What Does a Single Negative Review Cost You?
Many of our businesses ask us what exactly a negative online review means for their business. Does it actually cause that much of an issue when it comes to potential customers and their bottom line? We did some extensive research recently and found out that a single negative review on a platform like Facebook can have a wider effect than you might expect.
Research shows that negative reviews have become the #1 factor in consumers forming a bad opinion about a product or service. Statistically, 9 out of 10 consumers base purchase decisions on reviews, and 80% of those buyers will change their purchasing decision based on negative evaluations. The simple fact is, negative reviews affect the judgement and decisions of buyers. With two-thirds of consumers sharing their experiences and opinions on social media, recent data shows that only 14% of consumers will even consider buying from a business with 2 stars or less, and 19% will not buy from a business at all after reading just 1 negative review.
According to Review Trackers, Facebook has become a major source in reviews, with 55% of consumers considering Facebook as a common place to learn about brands. This year’s study uncovered even more about how reviews and recommendations play a role in the entire path to purchase. Facebook users report that reviews are more reliable than posts or comments, and 71% trust the reviews of people they have never met. Facebook is definitely one of the major players when it comes to customer reviews and opinions.
Obviously a negative review posted on Facebook can be very detrimental, but what about the general effect of reviews posted on any platform? We broadened our research to studies that included all platforms where someone could post a negative review. This means that they included platforms like Facebook and Twitter, as well as Yelp, Zomato, Angie’s List, Google Reviews and TripAdvisor.
Additional research done by the Nielsen Foundation shows that 68% of consumers trust online opinions posted anywhere regarding products and services. This means that when someone is looking for a new business, possibly after moving, they will most likely look to find reviews for businesses to help influence their decision. Studies show that this is especially true for local, small businesses. 88% of people read reviews on local businesses before visiting them, while 39% read reviews on a regular basis
When looking at research done by Right Now technologies in 2006, it was found that 68% of customers would not return to a business after a negative customer experience. In two years, that number jumped up to 87 per cent. In 2011, it was 89 per cent. This means that more customers than ever before will now leave your company after a single negative experience.
On average, a single negative online review will cost you 30 customers, according to a 2009 Convergys Corp. study. That’s just from a single review. Even if you only have 100 bad customer experiences in a year, and only one tenth of them decides to write about it online, that means you’re losing 300 potential customers.
This means that companies, especially small businesses, need to take a proactive approach to negative customer feedback. If people feel like their comments are not being heard, they are significantly less likely to change their opinion, and at times can become even more vocal. The 2011 Harris Customer Experience Impact Report showed that 50 percent of customers give brands a week to respond to a question before they stop doing business with them.
Using the above statistic, we can draw some very startling conclusions about the financial impact that a single negative review can have on your businesses. These numbers assume that you run a small business that provides some sort of service to your customers (i.e. cleaning services, home repair, medical services, etc.):
We know that one negative review will cost the company a total of 30 potential customers. This means that if a customer spends, on average, $200 with your business on a single visit then you are losing $6000 a year for every negative review of the company.
Now, that might not sound like too much, but we can look at it another way. If you have return customers for your businesses, then the loses can be even more staggering. That same loss of 30 potential customers because of one negative review is mad even worse if a customer spends, on average, $8000 over their lifetime at your business. One negative review has such a long-lasting impact that your company will be losing a lifetime income of $240,000 for every negative review.
Taking a proactive approach to customer care is extremely important. You need to not only have a solid plan for dealing with customer service at your place of business, but you also need to have a good plan for how to effectively deal with negative feedback. There are numerous steps that you can take to combat negative customer experiences and slow the tide of negative customer reviews, but you can’t be complacent.
Feeling out-of-date when it comes to social media marketing strategies? Don’t limit yourself to outdated methods and strategies. Let dRAE Media & Marketing help you reinvigorate your social and digital strategy. Doesn’t matter whether you are in Louisville, Lexington, or Timbuktu, we have the tools to take your business to the next level. Contact us today and let us show you what dRAE Media & Marketing can do.