JD Power may have some competition these days. Never before have consumers had as much influence on a companies reputation as they do today! Why do companies such as Nordstrom and Southwest Airlines spend so much time, money and training focused on the professional service provided to the client? First and foremost, because it is the right thing to do. Secondly, their employees understand that a positive and memorable experience will somehow make it to the bottom line via reputation, customer loyalty and eventually ... revenue. The world is changing quickly and the consumer has a large stage to provide positive reviews on the product and service. Become known as the difference maker for your organization.
Positive Customer Reviews Lead to Increases in Revenue
We’ve always known that negative customer reviews can bulldoze a business. But what can positive consumer reviews do?
Michael Luca, a Harvard Business School student, discovered that consumer reviews have a positive effect on revenues in the restaurant industry. In his research, “Reviews, Reputation, and Revenue: The Case of Yelp.com,” Luca revealed that “a one-star increase in Yelp rating leads to a 5-9 percent increase in revenue.” Interestingly enough, this dynamic seems to affect independent restaurants and not chain restaurants.
A Great Opportunity for Small Businesses
“The data show that people respond more to reviews when they don’t know much about a company. In industries where this is the case, the response should be larger,” said Luca in an email interview with HubSpot. This is great news for small businesses, for they can level the playing field and take advantage of customer reviews to grow their reputation.
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