Negative customer reviews are proven to damage your revenues and reputation.
Now, a new Harvard Business School study shows that the impact of bad reviews can be even worse:
You could lose your business.
The study, entitled “Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit,” http://hbs.me/2podwRO shows that restaurants with low ratings on Yelp are at a much higher risk of closing, compared to restaurants with higher ratings.
The authors of the study analyzed Yelp ratings for about 35,000 restaurants in the San Francisco bay area from 2008 to 2016.
Here are the key findings:
· Restaurants with a 2.5 star rating (out of five) were 25 percent more likely to close
· For restaurants with 4.5 to 5 stars, the risk increase dropped to 0 percent.
Of course, there are many reasons why restaurants close: intense competition, high operating costs, poor location, to name a few.
But this study demonstrates how powerful customer reviews really are.
Mobilize Your Advocates Now
Whether you’re in the restaurant business, smart home technology, consumer electronics, B2B software – just about any industry or product category today -- it's critical that you have a pro-active advocacy program to generate a steady stream of positive reviews.
It's also essential that you get and keep your rating above 4 out of 5, since most people won't buy a product with under four stars.
If you've got too many negative reviews, you’re at risk of losing more than sales.
You may lose your company.