Online reviews are a great way to attract new customers and resolve concerns prospective customers might have about your business or products. In order to get more reviews, it takes time and effort, which can be difficult to fit into your budget. To do this, it’s important to know how much online reviews are worth. Let’s see how much online reviews are worth when it comes to sales, conversions, branding, and more.
How Much Are Online Reviews Worth?
If you’ve created a campaign to try and get more reviews, it’s helpful to know how much time, energy, and money makes sense to spend. In order to know this, you’ll need to know how much reviews are actually worth. This can help you balance your campaigns and make sure your efforts are actually yielding positive ROI.
But how can you determine how much online reviews are worth? Obviously, these aren’t tangible assets. Reviews are a part of your company’s goodwill and reputation, your brand’s value, and your overall customer sentiment. It can be difficult to put a number value on these things. However, there are some estimates and data provided from customer surveys that we can use to estimate the value of online reviews.
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Online Reviews and New Customers
Online reviews can help convince new customers that your business is high-quality and your products or services are worth it. But how much do reviews factor into this equation?
While new customers are convinced to buy by many different factors, reviews play an important part. Almost 90% of customers read reviews before visiting a business, and 84% say they trust reviews as much as recommendations from friends. This is particularly important for local businesses. About 92% of customers say that they will visit a business that has at least a four-star review.
For many local businesses like restaurants or cafes, many people rely on Google Reviews. When customers do more research, usually for bigger purchases like hotels or contractors, they might also look at other review sites, like Yelp or Angi. In fact, a one-star increase on Yelp can increase business revenue by 5 to 9%, on average.
It’s difficult to calculate exactly how much reviews influence new customers. If you currently have few reviews or a low star-rating, improving these will likely yield higher impacts on ROI than if you already have many positive reviews. However, you can estimate how much online reviews are worth using the previously mentioned increase in business revenue.
Determine how many reviews it would take to change your star rating on Yelp, Google Reviews, or a similar resource. Your overall rating is usually determined by averaging all your reviews. Then, assuming you’ll gain about 5% total revenue from getting these reviews, you can determine how much each online review is worth.
Many customers may visit your site, look at your products, but not buy anything. Product reviews can be a vital way to turn these “window shoppers” into real customers. Since customers tend to trust other customers’ reviews more than information provided by the business itself, showing reviews on your product page can be a great way to generate trust and increase sales conversions on the page.
One study indicated that even one product review on a product page can increase conversion by 10%. With 100 reviews, this increased by as much as 37%, and 200 reviews increased conversions by 44%. A study by the Spiegel Research Center showed that the likelihood of a product being purchased increased 270% when it received a five-star review.
This is a wide span of data, and it can be difficult to pinpoint how much a review is worth exactly. However, even using even the modest estimation of 10%, you can calculate how much a product review is worth by calculating the value of a 10% increase in conversions.
Increasing Sales Volume
Besides encouraging customers to convert, good reviews also encourage customers to spend more. Studies indicate that customers spend an average of 31% more at a business with good reviews.
Undoubtedly, this is partially due to the fact that businesses with better reviews tend to provide a better experience and better products, so customers naturally spend more there compared to businesses with bad reviews. However, customers’ trust is also an important factor. If a customer isn’t sure about a business, but is interested in a product, they might purchase a sale item or a small item to see how it works out. But, if a customer trusts a business and sees that it has many positive reviews, they’re more likely to purchase a larger item with confidence.
If you already have excellent reviews, this estimation might not be helpful. However, if your reviews are middling or bad, consider how many positive reviews you might need to take your overall rating to “good” or “excellent.” Then, calculate a 30% increase in sales. Divide this number by the number of reviews you’d need and you can calculate, approximately, how much each review is worth.
The Cost of Lacking Reviews
While having plenty of positive reviews can increase sales, conversions, and bring in new customers, there’s also a cost associated with not having reviews, or not having enough. When deciding between businesses, customers tend to shy away from businesses that have low star-ratings or few reviews overall. If you don’t have reviews, you’re probably losing business to competitors.
Surveys indicate that, on average, customers need to see about 40 reviews before thinking that the overall rating is legitimate. Less than half of consumers say they would buy from a business with fewer than 4 stars. So, if you have fewer than 40 reviews or less than 4 stars, positive reviews are probably worth much more to you, since the improvements will stand out in customers’ minds.
If you have fewer than 4 stars on the review platform that is most relevant to your business, your business may be overlooked by as many as half of your potential customers. This is especially true if your competitors have many more reviews and higher star-ratings than you. If you gathered enough positive reviews to earn a legitimate four-star rating or higher, as many as half of your potential customers would consider your business, where they wouldn’t have before.
Of course, not all of these potential customers will make a purchase, but you can calculate the approximate value of new, positive reviews by calculating a 50% increase in new customers. Divide this number by the total number of positive reviews you would need, and you can approximate the value of each new, positive review.
If you already have plenty of positive reviews, each additional review is likely to have less of an impact, so reviews will be less valuable for you. The exception to this is product reviews, which can help you improve conversions and sales on individual items.
However, if your reviews are in the 3-star range or lower, you’ll benefit more from each new, positive review. This means each review will be more valuable for you. Or, if you have fewer than 40 reviews, even if your reviews are positive overall, you’ll benefit from each new review more than a business with many reviews. Factor this consideration into your calculations as you determine how much online reviews are worth.
Automating review-gathering can help you save time and gather reviews without spending too much time or money. This way, you can prevent overspending while still generating valuable reviews. Boast makes it easy to automate this process; you can set up a landing page, contact customers, organize your reviews, and showcase them, all in one place. Take a look at our demo to see how it works.
Posted in: Online Reviews