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How Online Reviews are Destroying Your Local Business (or Helping it Flourish)

State of Reviews Blog Post

How much do online reviews matter to a local business?

Would you visit a business that has a star rating of 2.8 on Google? What about one that has nineteen 1-star rated reviews on Yelp, instead? Studies state that online reviews greatly influence consumers’ purchase decisions, and we have data to confirm exactly that (and a little more).

69% of consumers who were part of the 2019 edition of Synup’s Survey and Analysis of Local Online Reviews said they’d rather visit a business that is farther away from them and has 4-star rating than go to one that is closer and cheaper with a bad online star rating. And on the other side, about 63% of business owners confirmed that they know of customers that picked their business based on their online reviews.

Let’s take a closer look at some of the insights that we have derived in our report.

Methodology

We recently ran a survey where we asked consumers and business owners what they thought about online reviews – whether they found them useful, how impactful they thought online reviews were to their business, the whole nine yards – and we documented our findings in a report. We also decided to give this another perspective and studied business listings on popular sites like Google, Yelp, and TripAdvisor. We tried to determine how the quantity and quality of reviews for businesses on these sites impacted their rankings.

We’ve broken this information down into three segments:

  • The Consumers Survey:
    Answers from consumers to gain deeper insights about their purchase behaviour and how reviews impact their purchase decisions.
  • The Business Owners Survey:
    Responses from business owners about their business’ local marketing, how they manage online reviews, and their opinions about how online reviews impact their business.
  • The Reviews and Ranking Factors Report:
    An analytical study of the top ranking businesses on Google, TripAdvisor, and Yelp in some of the biggest cities in the USA, to give you comprehensive insights about the factors that contribute to the rankings of businesses on these websites.

This information is available in the form of a downloadable PDF as well. To read the full report, click here.

The Consumers Survey

Key findings:

  • 77% of customers would take online reviews into account while making even a small purchase (less than $100 worth)
  • 60% of consumers responded saying that they’d trust online reviews as much as they would trust a friend’s recommendation
  • 70% of local customers use Google to check online reviews
  • 46% of customers said they would leave a review behind only when the business leaves a strong positive or negative impression on them

Reviews and Purchase Decisions

With customers confirming that online reviews mattered to them when they are making a purchase, we wanted to understand how online reviews compared to other factors that helped them pick certain businesses over others.

We showed consumers pictures of 4 business listings and asked them to pick the one they’re most likely to visit.

A colossal 68.93% of the customers chose the business that was 10 minutes away and had a $$$ price tag on Google over a business that was 7 minutes away and had only a $$ price tag – owing to just one main differentiator, the star rating of the business.

This entire segment of customers chose a restaurant that was farther away and more expensive owing to just the fact that it had a 4.5-star rating, as opposed to the business which was comparatively cheaper and nearer to them with a 2.6-star rating. This is proof that a business’ overall star rating trumps distance and price as a decision making factor for most consumers.

How frequently do potential customers check for online reviews?

We asked consumers whether they check business’ reviews for all of their purchases, or if they do it only when they spend over a certain amount on their purchase. This is what they had to say about it.

36.43% of consumers noted that they would check business reviews regardless of the price of the product/service.

Reviews As a Trust Factor

When asked whether they’d trust online reviews or a friend’s recommendation of a business more, this is what consumers told us.

59.64% of consumers responded saying that they’d trust online reviews as much as they would trust a friend’s recommendation. About 31% of consumers said that they’d trust a friend’s recommendation more, while about 9% of consumers said that they would, in fact, trust online reviews more.

Popular Review Sites

Here’s a breakdown of how much consumers trust different review sites.

When asked which website(s) they usually referred to while checking business reviews, 70.36% of customers said Google, 51.79% said Yelp, 38.21% said TripAdvisor, while 32.5% of them said Facebook. While the fact that these four websites are the most trusted when it comes to online reviews doesn’t come as a surprise, it still helps us rank them in order of importance.

Only 6.43% of customers said that they wouldn’t check for online reviews on any of these websites.

When Do Consumers Review Businesses?

When asked about what drove them to leave online reviews for a business, 46% of customers said that they leave a review behind only when the business leaves a strong positive or negative impression on them, while 28.21% said that they reviewed businesses online regularly.

In fact, 6.79% of customers said that they leave reviews for a business only when the business requests for it via email/text.

About 19% of customers said they don’t leave online reviews for businesses at all.

The Business Owners Survey

Key Findings:

  • 70% of business owners believe that customers find their business online frequently
  • 63% of business owners know of customers who picked their business after looking at their online reviews
  • 60% of business owners respond to online reviews that they receive on a regular basis
  • 13% of business owners employ agencies to take care of their online reputation

Responding to Online Reviews

Business owners seem to be becoming increasingly aware of how responding to online reviews can help them build a rapport with their customers and help their business. This is what business owners had to say when we asked them whether they respond to online reviews on a regular basis.

While 59.6% of them said yes, while 31.31% responded with a “no” to this question. About 9% of customers said they weren’t sure how their business was handling review responses.

Online Discovery of Businesses

This is what business owners had to say when we asked them whether their customers find their business online, often?

30.3% of business owners said that customers find their business online every day, while 25.25% of them said that customers find their business online at least once a week. 14.14% of the total population we surveyed, said that they don’t keep track of it, but said they were sure it happens a lot.

Generating More Reviews

Over 40% of business owners said that they personally work on getting more positive online reviews for their business, and about 13% employ agencies to take care of this for them. The most common way of working on earning more reviews is by just asking the customer to their face, or sending them emails asking them for online reviews.

The Reviews and Ranking Factors Report

Key findings:

  • Having an overall star rating of less than 4.0 greatly affects a business’ chances of a high ranking on Google.
  • 89.17% of businesses that ranked in the first 100 spots of Google had a star rating between 4.3 and 4.7
  • 74% of businesses that ranked in the first 50 spots of Google had a star rating between 4.5 and 4.7.
  • Detailed addresses and phone numbers help businesses rank higher on Yelp, but star ratings do not affect rankings significantly.
  • Businesses that show up in the top 100 ranks of all 5 cities on TripAdvisor had their complete name, address, and phone number information available.

Google Reviews As a Ranking Factor

Amongst the top 100 results for the term “restaurants in *city name*”, Houston and Chicago had no restaurants that were rated below 4.0, while NYC, San Francisco, and Miami all had only 1 restaurant each that was rated below 4.0. This shows that having an overall star rating of less than 4.0 greatly affects a business’ chances of having a high ranking on Google.

9% of businesses in the top 100 rankings had upwards of 1000 reviews in popular cities like Miami and New York City.

Reviews As a Ranking Factor On Other Websites

TripAdvisor and Yelp do not seem to factor in reviews as a major ranking factor.

So, what do you think?

We hope you enjoyed this post! This information is available in the form of a downloadable PDF as well. To read the full report, click here.

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Harsha Annadurai

Harsha Annadurai works as an Inbound Marketer at Synup. His excessive love for music and football has led many to believe that he was a jukebox in a football stadium in his past life. You can follow him on Twitter @harshaannadurai.

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