How negative reviews affect business

9 minute read

How negative reviews affect business

Consumers of all ages and walks of life are turning to the internet first when they want to learn more about a business or product. Specifically, they’re checking out online reviews. Websites like Yelp, Angie’s List, Facebook, OpenTable, and Google Reviews are considered to be trusted consumer resources, where discerning buyers can get a feel for how different products and services stack up to each other.

How popular are review sites?

Consider Yelp, one of the oldest and most trusted review sites on the web. There are over 115 million reviews on the site, spanning all industries from retail to health to local services. Seventy-two percent of the reviews are positive recommendations, while thirty-two percent of reviews are between one and three stars.

Seventy-two percent of reviews are positive recommendations

It’s not hyperbolic to say that stars—or a lack thereof—can make or break businesses. A study by Harvard Business School found that, for restaurants, a one-star increase on Yelp can translate to anywhere from a five to nine percent increase in revenue.

Breaking down the basics of online reviews

Online review statistics elucidate what many already know from personal experience: reviews are considered authoritative. Marketing company Invesp put together a compilation of statistics about online reviews. Here are some of they key figures:

Everyone is looking at reviews: 90% of consumers read online reviews before visiting a business.

  • Reviews are trustworthy: 88% of consumers put as much trust in online reviews as they do in personal recommendations.
  • Good reviews equal better revenue: Consumers are likely to spend 31% more money at a business with excellent reviews.
  • Bad reviews equal less business: 86% of consumers will hesitate to purchase from a business that has negative reviews.
  • Trust in reviews equal trust in a business: 72% of consumers say that positive reviews make them trust a business more.

With the diversity and global nature of today’s marketplace, consumers look online first because there’s no sense in wasting time or money on a business that isn’t up to par.

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The problem with negative reviews

There’s an elephant in the room when it comes to talking about reviews, and it’s the fact that people are more likely to share their bad reviews than their good ones.

A study by Dimensional Research found that respondents were 50 percent more likely to share bad interactions than nothing at all with a company on social media, and 52 percent more likely to share on a review site. There are two main types of negative reviews from genuine customers, which can be categorized into “disappointment” and merely “negativity.” Let’s look at each.

A majority of reviews use words like "disappointed"

A study on fashion purchases from Yotpo found that when looking at reviews (1.3 million of them), a majority of the negative reviews contain the word “disappointed” or “disappointment.” In fact, those terms were mentioned 20,000 times, while the word “bad” was present in just 7,500 of the negative reviews.

The cause is clear: when a consumer is buying online, they’re making a decision based on words and pictures. Without being able to use their other senses to make a decision, consumers depend heavily on what’s presented online. A disappointed customer is born when your business offerings don’t measure up to what you’re actually delivering, and the way to combat these negative reviews is to improve your product, offering, or customer service.

Negative reviews are like put-downs

A negative review is the equivalent of a put-down. Customers who are disappointed generally say what they were expecting, and how the business failed to measure up to their expectations. This helps inform future consumers instead of just turning them away. A bad review that’s just bad though, is a different story -- but not any less impactful on business.

Can customers be sued for negative reviews?

Sometimes customers can be sued for leaving bad reviews. But not usually if the review is true in all aspects. Some types of legal maneuvers can come into play involving SLAPP laws, the Communications Decency Act, and others. This article explains more about patrons being sued for leaving negative reviews. 

The impact of negative reviews

A bad review in a sea of otherwise positive reviews doesn’t hold much weight. Consumers trust collective opinions more than the opinion of a single individual who clearly had a bad, anomalous experience. Likewise, one good review in the midst of a handful of negative reviews isn’t going to do much to improve trust. Not every single bad review is going to harm your business, but if every single review is bad, you’re clearly doing something wrong.

Don’t take bad reviews personally, but do consider them to be learning experiences and find a way to grow from them. Apologize for your mistakes, fix them, and let consumers see you doing it. Integrity goes a long way, even in the face of bad reviews.

Make online reviews a priority

It’s easier to prevent a big mess than to clean one up, so most of your efforts should go toward providing optimal service and encouraging customers to share their good experiences with you online. You can offer incentives to customers who post reviews, just make sure there’s no caveat that the review has to be good (see this horror story, from a New York wedding venue who charged a bride and groom $500 for every negative review a guest of their wedding left, and ended up going from five stars to one-and-a-half stars on Yelp when news of their practice got out).

If you do receive a negative review, which is bound to happen at some point, don’t just let it sit there. Respond to it with tact and offer a solution. Most customers who leave a negative review simply want their experience to be acknowledged. A genuine apology can go a long way toward changing their perception, and can impact the opinions of other consumers when they’re reading through the reviews on your business.

Automate positive reviews

Finally, don’t let reviews—good or bad—happen without your knowledge. Monitor your mentions, both through frequent searches of your business on review websites and widespread reputation monitoring tools like these. The quicker you learn about a negative review, the quicker you can provide an actionable solution and avoid any fallout. Today, reviews can be monitored and even improved with automation.

Finally, don’t be afraid of negative reviews. Consider them to be opportunities to let the true integrity of your business shine. As long as you’re working hard to provide the best possible product or service, the positive reviews will outweigh the negative ones. And if you’re receiving more negative reviews than you’d like, see it as a chance to meet your customers’ demands. Feedback, both good and bad, is how you learn and grow.

Review Management FAQs

Why are online reviews important?

It’s not hyperbolic to say that stars—or a lack thereof—can make or break businesses. Every one-star increase on Yelp can translate to anywhere from a five to nine percent increase in revenue. If people read even just one negative review, they will likely seek other brands to patronize.

How do negative reviews impact business?

Negative reviews can seriously impact your business. Every time a negative review pops up on Google searches, you have the potential to lose customers. 86% of customers hesitate to purchase from companies with negative reviews. Negative reviews ultimately cost you web traffic and revenue.

How do I manage online reviews?

The key to effectively managing online reviews is to respond. This goes for positive and negative reviews. Most customers who leave a negative review simply want their experience to be acknowledged. So offer an apology, and work to make right of their situation. This can change their opinion and the opinions of other consumers who are reading through the reviews on your business.

How do I respond to negative reviews?

Remain calm when replying to negative reviews. What you say in your response has the ability to change the person's mind about your business. Always address their concern and work to resolve the issue, which may mean taking the conversation to email or private messages.