The Real Value of Online Reviews: Unveiling the Power of Customer Feedback

Online reviews are a powerful tool to draw in new customers and address any concerns they might have about your products or services. Gathering more reviews can take time and effort, which can be challenging to fit into your budget. Hence, knowing the real value of online reviews becomes essential. Let's delve into how online reviews influence sales, conversions, brand reputation, and more.

Understanding the Worth of Online Reviews
If you have initiated a campaign to gather more reviews, it's crucial to know how much time, energy, and money are reasonable to invest. This hinges on understanding the worth of reviews. This insight can help you balance your campaigns and ensure your efforts are bringing positive return on investment (ROI).

So, how do you ascertain the worth of online reviews? Reviews are not tangible assets. They contribute to your company's goodwill, brand value, and overall customer sentiment, which can be tricky to quantify. However, we can use estimates and data from customer surveys to gauge the value of online reviews.

Impact of Online Reviews on Attracting New Customers
Online reviews can convince new customers that your business delivers quality, and your products or services are worth their money. But to what extent do reviews influence this decision?

While new customers are swayed by various factors, reviews hold significant weight. Nearly 93% of consumers read reviews before engaging with a business, and 84% trust reviews as much as they trust recommendations from friends. This is incredibly important for local businesses. 

For many local businesses, such as restaurants or cafes, customers rely heavily on Google Reviews. For more significant purchases like hotels or contractors, customers might also consider other review sites like Yelp or Angi. In fact, a one-star increase on Yelp can elevate business revenue by 5 to 9%, on average.

The exact influence of reviews on attracting new customers can be challenging to calculate. If your business currently has few reviews or a low star-rating, improving these will likely yield more significant impacts on ROI than if you already have many positive reviews. However, you can estimate the worth of online reviews by considering the above-stated increase in business revenue.

Determine the number of reviews needed to alter your star rating on Yelp, Google Reviews, or a similar platform. Your overall rating is typically an average of all your reviews. Then, presuming you'll gain about 5% total revenue from accumulating these reviews, you can deduce how much each online review is worth.

Boosting Conversions with Online Reviews
Numerous customers may browse your site, look at your products, but leave without making a purchase. Product reviews can play a vital role in transforming these "window shoppers" into actual customers. Since customers tend to trust fellow customers' reviews more than information provided by the business itself, displaying reviews on your product page can foster trust and enhance sales conversions on the page.

A study indicated that even one product review on a product page can elevate conversions by 10%. With 100 reviews, this increased by as much as 37%, and 200 reviews boosted conversions by 44%. A study by the Spiegel Research Center showed that the likelihood of a product being purchased soared 270% when it received a five-star review.

These data points span a wide range, making it hard to pinpoint the exact worth of a review. However, using even the conservative estimate of 10%, you can calculate how much a product review is worth by figuring out the value of a 10% increase in conversions.

How Good Reviews Increase Sales Volume
Besides encouraging customers to make a purchase, good reviews also persuade customers to spend more. Studies reveal that customers spend an average of 31% more at a business with excellent reviews.

Undoubtedly, businesses with better reviews tend to offer superior experiences and products, leading to customers naturally spending more. But customer trust is also a crucial factor. If a customer is unsure about a business but is interested in a product, they might make a small or sale purchase to test the waters. Conversely, if a customer trusts a business and sees that it has numerous positive reviews, they're more likely to purchase a larger item with confidence.

If your business already boasts excellent reviews, this estimation might not be particularly useful. However, if your reviews are average or poor, consider how many positive reviews might be needed to upgrade your overall rating to "good" or "excellent." Then, calculate a 30% increase in sales. Divide this number by the number of reviews needed, and you can roughly calculate how much each review is worth.

The Cost of Neglecting Reviews
While an abundance of positive reviews can augment sales, conversions, and attract new customers, there's also a cost associated with not having reviews or not having enough. When choosing between businesses, customers tend to avoid businesses with low star-ratings or few reviews overall. If your business lacks reviews, you're likely losing out to competitors.

Surveys suggest that, on average, customers need to see about 40 reviews before deeming the overall rating credible. Less than half of consumers say they would patronize a business with fewer than 4 stars. Therefore, if your business has fewer than 40 reviews or less than a 4-star rating, positive reviews are probably more valuable to you, since improvements will be more noticeable.

If your business has fewer than 4 stars on the review platform most relevant to your operations, your business may be overlooked by as many as half of your potential customers. This is especially true if your competitors boast more reviews and higher star-ratings. If you gathered enough positive reviews to secure a solid four-star rating or higher, up to half of your potential customers would consider your business, where they might have ignored it before.

Of course, not all these potential customers will make a purchase, but you can calculate the approximate value of new, positive reviews by considering a 50% increase in new customers. Divide this number by the total number of positive reviews needed, and you can roughly calculate the value of each new, positive review.

Wrapping It Up
Automating the process of gathering reviews can help you save time and collect reviews without excessive time or monetary investment. This way, you can prevent overspending while still generating valuable reviews. Tapstar simplifies the automation process; you can establish a landing page, reach out to customers, organize your reviews, and display them, all in one place.