As a local business owner, you have probably begun to rely upon the Internet as a way of generating more visitors to your websites, interest in your products and services, and sales. You may even have come to the point where your business lives and dies by mentions and positive reviews on local directories and other sites where you potential customers might look for a business just like yours. For example, one local account said that her business tripled after some positive reviews on Angie’s List. You just cannot buy advertising like that, but you may be able to ask for it.
Of course, soliciting these reviews takes time and possibly some money. You may need to set up a systematic program to encourage your patrons to leave a review of your product or service. Like anything else you do to grow your business, at some point you need to sit down and figure out if it is truly cost effective.
Does Asking For Reviews Return A Positive ROI?
- Subtract the cost of your investment from your real or anticipated gains.
- Divide this figure by your costs.
- That figure is your ROI.
It might seem simple to calculate your returns. Simply subtract the cost of the investment from your gains that can be attributed to that investment. Then divide by the cost of the investment. If you spent $1,000 to solicit and monitor your local reviews, and you believe it returned an additional $2000 in profits, then your ROI would be 1. In this case, you can easily decide that the program was worth the money.
That sounds simple, but most companies are not totally able to determine exactly which of their additional profits came from their positive reviews on any particular local site. For example, a potential customer may see your listing for local dental services, find some good reviews, and then pick up the phone and call you. In this case, it is important to train your people to ask how the new patient found your service. Gathering good analytics is fundamental to tracking your efforts.
Positive Reviews Generally Do Translate Into Revenue Gains
However, you might rely upon a study performed by the Harvard Business Review that directly attributed increased business to an increase in the number of positive reviews on Yelp, a very popular business directory for local businesses. This study demonstrated that a rating increase of just one star led to a five to ten percent increase in revenue.
You can use that figure to estimate the profitability of your campaign in advance. Only you can really estimate the potential gains you would enjoy from each percentage point in additional revenue. In general, investing in gathering positive reviews for your local business or service is profitable. In some cases, it might be critical to your ability to compete. If you are not visible online, your competitors probably already are.
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