According to Revlocal.com, Google was also found to be the most important review site for purchase decisions, and consumers are 38% more likely to visit and 29% more likely to consider buying from a local business with a complete Google My Business page.
How much is a bad review? It takes more than 1 bad review to cost your business as consumers ignore bad reviews if the overall review is good (4 stars out of 5 and above). Bad reviews cost local businesses from $180,000 for a badly-reviewed restaurant to $1.1 million for a badly reviewed car dealer.
Reviews and online reputation play a critical role in the success and failure of any business. There can be different situations. We will discuss how much does a bad review cost for local businesses.
The Impact of Bad Review on Business
Bad reviews can majorly affect small businesses that relied on reputation or sell higher-priced products like cars. It doesn’t matter the reviews are genuine or fabricated; they will potentially drive away from the customers.
A bad review can affect your business badly because
- A single bad review can take away 1 potential customer out of every 10.
- Consumers trust online reviews before making any purchase because malicious reviews are supposed to be removed by smart artificial intelligence in Google, Facebook, or Amazon.
- People might not give importance to one or two bad reviews, but a steady flow of bad reviews can drive potential customers away. The bottom line is a bad review that led to lower revenue.
Based on rough estimates, it results in a loss of revenue of almost 500 billion in the United States. The number is shocking, but it indicates how widespread the problem is and how it can affect small businesses in competitive and commodity businesses like cars.
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House Cleaning Services
The cleaning industry also suffers from the impacts of bad reviews.
Reputation issues arise because of mistrust, lack of quality, and the most important one, poor reviews from dissatisfied or angry clients. It could even be petty crimes like thefts during cleaning that will deter potential customers.
Imagine having multiple customer complaints about missing items from a cleaning company.
If a new customer wants to get your services and reads online reviews in which you accuse your employees of theft, they will assume that you are not trustworthy for their work.
However, it can be a misunderstanding or a mistake, but most sites won’t allow you to change or delete your review. Companies spend much higher costs on marketing than customer retention costs or have to rebrand their companies.
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Hotels
Hospitality prices have always been fluctuating, and now owners are trying to adjust their prices according to their online reputation.
Below is an example of a bad review of simple customer complaints like spoiled air conditioners.
Worst hotel I ever stayed.. not recommended.. the airconditioned is not working properly.. shutdown every 90 seconds at 3oclock in the morning.. I was sweating.. I just need a good night sleep
Companies use social media platforms to know their online reputation and adjust their rates. According to studies, only a 1% increase in online reputation can lead to a 6.9% increase in ADR.
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Restaurants
People who searched for restaurants is definitely looking for a good experience. Imagine reading a poor review like the one below:-
Poor and slow service. Food is overpriced. Doesn't even give a receipt or say thanks when I made payment. Asked me to wait for receipt even when it's already printed. Food is slow to arrive and some dishes not available. Will not patronise again. Poor value for money.
According to a study of Harvard Business School, an increase of a star in Yelp 5-star rating can lead to a 5 to 9-percent increase in sales revenue. The difference between a 3-star rating and a 5-star rating can result in a revenue increase of up to 18%. If the annual income of a restaurant is $1 million per year, they might be losing $180,000 every year just because of negative reviews.
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Product Sales
If your company has mostly negative reviews than 4 out of 5 potential customers won’t buy from your company. You can calculate the impact of bad reviews on your business by keeping these stats in mind.
For example, you are selling 5 products daily each of $50. When you lose 4 customers means you will lose out $200 for just a single day. You can calculate the yearly loss by multiplying it with 365.
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Auto Dealers
As cars are pricey purchase, people will leave stronger comments on their purchase.
Beware, this company does not do what they say they will. They made me a offer, waited for me to upload all my information only to come back a day later with an offer thousands less. I would not sell them dirty lake water to put out a fire. Nor would I purchase anything from them.
Almost 8 out of 10 buyers start their search online, and more than 50% of people choose a car dealership based on their online reputation. In the United States, dealerships sold about 1,050 vehicles, and they have earned almost $2100 for a single vehicle. These sales generate a profit of nearly $2.2 million for each dealer. But if your company has negative reviews, you may lose half of your sales and earn only $1.1 million per year.
How to Protect Your Online Reputation from Bad Reviews?
As a business owner, you can protect your business’s reputation in six ways.
No doubt, bad and fake reviews giving a 1-star rating can surprise your business. Your company needs to be one step ahead. If you have a detailed crisis management strategy, you can recover quickly. Perform these steps to protect your business from a bad reputation.
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Stop Bad Reviews Before They Happen
Listen to customers' concerns and give them other ways to provide you feedback regarding the product or service. Try to resolve the matter reasonably before they take their grievances online and affect the reputation of your business.
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Ask For Reviews From Happy Customers
Businesses know how many people are satisfied with their products, so you can ask those happy customers to share their feedback online. Many platforms can help to separate positive reviews, and this counterbalance approach can suppress negative feedback. Once you have positive reviews from customers, you can share them on your social profiles and websites.
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Stay Vigilant
Sign up for Google alerts and other tools. If a customer leaves a negative review, don’t wait for more bad reviews and try to fix things as soon as possible. React quickly and try to resolve the matter before it’s too late.
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Make Use of Social Profiles
Identify social media platforms that can help you promote your business and keep posting on them to enhance your digital footprint.
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Submit a Press Release
Submit a well-managed and optimized press release. Make sure that it discusses all the positive things related to your company, like charities or sponsorship, etc.
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Respond Professionally to Bad Reviews
Sometimes negative reviews are real, and when you leave a bitter reply, they harm your business. Reply to all negative reviews professionally. Show some regret and promise them to fix the problem and a better experience next time.
Negative reviews can reduce your sales and leave a bad impact on your online reputation. However, it depends on businesses; how much does a bad review cost? But generally negative reviews drive away from four out of five potential customers and result in lower revenue.