviews still earn nearly the same as the average business. 

shocking small business facts 3

Interestingly, the data shows that “fresh” reviews (posted within the last 3 months) are far more correlative to increased revenue than a fantastic star rating is.

Businesses in the study with 9 or more recent reviews earn 27% more than the average business, and those with 25 or more fresh reviews bring in a staggering 87% more annual revenue than the average.

shocking small business facts 4

Businesses with 0-5% negative reviews actually earn 21% less than the average business in the study.

Please note: this is without regard to whether these reviews are positive or negative.

4. Businesses who respond to reviews at least 25% of the time earn far more than those with a star rating of 4.5 or higher

Womply’s study shows that the freshness of online reviews matters far more than whether they are positive, but it also shows that businesses should prioritize responding to their reviews.

Businesses that respond to at least 25% of their reviews earn 35% more annual revenue than the average business in the study. 

Businesses that don’t respond to any reviews earn 9% less than average.

shocking small business facts 5

As shown in section 1 above, businesses with star ratings of 4.5 and higher actually earn less than average revenue.

5. Almost all online reviews are positive

This may come as a real surprise, as it can sometimes feel like everything anyone says about you online is negative. But the data shows that simply isn’t the case. 

Of the reviews posted for the nearly 210,000 small businesses Womply studied, the overwhelming majority were positive. In fact, 88% of businesses had star ratings of 3.5 stars or greater.

shocking small business facts 6

So it seems clear that, rather than being concerned about bad reviews or a less-than-stellar star rating, small business owners should focus their efforts on engaging their current and potential customers online, and working toward a regular supply of fresh reviews.

You may also like: How to get more reviews

Save time and get better results with reputation management software

Keeping track of all the different review sites and reading and responding to all your reviews can take a lot of time… time may small business owners simply don’t have.

But as Womply’s study shows, it’s imperative that you engage your customers, reply to reviews, and work to get fresh reviews. 

That’s where Womply’s reputation management software comes in. With Womply’s easy-to-use dashboard, you see all your online reviews from all the popular sites in one place, with one login. 

You can also respond to reviews right from the dashboard, including (if you choose) automatically posting review responses to save you valuable time.

We also help you encourage more reviews from your best customers, and, depending on your software package, you can get a pre-populated list of all your customers and their contact information so you can engage them in customer loyalty and email marketing programs to keep them coming back to spend with you.

Learn more, plus get free reputation monitoring and customer insights when you sign up for Womply Free!

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