Entrepreneurs all over the world have considered consumer reviews a powerful marketing tool for quite some time. Online reviews carry enough power to make or break a business, depending on how one approaches them.
Moreover, marketing specialists have noticed that monitoring customer feedback and managing online reviews often becomes a bigger investment priority than marketing and advertising or traffic acquisition. Why? Because being proactive and dealing with the damage before it is done seems to yield good results.
Researches have shown that a single piece of negative content such as, for example, a negative review, can cost a business about 30 customers. In 2009 a musician took revenge against United Airlines for breaking his guitar by writing a song that became a YouTube hit. The song was viewed over 15 million times and, as a result, took $180 million off United Airlines’ business revenue.
When one person’s grievance with a brand goes viral, subsequent disasters can have a devastating effect on a business’s bottom line. The same goes for all the minor incidents that occur every day, never come to the attention of the brand, but are nonetheless talked about with the families and friends of those individuals who experience them.
Consumer behavior researchers, for example, the ones conducted by BrightLocal and Marketingcharts.com, show that pissed off people are more prone to talk about their negative experience than happy people about their positive ones. And the fact is that lost business revenue from customers who voice their complaints adds up over time.
So, how much money can one piece of negative content cost your business? Is it more like a dollar or more like a couple of thousand dollars? Is it a one-time loss or is it a non-reversible process that can get your business into the financial hole? How much negative content are we talking about? How can all these and many more questions be answered? How can the right numbers be calculated?
In an attempt to find a simple and easy way to estimate how negative online reviews can influence a business we reviewed numerous articles and publications, both online and offline. This article presents a summary of our findings.
We would also like to draw your attention to the fact that when we say “negative online review,” we are actually talking about any piece of negative online content, whether it is a particular webpage, an online article, a blog, or something similar.
How to Calculate the Cost of a Negative Online Review
Determine what brand keywords people may and do use when searching for your company and your products/services online.
You may use any of the following tools for this:
- Google AdWords Keyword Planner,
- Google Analytics, etc.
We will be using Google Analytics here as an example.
NOTE! As we are dealing with reviews and negative content in general, please make sure that you include such brand keywords as, for example, your company name + the word “reviews,” your company name + the word “complaints,” your company name + the words “customer service,” your company name + a particular geographic location.
For the purposes of this article let us take a fictitious company called “Company XYZ.”
- Make your own list of keywords that you think people use (you need to come up with 3-8 keywords). This is List 1.
Sample list of keywords can look like this:"company xyz""company xyz reviews""company xyz complaints""company xyz customer service""company xyz services" (i.e. the name of your product/service)"company xyz new york" (i.e. applicable location of your company)
- Use Google Analytics to check which keywords are actually used (follow this path: Google Analytics→Acquisition→Search Console→Queries). The list of keywords will be in the left column under “Search Query.” This is List 2.
- Check which keywords bring the best conversion (follow this path: Google Analytics→Acquisition→All Traffic→Channels→Organic Search). After clicking on the “Organic Search” link:
- This is List 3. You see the conversion percentage each keyword brings. Please note, however, that conversion is computed based on the goals you set in Google Analytics. You can find instructions on how to set up Google Analytics goals based on your KPIs. If you are an e-store, we can also recommend adding up the enhanced ecommerce plug-in for better results.
- Compare List 1, List 2, and List 3 and make the final list of 3 to 5 top brand keywords we will be using further.
Sample list of keywords can look like this:"company xyz""company xyz reviews""company xyz complaints"
Go into Google search and check what search results you are getting when searching by each one of your selected top brand keywords.
Following the instructions given in Step 1, you have determined that “company xyz reviews” is one of your top brand keywords. You type the “company xyz reviews” query into Google search bar and find out the following:
- your company website is on the 5th position on the 1st page;
- a negative review about your company published on one of the online review platforms is on the 3rd position on the 1st page.
Hereby, we would like to take a step back and draw your attention to the fact that you need to analyze only the first three pages of search results. It will be more than enough because, as Google organic desktop search study shows, most people do not go very far down the search engine results Page.
The best way to evaluate your probable loss from such a negative review is to calculate how much money you would have been making if your website (or one of its pages) or some positive information about your business would have been showing up in Google search instead of the negative review in question.
Sample calculation process goes like this:
With the help of AdWords Keyword Planner you calculate frequency of your “company xyz reviews” brand keyword, and it turns out to be, for example, 1000 visits per month.
You know that your website’s current 5th position in Google gets your business income of approximately $300 per month, for example.
The research prepared by Search Engine Watch shows how much average traffic share (%) each position in Google’s search results gets:
1st position = 32.5%
2nd position = 17.6%
3rd position = 11.4%
4th position = 8.1%
5th position = 6.1%
According to the above-mentioned research, in your case:
3rd position = 11.4% of 1000 visits = 114 visits/month
5th position = 6.1% of 1000 visits = 61 visits/month
If it were your page on the 3rd position, you would be getting 114 visits per month. Now you are getting 61 visits (since it is not your page on the 3rd position, but a negative review, for the purposes of this calculation we assume that this negative review gets 114 visits per month).
114 visits – 61 visits = 53 visits/month is what you are loosing
5th position = $300/month
According to GA goal, SERP position, Keyword Planner amount of monthly visits (again, this sum is taken as an example)
$300/61 visits = approx. $5/visit
(114-61) x $5 = $265 is your monthly loss
The thing is, however, that this is only your “one-time-per-one-visitor loss.” As we mentioned at the beginning of our article, word-of-mouth, both online and offline, can travel fast and far. Thus, your actual loss actually looks more like this:
(114-61) x $5 х ∞/infinite monthly loss Now, that you know how to estimate the impact of negative online reviews on your business income, it is a good time, perhaps, to think about paying more attention to those reviews and making them work for you, not against you.