One of the highest compliments a consumer can give any retailer is to tell someone the company can be trusted and operates with integrity. Perhaps the accolades were prompted by receiving exceptional service, selling quality products at fair prices, or exceeding the person’s expectations at every step of the buying journey. Whatever the reasons, these types of comments are worth their weight in gold.
This year, the Better Business Bureau surveyed consumers to find out the importance of honesty and integrity when conducting business within the home improvement industry. Although 2020 was a challenging year, the pandemic and the economic crisis resulting from Covid-19 are gradually subsiding. The survey points out understanding customer expectations will help retailers figure out what matters most to customers. Owners can then use the answers to create a positive customer experience that will generate repeat business and a steady supply of referrals.
The Power of Online Reviews
One of the best sources to get insights into customer expectations is online reviews. But, managing online reviews and responding to negative ones can be difficult for small companies. However, the feedback from customer reviews is a valuable and powerful way to improve operations and profitability. The BBB spoke to Dr. Evans Baiya, a growth strategist and coach, who says, “We have to think about small targeted segments. You need to have a good understanding of the “what” and “how” of your customer. When you talk about new value—what is it that you are going to take to your customers this year that they instantly will find value in?” There’s no doubt customers read and respond to online reviews.
- Almost 95 percent of customers read reviews before buying a product. (Spiegel)
- Seventy-two percent of customers won’t decide before they read reviews.
- (Testimonial Engine)
- Ninety-three percent of customers use reviews to determine the quality of local businesses. (BrightLocal)
How Reviews Translate into Revenue
Potential customers are constantly seeking information about local businesses on Google, Yelp, and Facebook. While many companies fear those negative reviews they may find posted by disgruntled customers —the situation is not as dire as it seems. Womply, a local commerce platform, surveyed 200,000 U.S. small businesses to understand the correlation between reviews and revenue better. Their research indicates that there are simple things retailers can do to manage and improve reviews and use them to generate income.
- Claiming free listings on at least four review sites can earn a business 58 percent more revenue.
- Replying to about 25 percent of reviews can average 35 percent more revenue
- Five-star-rated businesses have below-average sales. The best rating is 3.5 to 4.5 stars
Why Responding to Reviews Matter
In the eyes of consumers, businesses that respond to positive or negative reviews are seen as being more credible since they actively engage with customers. Surprisingly, only 25 percent of companies respond to their online reviews. That means the vast majority fail to do so. However, when customers see that businesses are active on review sites, they are more prone to spend money with the company.
- Responding to just one review can earn businesses four percent more than average.
- Businesses that respond to at least one review respond to an average of 26 reviews.
How Star Ratings Impact Revenue
While there are several factors that business owners directly control with online reviews, star ratings fall into the hands of consumers. Low ratings on Google are more damaging to a businesses’ revenue than a low rating on Yelp or Facebook. Womply survey results indicate that high star rating matter, but not as much as local businesses think they do. Five-star rated establishments average much less revenue than the typical business because they have fewer reviews and are less established. They could also be compromised by buying fake reviews.
- 3.5 stars to 4.5 stars are the sweet spot for a local business
- 4 to 4.5 stars rating earns the highest average revenue
Focus on Increasing the Number of Reviews
Google is the most important review site for small businesses. The average number of reviews across all areas is 82.5. The survey shows a direct correlation between the number of reviews customers post and the company’s sales revenue. Businesses that exceed the average number of reviews generate 82 percent more annual revenue than those with less than the average number of reviews.
- 82 reviews trends above-average levels
- Thresholds above 82 reviews generate much higher levels of revenue
- Businesses with over 400 reviews more than double the income of an average business
Small businesses should do what is necessary to get as many genuine and honest reviews from customers as possible. Although some may be negative, customers value those as well. When organizations respond, potential purchasers view this as a desire to resolve the problem and ensure that the customer is satisfied with the service or product.