A study issued last week by Womply found that there is a significant negative impact on revenues from receiving bad reviews across Google, Yelp and Facebook, but the price for bad Google reviews is especially steep.
The study, “How Online Reviews Impact Small Business Revenue,” found that small business that has a 1 to 1.5-star rating on Google generated 33% less revenue than the average business. For Yelp, the penalty for the same low rating was 19%. On Facebook, it was 9%.
Womply is a CRM, email marketing, and reputation management SaaS provider targeting small businesses.
Here is how the company describes the study methodology.
To compile this study, Womply’s data science team conducted an in-depth analysis of transaction and online review data for more than 200,000 U.S. small businesses in every state and across dozens of industries, including restaurants, retailers, lodging places, salons, auto shops, and medical offices.
One clear takeaway from the Womply study is that having a variety of reviews, positive and negative, is a good thing, as long as the average score is strong. Review volume also is a big factor in business results.
Other notable findings from the Womply study include:
- Being a 5-star business is apparently overrated. The sweet spot for optimal performance is apparently the 3.5-4.5 star range, according to Womply’s findings. In fact, 5-star businesses earn less than 1-1.5 star businesses. Perhaps a perfect score seems inauthentic? Also, a perfect score is more likely in a business with a low volume of reviews.
- To the point on review volume, the study finds businesses with more than 82 total reviews earn 54% more in annual revenue than average.
- Recent reviews also make a big difference. Businesses with more than nine “fresh” reviews earn 52% more than average.
- Bad reviews on Google and Trip Advisor have the greatest negative impact on business performance.
- As we’ve covered in other studies, responding to reviews has a big impact on performance. Womply found that businesses that reply to more than 20% of their reviews generate 33% more revenue than average. By contrast, businesses that never respond to reviews earn 9% less than average. We’re actually a little surprised the latter figure isn’t higher.
The Womply study joins many others over the past year that support the notion that Google reviews have an outsized impact.
BrightLocal did a study last year showing the relationship between Google star ratings and SEO ranking.
SOCI and LSA recently joined forces on a study examining how better performance at “Localized Social Marketing” impacts business results for multi-location brands. One key finding was Google’s dominance in reviews volume.
