Ignoring online reviews can be a big mistake.
A 2019 report from the customer insight firm, Womply, revealed small businesses that reply to at least 25 percent of its customer reviews earn 35 percent more revenue than their peers.
This is a huge number that's hard to ignore.
Womply's researchers analyzed data from more than 200,000 small businesses across multiple industries and discovered some interesting conclusions.
A 4.5 star rating is better than a 5 star rating.
Just 19 percent of reviews are negative.
Businesses with at least 9 recent reviews earn 52% more revenue.
You can read the entire report here.
Let's take a closer look at why responding to reviews drives revenue growth and how you can do it gracefully, even when the reviewer is angry, mean, or unfair.
How responding to reviews increases revenue
There are two ways responding publicly to reviews can grow your business.
Improve your search rankings
Send a positive signal to potential customers.
Improve your search rankings
Online review sites are also search engines. People actively look for businesses like yours on Google, Yelp, Facebook, OpenTable, TripAdvisor, and others. Most offer free listings for businesses.
Womply's research found that just claiming your free Google listing can grow your revenue by 10 percent!
My own analysis confirms that Google is the most important listing site for a small business because it's the search engine customers use most often, even when they aren't specifically looking for reviews.
Here's the kicker.
Google is pretty clear that responding to reviews will improve your search ranking. One analyst estimates that actively responding to customer reviews accounts for 15 percent of Google's SEO algorithm for local businesses.
Let's say I'm in Austin, Texas and I want to find a coffee shop.
Notice how Google serves up a map at the top of the search results along with three businesses that have high ratings:
Imagine how many more customers would find your business if you could get it on that map!
The Hideout Coffee House and Caffe Medici both have over 200 reviews, but the Capital One Cafe has just 32. So how did the Capital One Cafe get one the list?
One explanation is a high response rate to recent reviews, which helps it get ranked higher in the results.
You may notice that Capital One Cafe is part of a major corporation, Capital One. It’s actually unusual for a large corporation to respond to online reviews like this. Most haven’t caught on yet.
So ask yourself this question: Can you do a better job of responding to customer reviews than Capital One can?
Of course!
Send a positive signal to potential customers
Womply's research revealed that businesses with a 4 to 4.5 star rating earn 28 percent more revenue than average. That's even better than businesses with a perfect 5 star rating!
Why is 4.5 better than 5?!
The answer is trust. Many customers seek out negative reviews. They want to know what people complain about to see if there's a consistent trend or just a few grouches. When a business has a lot of reviews, but no complaints, something seems fishy.
Here's where responding to a review can really help.
The response isn't necessarily for the customer who writes the negative review. It's for all the other customers who read the negative review and your response. Research shows that customers are more likely to be empathetic to you and your business if your response to a negative review is polite and professional.
And you might even change a customer's mind. Here's a powerful example:
Image credit: Womply
How to respond to an online review
It's always important to be polite and professional when responding to an online review. The specific way you respond depends on the type of review you receive. There are three general types:
Happy customers
Neutral customers
Unhappy customers
I'm going to use one of my favorite companies, Ideal Plumbing, Heating, Air, and Electrical, to show you how a small business can effectively respond to different types of online reviews.
First, we'll look at a review from a happy customer. Ideal does a great job of acknowledging the customer and thanking them for their review.
There’s a few things to notice about the review:
The response thanked the customer.
It acknowledged the customer’s feedback.
The reply was sent quickly.
The next type of review is from a neutral customer. This particular customer gave three stars, acknowledging Ideal's excellent work while complaining about the prices.
Notice the friendly and helpful response.
It sincerely thanked the customer for their review.
The response called the customer by name to make it more personal.
The reply politely offered an explanation for Ideal’s pricing, without getting defensive.
Keep in mind customers aren't reading these reviews in isolation. You'll notice the review right below it commends Ideal on sticking to the budget. So a potential customer might think that Jeffrey is a lot more price-sensitive than other customers like John who value fast service and high quality work.
The final review is from an unhappy customer. Some unhappy customers may have a legitimate gripe, while others appear to be unreasonable. And yes, a few even lie.
The review below is from a someone who didn’t even use Ideal’s services!
This person was upset about Ideal's charges for emergency air conditioning service on a very hot Saturday. Ideal's response is still positive, friendly, and helpful to other customers who might be reading the review:
There are a few things I really like about this response:
It comes directly from the owner, Don Teemsma.
Don adds important context that would be helpful to other customers, without getting defensive.
He politely explains the fees while acknowledging the customer’s urgency.
Will this response change the angry customer’s mind?
Probably not. But that’s not really the point. Don’s polite and measured response likely assures other customers reading the review that Ideal is an honest business that takes good care of its customers.
I have personal experience with this situation.
Last year, I woke up on a Saturday morning to find my own air conditioner had stopped working. It was going to be one of the hottest days of the year, and I was truly worried about the heat.
I called Ideal first thing in on a Saturday morning to schedule the repair, knowing full well that Ideal was going to get a lot of calls just like mine that day. Fortunately, Ideal is very responsive. Phil, one of Ideal’s friendly and capable HVAC technicians, came out to my house and got my system working again before noon!
That type of service was definitely worth a premium!
Online Review Resources
There are a number of resources that can help you leverage online reviews to grow your business. Womply's report is a good place to start.
You can also watch a webinar with Jess Greene-Pierson, Womply's Director of Go To Market, where we talk in-depth about using online reviews to grow revenue.
Want to really dive in? You can take my LinkedIn Learning course, Serving Customers Using Social Media. There are three ways to watch the video:
Use your LinkedIn Learning subscription to watch it for free.
Access the course at no charge with a 30-day LinkedIn Learning trial.
Purchase the individual course.
Here's a short preview.