“It takes 20 years to build a reputation and five minutes to ruin it. If you think about it, you’ll do things differently.”
- Warren Buffett
This quote by billionaire investor Warren Buffet lauds the significance of a business’ reputation. When businesses consider their revenue, they often ignore the importance of digital reputation. But digital reputation is crucial, especially in an increasingly tech-connected world.
Digital reputation starts with offering the best customer experience. It’s the companies that take their customer experience to the next level and really consider the customer’s willingness to recommend their products or services that truly elevate their digital reputation and bottom line, compared to their competitors.
Why is digital reputation so important?
But why is digital reputation so critical for businesses? Research shows that consumers care a lot about online reviews and use them on a daily basis to make purchase decisions.
About 97 percent of customers read online local business reviews last year, with 12 percent searching for a local business online every day, according to a BrightLocal survey. Furthermore, 85 percent of consumers trust online reviews as much as personal recommendation, and 66 percent say that online reviews are their most trusted recommendation. About 52 percent won’t do business with a three-star company; 87 percent with a two-star rating.
And the significance of digital reputation is only increasing. Customers read an average of seven reviews before trusting a business, up from six last year. According to ReputationX, 74 percent of people say that reading online reviews increases their trust in a business.
But a positive digital reputation doesn’t just boost consumer trust in a business. A Harvard Business School study found that a one-star increase in Yelp rating leads to a 5 to 9 percent increase in revenue.
The Pros and Cons of Negative Reviews
Negative reviews clearly have an impact on a business’ revenue. According to Forbes, companies risk losing 22 percent of their business when prospects find just one negative article on the first page of their search results. That number increases to 44 percent of lost business with two negative articles and 59 percent with three.However, on the flip side, negative reviews can help your business appear more trustworthy and authentic to potential customers. According to Northwestern, purchases actually drop off when the average star rating surpasses 4.2 to 4.5. Consumers perceive ratings closer to a perfect score of 5.0 as too good to be true and are less likely to trust the business.
Therefore, a small number of negative reviews, combined with a large number of positive reviews, can have a great impact, because they help foster a sense of trust and authenticity. Customers appreciate these negative reviews as a crucial part of their decision-making process and a simple way for them to gauge customer experience at the business in question. According to PowerReviews research, a whopping 82 percent of consumers seek out these negative reviews to inform their decision.
How Businesses Improve Their Online Reputation
Obviously, digital reputation is critical to fostering a sense of trust in your customers. But just how do you improve your digital reputation, moving forward?
We recommend making online reputation engagement a crucial component of your company’s marketing strategy. That means intercepting your reviews before they even happen. According to a 2003 Harvard Business Review study, it’s also crucial to make your five-star customers your marketing department. Convert your promoters into your marketing engine by following up on five-star reviews, and neutralize your negative reviews before they even happen.
Boosting Online Reputation in Practice
Placement of the reviews is equally important for digital reputation as their content. XAmplifier advises its clients on where to place their best reviews, relying on internal analytics to consult them on placement even if the client believes that reviews should be placed elsewhere.
“Our client might request that we drive their reviews to one site, but based on analytics from our staff data scientists, we recommend sites that see exponentially more traffic,” XAmplifier CEO and founder James Kropp says. “So there’s a difference between driving reviews to an industry-focused, low-traffic site and a less focused but more prominent site with higher traffic, and we find that driving genuine reviews to high-traffic sites is more valuable for our clients.”
Furthermore, XAmplifier is changing its clients’ company cultures and, to a certain extent, helping them with adjusting their strategic direction. Sentiment analysis performed by the platform’s data scientists reveal that customer experience in the office can alleviate potential shortcomings in the service itself.
One particular XAmplifier client thought that they were measured on the success of their service and that the quality of the service outweighed the rest of the experience.
On the contrary, XAmplifier data shows that customer experience can mitigate a service with a less than ideal outcome. Based on that information, the client is making major changes to its company culture, making the customer first in every interaction from the time the receptionist introduces themselves.
To sum it up, digital reputation and online reviews – both positive and negative – are crucial for building trust and authenticity with customers and, in turn, boosting revenue.
For XAmplifier clients, the reputation effect is clear. In one case, XAmplifier had a client who had a single location jump from 2.7 stars to 4.3 stars in a span of 12 months, which resulted in driving more traffic to their Google My Business (GMB) panel and, in turn, led to higher-level interaction with that location. In another case, XAmplifier has seen its client boost their number of inquiries by over 6,000 across 25 locations in 12 months. By any conservative estimate, this kind of increase in digital presence can lead to a significant positive impact on their revenue.
From converting promoters into your marketing department to neutralizing negative reviews before they even occur, online reputation management is an important part of a company’s marketing strategy.
To quote Frederick F. Reichheld’s 2003 Harvard Business Review study: “The only path to profitable growth may lie in a company’s ability to get its loyal customers to become, in effect, its marketing department."
Learn more about digital reputation and request a demo with XAmplifier today!