How to Calculate the ROI of Online Review Management

Most consumers today — nearly 90% — factor in online reviews and ratings when making purchase decisions. In light of this data, putting resources and effort into an online review management strategy for your business, or your clients if you run a marketing agency, seems like a smart move. 

But is it? How do you dig into the ROI of review management to know if it’s worth it?

In this article, we’ll discuss the benefits of online review management and why responding to reviews matters. We’ll also share an ROI formula you can use to determine how review management can positively impact your business—or your clients if you run a marketing agency.

Benefits of online review management

A good review management strategy and tools can help you automate and effectively manage your day-to-day review processes, but review management can also net you some important business benefits: 

Greater credibility

Your business gains credibility simply by having customer reviews — ideally, positive ones — since people searching online for businesses like yours can see that you have real customers who have real experiences with your products and services. But if you don’t have any reviews or too many negative reviews or maybe only a handful of old reviews, then you’re not providing enough of the social proof potential buyers are looking for. That’s why business credibility is important when considering the ROI of review management.

With review management, you can monitor what customers are saying about your business—on Google, third-party review sites, your own website, and social media—so you know what to highlight and champion or change and improve. You can respond to reviews to show customers that you care about their feedback. You can automate a steady flow of quality reviews to reinforce with potential buyers that your business is legitimate. All of this serves to build and maintain your business credibility.

Better SEO

Search engine optimization (SEO) is another way to measure the return on your review management investment. Like customer reviews showing potential buyers that your business is real, reviews convey authority and legitimacy to Google and other search engines when determining your ranking in search. Review signals matter greatly in local search visibility, making up 16% of Google’s Local Pack ranking factors, just behind Google Business Profile and on-page signals. 

Review management improves SEO by ensuring you have a growing body of recent, verified, and positive customer reviews. When Google can verify that you do what you say you do, sell what you say you sell, and have positive customer reviews to back it up, your business can get bumped up on SERPs (search engine results page), thus raising your profile with potential buyers so they can more easily find and engage with your business. 

More business leads, conversions, and sales

Positive reviews about your business play a major role in attracting new customers. Reading a detailed review from a happy customer can be the critical nudge a potential customer needs to convert — whether that’s calling with a question, mentioning that they were referred, scheduling a free estimate or consultation, or clicking through to your website. Reports show that reviews from verified customers can increase conversions by 15%

At the end of the day, the ROI of review management is really about recognizing that the feedback your satisfied customers share about your business online is an invaluable marketing tool. When properly managed, it can earn you new business, increase your revenue, and drive growth.

Why does responding to reviews matter?

Having a mechanism in place that allows you to respond to all reviews — positive, negative, or neutral — does the following:

Shows customers you’re paying attention 

No one wants to put a review out there and then wonder if anyone at the business saw it, or even cares. Whether a customer is praising you or criticizing you — it doesn’t matter. Responding to every review indicates to existing and potential customers that you’re actually listening to and value what’s being said — and are willing to engage with it. 

Enables you to impact the conversation 

Responding to reviews lets you get your brand story out there. What are your business values? What are you striving for? What improvements are you actively making that will give customers a better experience? Review responses are golden opportunities for influencing the buzz about your business. 

It doesn’t mean telling a fluffy story or glossing over genuine problems. Rather, it’s about providing clarity, adding information, or offering support that gives the reviewer and audience a more complete and accurate picture of your business. 

Improves customer loyalty 

When a customer gets a response, they experience it as an emotional connecting point that makes them feel more human to your business and your business more human to them. They might feel flattered, valued, appreciated — but whatever they feel, it’s the emotion you’re tapping into, which is one of the quickest ways to earn customer loyalty. 

If the ROI of responding to reviews is a whole bunch of long-term, satisfied customers, that can feel like its own reward. But if you need more convincing, you’re 60% to 70% more likely to sell to an existing, loyal customer. 

Helps you turn around a negative situation

Negative reviews can hurt your business and drive away potential customers (as outlined below). But the reality is, no business can escape getting a negative review occasionally. The secret is in how you handle it. When you promptly offer a sincere apology and a real solution, you can calm down a disgruntled customer and even increase the likelihood that they’ll return. 

Just as important, you show potential customers that you’re willing to fix a negative situation and improve so that a revenue loss doesn’t have to be the only outcome. At the end of the day, it’s helpful to remember this: over half (53%) of consumers look for a realistic mix of positive and negative reviews as their top prompt to make a purchase. 

ROI of review management: Formulas you can use

So now that you understand the benefits of review management and why responding to reviews matters, let’s get to the burning question: Is review management worth it?

To answer this question, you’ll need to have a review management strategy already in place — as a business owner or an agency handling it for your clients — so you can start to put some real numbers behind it. Once you do, here are a few calculations to help you determine the ROI. Depending on the data available, one may work better than the other. 

  • Here is a look into what a negative review can cost you. According to a study by Moz, this is how many negative reviews it takes for people to consider not buying from your business: 
    • 1 negative review = a loss of 21.9% of customers who were considering buying from you
    • 2 negative reviews = a loss of 22.3% of potential customers
    • 3 negative reviews = a loss of 15% of potential customers
    • 4+ negative reviews = a loss of 10.7% of potential customers
  • Figure out the cost of getting reviews:
    • Add up the cost of the review management software you use, employee labor in managing reviews, and any incentives you offer customers for leaving reviews 
  • Calculate your conversion rate from customer reviews:
    • Divide the number of converted leads you get from people reading reviews by the number of total leads
  • Weigh your potential revenue increase from reviews against the cost of review management:
    • Determine the order value of the average converted customer
    • Subtract the cost of your investment in review management labor and tools from additional revenue earned from reviews, then divide that number by the cost of your investment

As you can see, no single formula will give you a complete answer. The best approach is to start collecting the data you’ll need to make these calculations, see the results, and compare the answers you get. In time, you’ll have a clearer idea from actual numbers to help you build a sense of your overall ROI of review management.

GatherUp’s comprehensive review management platform supports small businesses ready to launch a review strategy and marketing agencies that want to offer review management services. To learn more, start your free trial today.



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