Rise or Ruin: How Online Reviews Make or Break Your Business

Rise or Ruin: How Online Reviews Make or Break Your Business

If you own a smartphone like most Americans, then the chances are that you will recall Pepsi’s recent Kendall Jenner “protest” ad. You may have even only been introduced to it in the context of the severe online backlash it incurred on Pepsi. As a giant corporate entity, Pepsi will likely endure, but not all businesses can survive a dip in public internet opinion on this scale. In fact, according to the Pew Research Center, 68% of consumers trust opinions posted online as much they would trust an acquaintance and say that good reviews make them trust a business more. With almost 90% of Americans using internet opinions to help them make decisions on how and where to spend their money, businesses can’t ignore the importance of their online reputation.

More Stars, More Money

As positive reviews pile up, so do the profits. According to a business blog on Brightlocal.com, each star added to a business’ online profile can increase business 5-9%, increasing the number of customers who consider the business, enter through its doors, and complete transactions. Additionally, if given the choice between two businesses offering identical services, consumers are almost four times more likely to choose the better-reviewed business. Consumers have also shown that they are willing to spend more money on a service or product from a positively reviewed business. One can understand why businesses would place an increased emphasis on their online reputation.

Negative Press, Bad Press

As useful as positive reviews can be for business, negative reviews can have an exponentially greater effect. Where positive reviews can increase profits, improve reputation and perceived trustworthiness, and bring in more customers—negative reviews damage prestige, decrease profits, and ruin the perceived trustworthiness of a business. As Brightlocal states, a single negative review has the capacity to drive away 30 customers. If that were not enough, consumers are much more likely to review a business based on a negative experience than a positive one.

Witch Hunts

It doesn’t take a full investigation to realize the effect of negative publicity. A business can become a pariah almost overnight. Recall the internet backlash after a small bakery refused to bake a cake for a same sex couple’s wedding, or the time it was discovered that dentist Walter Palmer had killed Cecil the lion. These examples show that online reputation of a business can be affected by much more than business related interactions.

Job Prospects

Customers aren’t the only ones who check reviews. 76% percent of professionals research a company online before considering a job opportunity, according to research on Brightlocal. The clear majority of job seekers prefer to work for an employer with higher reviews, and over half would not even apply to a company with 1 star on its Google or Glassdoor profile.

False Positivity

Given the nature of negative reviews and their damaging effects to the reputation of a business, some businesses have taken the reins of their online presence, and not with the most honest of methods. In 2013 the New York Attorney General’s office publicly announced that it had reached a settlement with 19 companies for $350,000 in fines over fake reviews produced by the companies. The companies ranged from media groups, to AstroTurf suppliers, to spas. More recently, in 2016, Alibaba sued Shatui.com for over $300,000 dollars for producing fake positive reviews. The company had allegedly enlisted five thousand people to write fake reviews.

Trust and Honesty

The relationship between reputation and business is evolving. The effects of online reviews are substantial and they aren’t going away any time soon. While some companies may attempt to increase business with publicity stunts or sponsored reviews, the online social landscape is complex and always changing, which can lead to a business shooting itself in the foot, so to speak. The best method for success may be to simply provide the prompt and exemplary service a business would intend for a reviewer to describe.

Samuel Piper is a student at Excelsior College and completed this article as part of an internship project in conjunction with the AMA New York Capital Region and Braathe Enterprises.

Disclaimer:
Opinions expressed are solely those of the author and do not represent the views or opinions of their employer, Excelsior College, Braathe Enterprises, or the AMA New York Capital Region chapter.

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