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Ways Customer Reviews Can Impact Customer Loyalty

19 Nov
2018

customer reviews impacts customer loyalty

Word of mouth advertising has always been a powerful way to build a brand and loyal consumer base. Small and large businesses alike understand how important word of mouth can be, especially when it comes to getting new customers and conversions for a low or nonexistent cost. With the prevalence of online shopping these days, this important form of marketing has increased its impact to the point that most businesses cannot survive without monitoring how existing customers are influencing potential ones.

Word of mouth has evolved with the digital age. While the basic premise remains the same– customers endorse your business–the means and form of this communication have changed. Now, entire websites and online forums have matured to invite customer response. Reviews and ratings found on sites like Amazon are the digital, 21st century form of word of mouth advertising. More importantly, good reviews impact how likely potential customers are to convert and how loyal existing customers become.

A business’s reputation with customers is more accessible now than ever. As a business works to build this reputation and grows its consumer base at the same time, its rate of growth may begin to be influenced by customer reviews. In fact, the only way a small business can scale up is with the digital, social currency that is created with customer reviews. In short, customer reviews influence the likelihood of new customers converting and existing customers staying. Since customer loyalty is just as important as a business’s capability to convert, these reviews can affect a business’s entire consumer base.

person using mobile device

As a result, it is important to understand just how customer reviews can influence existing and future customer loyalty. With this understanding, you will be able to monitor this part more accurately and take measures needed to fix problems before they arise.

Basic Reputation

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At its core, a good customer review helps to increase the reputation of a product or service and, by extension, the business itself. Potential and existing customers are often drawn to good reviews. It mitigates the risk of buying something unknown so people are more likely to depart with their hard-earned money in the first place. It also allows customers to focus on filtering through vast product/service selections. A simple rating can be a visual indication of what others seem to like or dislike about what is available. Low ratings are often immediately dismissed.

A business’s reputation is influenced by the success it enjoys with its offerings. That is why new businesses must frequently spend time fine-tuning their offerings to find out what their customers actually want. The challenge of advertising to find new potential conversions also makes this difficult since customer reviews are typically few and far between at the start.

As a business grows, however, the consumer base begins to solidify. With more good reviews supporting different products and services, the reputation of the business itself grows. In some cases, customer reviews begin to focus on the business as well. This all can persuade more customers to stick with the business, becoming a loyal following that has a hand in shaping the business’s impact.

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At the most extreme level, customer reviews begin to shape and reinforce the business’s brand. While many marketers and small business owners assume a brand is something shaped by the business that is then advertised to customers, in reality, customers have final say on the brand. When they accept certain aspects of a preplanned brand or begin to promote the qualities they like, a brand really begins to get persuasive influence over new and existing customers.

Customer Tastes and Influences

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It should go without saying that customer reviews influence product and service perceptions. Most potential customers, especially those shopping online, take advantage of the wealth of information available on products/services. The feedback other people provide in the form of detailed reviews and ratings influences the likelihood of someone else buying those same products and services. The most successful things a business can offer are often the most popular based on these social metrics.

The effect of customer reviews goes much deeper than just making certain products and services more popular, however. They can influence the very preferences and purchasing trends that existing customers display in the first place. By definition, that is the entire point of a trend. As a result, businesses may find that the right customer reviews will not only grow basic customer loyalty, but also shape how those customers spend their money with that business. Small businesses can grow to analyze consumer demand based on the reviews themselves. This is not always a foolproof method of predicting future customer preferences, but it is one piece of a larger puzzle that can be helpful in preparing for that future.

Many small business owners also find it helpful to plan future products and services based on the feedback of existing ones. In this manner, they can use the responses that point to certain aspects about existing offerings as being successful. Some customers may like certain design features. Others may find specific deals to be attractive. All of these indications help to make certain safe assumptions about future products and services when used correctly.

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In this regard, good customer reviews help to mitigate the risk of trying out new products and strategies in the future. Since change is always necessary, it is helpful to have reliable feedback that serves as support or evidence of how successful certain changes may be. At the same time, this feedback also can help you to cater to loyal customer preferences. Being one of the most influential components of a business’s consumer base, it is important to keep the most loyal customers happy in order to strengthen the bonds of these relationships.

Low-Point Survivability

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No matter how successful a business is starting out, there is always the likelihood that the future will be different. Even slow, steady growth is never lasting given the number of things that can turn south. In other words, all businesses need to be prepared to weather a rough patch if they are concerned about their long-term survivability.

Low points are common in many types of businesses. Things such as consumer preferences, material supplies and even the economy all play a role in influencing a business’s success at any given point. Since most of the factors are out of the owner’s hands, certain steps need to be taken to make sure the business can handle the tough times without going under.

attract conversions quoteLoyal customers are the lifeline of any business during these times. During periods where it is hard to attract new conversions, a loyal customer base can keep the business running. Sometimes, the reviews from loyal customers are enough to end the slump in sales altogether. At the very least, loyal customers know what the business is capable of doing at its peak. This can dampen the potential fallout of low points if enough of the consumer base sticks around.

Previous positive customer reviews can even keep loyal customers around when they’d be likely to abandon another business. This is because of the effect of reviews on a business’s overall reputation. Reviews strengthen reputation so they can start to weather rough patches more readily than new businesses can. Previous positive reviews can also remind new and potential customers the business is capable of doing excellent work again.

Building a solid loyal consumer base through good reviews is an excellent and affordable tactic for increasing your business’s survivability. It can be difficult at times, and growth is not always guaranteed. The effort, however, can be worth it when you can successfully build a cushion of support for your business. Otherwise, you are leaving your business’s future success in the hands of chance and fate. For anyone wanting to control their destiny, a loyal base influenced by positive customer reviews does not hurt.

The Chain of ROI

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How do you know when your efforts are truly working? How about the money you spend on advertising, product development and other expenses? Most people search for different ways to measure their return on investment (ROI) to see if the expenses they incur are actually worth it. Gauging an accurate ROI is important to making sure funds are being spent on things that will improve the business’s success, visibility and overall sales.

Unfortunately, it is difficult to know how to measure the return on investment since there are different things you can use to gauge it. In other words, ROI differs depending on how and even who is measuring it. The only concrete similarity most people search for is some kind of sign of progress in customer engagement or direct sales numbers.

customer review concept

On the customer side of things, the relationship between customer reviews and loyalty can be a good pulse line to check out when you are trying to measure return on investment. This can be a concrete sign of progress in terms of both engagement and sales numbers since a loyal consumer base is generally regarded as a sign of good health in the business world. Loyal customers drive sales numbers through direct action and word of mouth advertising.

Best of all, this relationship between reviews and loyalty can be measured quantitatively. In other words, you can use statistical evidence like performance numbers to gauge whether you have a strong causal connection or not. Look at the number of reviews, the number of sales, the number of people who fit the profile of “loyal customer.” These will give you the best indication of how well your business is doing in its overall efforts to drive sales and growth. This alone, however, does not give you an idea on the ROI.

To measure the return on investment influencing this relationship, you need to look at the efforts you are taking to generate better customer reviews in the first place. Marketing, customer incentives and general sales strategies all can have a role in this endeavor. If you have a strategic campaign to increase customer reviews, look at how much you are spending over a specific duration. Next, measure the increase or decrease of customer reviews over time. Be sure to take the number of overall positive and negative reviews into account. Reviews alone do not indicate a positive ROI unless they contribute towards a positive growth in reputation or direct sales.

Growing Positive Reviews and Loyalty

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Understanding the relationship between reviews and customer loyalty is only the start. With a better understanding, you can begin to actually improve this relationship with a few strategic steps. In general, the goal is to improve the number of positive customer reviews in the first place. Doing so will help you grow your consumer base and convert existing customers into loyal customers.

Start by looking at your marketing efforts. If you are growing the business, these efforts will likely be aimed at bringing new customers into the fold. As a part of this strategy, focus on marketing through channels that make it easier to incentivize new customers. Social media advertising, for example, is more convenient to engage with customers in a way that motivates them to actually leave a review in the first place. It is also easier to deal with customer issues and potential reputation killers in an interactive manner.

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To incentivize existing customers, focus on manageable steps you can take like promotions and deals. Exclusive memberships can also help promote motivation to review and increase customer loyalty at the same time when they feel like they get something extra out of their effort.

Be careful not to go overboard with the steps you take. Doing too much just to elicit a positive review from customers can backfire, bringing down the overall loyalty. This can harm your business’s credibility with customers looking for a company or business that is not trying to deceive or manipulate. Everything you do should be genuine for the benefit of the customer. When you do this, the rest will take care of itself.

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