Irrespective of the type or size of a business, online reputation management is crucial. Internet usage has increased significantly over the years, and many people are turning to it to get information. For example, potential clients are likely to Google search for a business name and check the reputation before deciding on whether or not to buy from a firm.
If a company cares about other people’s perception of its brand, it needs to plan to ensure that what they find is positive. Search results about a brand may make or break it. If its negative, people are likely to move to other competitors’ sites.
Sound online reputation management strategies enable organizations to gain a competitive as they appear in search results in a way that earns them trust. Consumers tend to make purchases only from dealers they trust. Another benefit of managing a reputation on online platforms is that it helps to build brand awareness. Here are the three problems a business may experience due to bad online reviews:
Significant Reduction in Sales Volumes
Some studies have shown that consumers trust online reviews more than ever before. According to statistics, about 80% of customers are unlikely to buy goods and services from sellers with negative reviews. Although some sites such as Amazon crackdown on fraudulent feedback from internet users, a significant percentage of reviews may be fake.
Such reviews may boost a competitor's sales volumes or result in increased complaints from customers. Either way, this leads to reduced revenue. Bad online reviews carry the same weight, whether genuine or not, as many people may not tell the difference. However, some internet users may understand that mistakes may happen and have a willingness to overlook negative feedback from some clients.
According to some researchers who focused on the impact of bad reviews on restaurants, a 1-star rating increase can result in a 9% increase in sales revenue. Also, it was established that revenue differences between 3-star and 5-star restaurants could be as high as 18%. This means that businesses with about $1 million annual revenue may lose up to $180,000 due to bad reviews.
Difficulties During Recruitment Exercises and Retention Efforts
Other than revenue, bad negative online reviews may mean increased hiring costs and lead to employee retention crisis in an organization. According to the findings of a study conducted in the United States, over 70% of residents are unlikely to apply for jobs in companies with bad online reviews.
Existing workers may be the cause of a bad reputation, which may prevent an organization from recruiting skilled employees. The customers' perception of the CEO of a company can also have a negative impact on its reputation. For example, their negative posts may lead to brand boycotts.
If a firm decides to retain leaders after such incidents, it may cost them as high as 21% more in remuneration packages. In some cases, it may be impossible to convince some employees to stay in an organization with a bad reputation. If that happens, organizations may spend tens of thousands of dollars in the replacement of midrange positions.
Negative Online Reviews May Mean Losing Customers
According to some researchers, a single bad review can drive away about 30% of potential customers. Also, the more the negative reviews, the more the number of clients a business may lose. The researchers also found out that over four negative reviews may lead to the loss of 70% of clients.
Many customers tend to share bad experiences than good ones after buying goods and services. For most reviewers, sharing bad reviews is a way of ensuring other people don’t experience the same. Organizations can encourage their satisfied customers to leave their reviews too.