Are SMBs Living and Dying by Online Reviews?

BY: ON WEDNESDAY, JANUARY 29, 2014

As we've said many times before; every business is an online business.

That is, the modern business' existence is constantly out in the open for the world to see. Our websites represent our faces. Our social presence represents our voices. If users are looking for us, chances are they’re looking online (and chances are, they’ll find us).

What they find, however, represents a whole other story.

Enter the world of Yelp!, arguably the most popular online review site today. Yelp! and similar sites have transformed the way we discover, judge, and critique the modern business. Boasting millions of visitors per month and over 47 million reviews across the site, there’s no doubt that Yelp! has had an impact on a good chunk of the country’s businesses. In fact, you can often Google the name of a business and see a Yelp! listing before the company’s actual site.

Nobody’s arguing that the sites that provide ratings and reviews of businesses online aren't important; however, such sites also come with some unspoken baggage. That is, negative reviews can have huge implications for today's SMBs.

Recent studies and surveys tell us that online reviews may hold more weight than most of us ever thought possible. Consider the following:

In a recent study by Dimensional Research, "90 percent of respondents said their buying decisions were influenced by positive online reviews, and 86 percent were influenced by negative reviews.”

A 2011 Harvard Business School study focusing on restaurant reviews online found that “a one star increase in Yelp rating leads to a 5 to 9 percent increase in revenue.”

A Cornell University study from 2013 examined hotel review sites such as Travelocity and TripAdvisor, finding that “a one-point increase in a review score (on a five-point scale) allows a hotel to increase its price by up to 11.2 percent without scaring away customers . . . The better its online scores, the bigger the company profits.”

All of this buzz from a few words on a page? Are today's companies really living and dying at the hands of their reviews? Does this spell good news or bad news for today’s SMBs? Consider further some of the questions and controversy surrounding sites such as Yelp!

The Negative Spin

There’s an argument to be made that users are psychologically inclined to write negative reviews versus positive ones; therefore, many online reviews are predisposed to be negative from the start. This effect creates a sort of mob mentality when a business does something a customer perceives to be “wrong.” The threat of a negative review is always looming and, because of anonymity and the nature of such sites, there’s little for businesses to do about it. In a a mere instant, one customer’s poor experience is on display for the world to see. Is that fair?

The Legitimacy Factor  

The legitimacy of online reviews has come into question since the inception of such sites. Yelp! in particular has worked at great length to fight spam reviews; however, can they realistically fight them all? What tools do they have to work against the competing businesses spamming fake reviews? While there’s no doubt that Yelp! wants to avoid seeming like spam, just about any review can be put under a certain degree of scrutiny. What truly keeps a business from inflating its own ratings or needlessly trashing their competitors? What percentage of such reviews manage to slip through the cracks?

Of course, there are repercussions for spam when it comes to review sites; however, policing such behavior is much easier said than done. Nevertheless, online reviews as a whole can quickly become watered down as we don’t know what’s legit and what’s not.

Given the recent slew of lawsuits and horror stories from other business owners concerning Yelp!, it seems like only a matter of time before they step in with a measure to stop the spam once and for all. Whether or not they truly can remains to be seen.

Does Responses Really Matter?

While businesses do have the ability to respond to negative reviews on Yelp!, oftentimes the damage is already done by the time a negative review hits the page. Sure, the business owner is able to state their own case and provide an explanation or solution; however, they cannot remove a one-star review or keep others from reading what could potentially be libel. Is it the responsibility of business owners to police such sites themselves and fight back against such complaints?

Or Are Review Sites Helping Us?

On the flip side, there are a number of positives we may take away from sites like Yelp! (mostly from the standpoint of a customer) as they...
  • Hold businesses to a higher standard, forcing companies to understand the stakes when it comes to their performance and online presence

  • Increase transparency among businesses and their customers, both potential and existing

  • Provide an opportunity to put our businesses out there from a marketing, advertising, and SEO perspective, giving visitors a central hub of information concerning our businesses and what they have to offer 
The Bottom Line

While there’s no clear cut answer to whether or not sites such as Yelp! are being fair to SMBs, the pros and cons speak for themselves. Regardless, review sites are here to stay and force businesses to read lightly and rethink how they treat their customers. How do you feel about what Yelp! is doing for the small business community?

Image via Shutterstock

About the Author

Brent Barnhart

Brent Barnhart is a freelance content writer specializing in topics such as Internet marketing and content marketing for small businesses. His goal is to help business owners find their voices online and improve their content strategies. You can reach Brent or find out more at brentwrites.com.

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