There are many ways that customer reviews generate a return on investment (ROI) for businesses including:
So how should a business determine the ROI of asking for reviews as compared to simply waiting for them?
I have blogged about the impact of asking for reviews as compared to waiting for them. Simply put, asking for reviews stimulates the “happy silent majority” of your customers to write reviews and results in higher ratings. How much higher? Start a free trial with us and find out the impact for your business.
A recent study conducted by a professor at Harvard Business School found that higher review ratings directly translate to increased revenue. Specifically, the study demonstrated that a one-star increase in review rating lead to a 5-9% increase in revenue.
To calculate your ROI, first determine the cost of the investment. In this case, the investment includes both the cost of generating the reviews (review management service, review monitoring, etc.) plus the cost of the managers time to manage and monitor the reviews.
The next step is to estimate the gain from the investment. Using the Harvard Business School study, gains can be estimated based on the annual revenue of the local business: