How Negative Reviews Affect Your Business

Negative online reviews are something that a business owner dreads and for good reason- it’s been proven in study after study that a single negative review has a far bigger impact than multiple positive reviews. Knowing how negative reviews affect your business can help you respond to them in ways that minimize their impact.

There are a number of key things to understand about negative customer reviews, negative feedback, and the statistics that show their effect, and that knowledge can help a business maintain repeat business and attract potential customers. Ultimately, the more you know will help offset negative and even fake reviews you might receive.

Understanding the Impact of Bad Reviews

Studies show that 90% of consumers now use Google and social media to do online research before making purchasing decisions or accessing services from a business. Furthermore, upwards of 75% of online customer reviews are found on Facebook or Google, meaning customers have more power and reach than ever to make or break a business.

Positive reviews and happy customers are a good thing, of course, as is responding to them, but bad reviews can drive consumers away far more than positive ones do. In fact, one study showed that it takes up to 12 positive online reviews to make up for the impact of one negative review. You may also be curious as to why people write fake reviews too, but first;

Here are all the key ways in which negative reviews have been proven to affect business.

Direct Loss of Revenue

The data on the actual loss of revenue and poor ratings due to bad reviews that businesses experience is clear. Studies show that a business with a 1.5-star Yelp rating or lower will reliably report at least 30% less revenue than one with a rating on the higher end.

Damage to Reputation

Negative reviews can have an enormous impact on a business’s reputation, even if they’ve spent years building a positive reputation. It’s been proven that one negative review has many times the impact that one positive review does, in no small part due to the fact that more potential consumers will engage with negative feedback on social media left by disappointed customers.

Related: Learn how to get app reviews.

Driving Customers to the Competition

Again, studies have proven time and time again that negative reviews drive consumers away from a business and towards the competition. Research has shown that one negative review alone will typically drive a minimum of 30 customers away from your business and into the hands of a competitor. More than four consecutive negative reviews can increase your loss of customers by 70%.

Lower Search Engine Rankings

Review-based business ratings can sink a business to the bottom of search engine rankings. Search engine algorithms recommended the highest-rated businesses first in search engine results, meaning that poor ratings can have an exponential effect- low ratings lead to low rankings, which leads to fewer potential customers discovering your business.

Rehabilitation Costs Decrease Profitability

Another effect bad ratings and negative reviews can have- though slightly less directly- is in the costs that usually accompany any serious attempt to rehabilitate a business’s reputation after it has experienced low ratings and poor search engine performance due to negative reviews. These costs can include expanding a social media budget, hiring more employees or contract workers, and purchasing licenses for new software needed.

These extra costs directly decrease the overall profitability of a business, and the effect can last for quite a while as a business works to recover its online reputation.

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