A special report from Womply Research

How do online reviews impact revenue for retail businesses?

If you've read our full report, you've already got a sense for just how important review sites are for local businesses. But what about local retail businesses in particular?

Are reviews more (or less) influential on revenue for retail shops than other types of local businesses?

Impact of Reviews on Revenue page masthead graphic. A special report from Womply Research.

To understand the correlation between reviews and revenue for retail businesses, Womply's data science team conducted an in-depth analysis of transactions and online review data for more than 38,000 retail businesses in every state.

Key findings include

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Local retail businesses that claim their free listings on 3 or more review sites earn 21% more revenue

Retail businesses that don't reply to any reviews earn 6% less revenue

5 star rated retail shops have below-average sales—the sweet spot is 3.5 to 4.5 stars

Local retail businesses with more than the average number of reviews bring in 26% more in annual revenue

Retail businesses whose total number of reviews are 25-35% negative average 26% more annual revenue than businesses whose reviews are 0-5% negative

Go deeper by reading our analysis for businesses in a different industry.

Claiming free listings

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Retail businesses that claim their listing on multiple review sites make more money

Key findings include

Retail businesses that claim their free listings on 3 review sites or more earn 21% more revenue

Retail businesses that don't claim their listing on any review sites earn 22% less revenue

21% of retail shops haven't claimed any of their free listing profiles

Google is the most important free listing site for retail businesses

The average annual revenue across all retail businesses in our study was $262,000. As with all businesses in our study, claiming your profile on more review sites correlates with more annual revenue.

Retail businesses that don't claim their profile on one of the major listing sites earn 22% less revenue than the average retail business. Meanwhile, those who claim even one free listing profile earn 3% more.

When retail shops claim their free listing on review sites, it gives them the ability to reply to reviews, add helpful information about their business, and plenty of other things that clearly make an impact on curious customers. Let's put it this way, retail shops who follow the simple practice of claiming their free listing on Google, Yelp, and Facebook average $56,000 more each year than those that don't claim any of their free listings.

More and more customers use Google Maps to look for local retail shops in their neighborhood than ever before. Which is a likely reason why retail businesses who don't claim their Google listing show the largest decrease in annual revenue.

No matter which way you look at it, though, retail businesses should be claiming their business listing on every review site.

Go deeper by reading our analysis for businesses in a different industry.

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Replying to reviews

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People spend more money at local retail businesses that reply to reviews

Key findings include

75% of retail businesses don't respond to any reviews

Retail businesses that respond to just 1 review earn 7% more than average

Shops that don't reply to any reviews earn 6% less in annual revenue

Locations that respond to reviews on a semi-regular basis earn 19% more in annual revenue

It's clearly important for retail businesses to claim their listings on as many review sites as possible, but they shouldn't just stop there. Our analysis reveals that as customers search for local retail shops, one of the things they're looking for is a business that engages with customer reviews.

75% of all retail businesses in our analysis haven't responded to a single review, and those businesses earn 6% less in annual revenue.

Once businesses engage with their customers online by replying to reviews, though, revenue starts to go up. Retail businesses who responded to even just one review earn $18,000 more each year than the average retail business.

As you can see in the charts above, retail businesses that engage with their customers via online reviews earn more money. Retail businesses that reply to their reviews between 1 and 25% of the time earn 19% more revenue than the average.

Interestingly, the increase in revenue stays the same even as retail shops reply to 25% to 50% of their reviews, and drops slightly when the review rate raises to 50% or more.

This is likely because retail businesses with a large number of total reviews are very popular and well-established, and may be likely to earn more money than average, but may also be more likely to have a much lower review response percentage.

This becomes clear when you look at retail business revenue by total number of review responses:

Retail businesses that responded to at least 1 review responded to a total of 14 reviews on average. Again, even retail businesses that respond to just one review earn more money than average.

Revenue rapidly climbs the more times a retail shop responds to reviews. Even those shops with just a handful of reviews earn quite a bit more than average, and by the time you get to those who respond to more than 50 reviews, they're earning over $175,000 more each year than average.

When it comes to responding to reviews, it's clear that retail businesses should focus on engaging with their customers by responding to many reviews, positive and negative alike.

As we'll explain in the sections below, getting more reviews is clearly important, but staying engaged with customers in a real and meaningful way can make a clear difference.

Go deeper by reading our analysis for businesses in a different industry.

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Star ratings

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How much does a retail shop's star rating impact revenue?

Key findings include

Retail businesses with a rating between 3.5 and 4.5 stars earn more revenue than any other rating

5 star shops earn less in revenue than 1 to 1.5 star shops

Locations with a 3.5 to 4 star rating earn 13% more in annual revenue than average

Only 4% of retail businesses have lower than a 3-star rating

Now that we've discussed things that a retail business owner can control when it comes to review sites, let's get into the reviews themselves. We'll begin with what many retail business owners consider the most important part of their online presence—their overall star rating.

The chart below illustrates how much the average star rating matters to revenue at retail businesses.

The sweet spot for retail businesses is from 3.5 stars to 4.5 stars, with 3.5 to 4 star businesses earning the highest average revenue.

Interestingly, retail businesses appear to be less sensitive to ratings than other industries. Not only do retail businesses with 1.5 to 1.9 star ratings actually earn more than the average, but retail shops with good ratings typically experience a less drastic increase in revenue than other industries.

As with other industries, 5-star retail locations also average far less revenue than the typical retail shop. This is possibly because most 5-star rated retail shops are less established, or may be engaged in black-hat techniques like buying fake reviews.

Go deeper by reading our analysis for businesses in a different industry.

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Number of reviews

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How much does the number of reviews matter for retail businesses?

Key findings include

Retail businesses with more than the industry average of 43 total reviews earn 26% more in annual revenue

Retail shops with fewer than 43 total reviews earn 7% less in revenue than average

Locations with more than 200 reviews earn 46% more than the average

An above-average number of reviews on Google has the largest positive impact on revenue of all review sites

Retail business owners often stress about their star rating, but as you can see in the section above, a high star rating has a somewhat nebulous correlation with increases in revenue. On the other hand, our findings suggest that retail business owners should perhaps focus much more on increasing the number of reviews than almost anything else.

Retail businesses in our analysis averaged 43 reviews on review sites. This is significantly less than the 82.5 average across all businesses, suggesting retail businesses may need to work a little harder than other industries to get reviews.

We analyzed the revenue of businesses whose review counts fall above and below that average 43 review threshold.

The results of this analysis revealed a strong positive correlation between review count and sales revenue.

Retail locations with more than the average number of reviews earn 26% more in annual revenue than businesses with review counts below the average, while those with less than the average number earn 7% less than the average retail business.

Looking closer at the numbers helps clarify any relationship between the number of reviews and an increase in average revenue.

Retail locations with fewer than 10 reviews earn far less than average, while those with 21 to 43 reviews earn slightly more than the industry average.

Annual revenue at retail locations with more than 200 reviews is 46% more than the baseline average, suggesting that a large number of reviews is far more appealing to customers searching for retail shops online than almost anything else.

Google and Yelp are the most important for retail when we look at individual review sites. Retail businesses with an above average number of reviews on Google earned 38% more than average while those with a lot of Yelp reviews earn 21% more.

Regardless of the platform, local retail shops would be well-advised to get as many reviews on as many sites as possible. Even if some of those are negative reviews (which isn't necessarily a deal-breaker, as we'll explain below), there's little question that customers put more value in a higher number of reviews (or other factors) than they do in a 5-star rating.

Go deeper by reading our analysis for businesses in a different industry.

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Fresh vs stale reviews

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Fresh reviews are crucial for retail businesses

Key findings include

Retail shops average 5 fresh reviews (posted in the last 90 days)

Locations with more than 5 fresh reviews earn 28% more than average

Retail businesses with no fresh reviews earn 13% less than average

Retail businesses with 20 or more fresh reviews earn 40% more in annual revenue

The number of reviews a retail business has on review sites is clearly important, but how important is the "freshness" of those reviews?

The average total number of fresh reviews, (reviews posted within the past 90 days) per retail business in our analysis was 5. This is slightly lower than the average across all industries, continuing the theme of retail shops receiving fewer consistent reviews than some other businesses.

We started by examining how much it affected a retail location's revenue if they'd received fewer or greater than 5 reviews in the past 90 days, or if they'd received no new reviews at all.

As you can see, getting new reviews is extremely important for retail businesses. Those who don't bring in any fresh reviews in the past three months days earn 13% less revenue than average. Getting a few fresh reviews helps, but not quite enough, as those with a below average number of fresh reviews (1 to 5) earn 2% less than average.

Getting more than the average number of new reviews, on the other hand, correlates with a 28% increase in revenue. Our speculation is that consumers may put a premium on recent reviews and might be more willing to patronize a retail business with more fresh customer feedback.

Breaking this down even further, we can see that retail businesses with just 3 to 5 fresh reviews (again, fresh means posted in the last 90 days) earn 22% more than those with no new reviews.

Retail businesses who get 20 or more fresh reviews, meanwhile, earn 40% more than the typical retail business. Put another way, getting just 6 to 7 new reviews per month correlates with an extra $100,000 each year for local retail shops.

The takeaway is that retail businesses should focus on getting a steady stream of real, recent reviews rather than trying to chase a perfect star rating. And, even a handful of fresh reviews clearly holds more weight than glowing reviews from last year.

Go deeper by reading our analysis for businesses in a different industry.

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Impact of negative reviews

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Customers expect to see negative reviews of retail businesses

Key findings include

16% of the average retail business's reviews are negative

Retail locations with 25-35% negative reviews earn 3% more annual revenue than those whose are 5-10% negative

Retail shops whose reviews are 0-5% negative earn 13% less than average

Retail businesses whose reviews are 35-50% negative still earn 8% more than average

It's clearly important to get a steady stream of fresh reviews, but how important is the ratio of positive to negative reviews?

On average, 16% of reviews retail businesses receive are negative, which is slightly less than the 19% average across all industries. Let's take a look at whether the total number of negative reviews correlates with revenue at retail businesses.

As with businesses across all industries, the retail businesses that earn the highest average revenue are those with a healthy mix of positive and negative reviews.

Retail businesses with 25% to 35% negative reviews earn the most, and actually earn 3% more in annual revenue than businesses whose reviews are only 5-10% negative. Even shops with 35% to 50% negative reviews earned 8% more than the average retail business.

Now, this is likely due to multiple factors, such as businesses in that sample having a larger total number of reviews, but it's clear that business owners shouldn't lose sleep over getting the occasional bad review.

When customers browse retail business listings on review sites, they might expect to see a certain amount of bad reviews. A business with little or no negative reviews might appear untested or even a little "too good to be true."

Our takeaway: retail businesses that focus on getting as many real and authentic reviews as possible reap the rewards.

Go deeper by reading our analysis for businesses in a different industry.

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Kindest and harshest states for reviews

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Where in the U.S. are consumers kindest (and harshest) to retail businesses in reviews?

Next we analyzed online reviews at a state-by-state level to see which parts of the country are kindest (and harshest) in their reviews of local retail businesses.

rank state positive review rate
FL TX NM AZ AK CA NV UT CO OR WA ID HI OK MT WY ND SD NE KS MN IA MO AR LA MS AL GA SC IL WI MI IN OH TN KY NC WV VA PA NY ME VT NH RI CT NJ DE MD MA DC

Montana and Wyoming top the list of best-reviewed retail businesses, both with an average positive review rate of 89%. Next-door neighbors North and South Dakota are close behind with 88% positive reviews.

Overall, though, Americans in every state are generally favorable in their reviews of local retail businesses. Even Nevada, the lowest-ranked state, had an average positive review rate of 79%. This suggests that people are more likely to post positive reviews about retail locations than we have been led to believe.

Go deeper by reading our analysis for businesses in a different industry.

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States best at managing online presence

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Where in the U.S. are retail businesses the best at managing their online presence?

We looked at which states' retail shops were the best at managing their online presence. First we looked at the percentage of retail businesses in each state that had claimed at least one review site listing.

rank state claimed at least one listing
FL TX NM AZ AK CA NV UT CO OR WA ID HI OK MT WY ND SD NE KS MN IA MO AR LA MS AL GA SC IL WI MI IN OH TN KY NC WV VA PA NY ME VT NH RI CT NJ DE MD MA DC

88% of Rhode Island retail businesses have claimed at least 1 business listing, which is good for the top spot nationwide. Utah came in second with 86%, and North Dakota third with 85%.

On the other end of the spectrum, 29% of retail shops in Maine and Arkansas haven't claimed even a single listing, putting them at the bottom of the list.

Lastly, we looked at how frequently businesses in each state responded to reviews.

rank state responded to at least one review
FL TX NM AZ AK CA NV UT CO OR WA ID HI OK MT WY ND SD NE KS MN IA MO AR LA MS AL GA SC IL WI MI IN OH TN KY NC WV VA PA NY ME VT NH RI CT NJ DE MD MA DC

South Dakota retail businesses were the most engaged, averaging a response rate of 37% among businesses who responded to at least one review. South Dakota and Wyoming came in close behind with a response rate of 30%.

Alaska and Montana retail businesses were the least engaged out of all states, averaging a reply rate of 16% among businesses who responded to at least one review.

Go deeper by reading our analysis for businesses in a different industry.

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Conclusion

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Conclusion

Online reviews are the new word of mouth in the digital age. Local retail businesses that recognize and respond to how consumers use the internet to find, evaluate, and choose where to spend perform better financially than those that don't.

Specifically, local retail businesses experience the best revenue performance when they:

  • Claim all their free business listings on relevant review sites
  • Are highly responsive to customer feedback posted on review sites
  • Get and maintain a star rating between 3.0 and 4.5 on key review sites
  • Receive a steady flow of authentic reviews from real customers
  • Have a reliable review profile, comprised of about 15-35% negative reviews

Go deeper by reading our analysis for businesses in a different industry.

Read More

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