Economic Impact Of Negative Reviews On Businesses In Same Area, But Targeting Different Audiences

Negative online reviews come in many forms, such as:

  • A simple 1 out of 5-star review on a site like one’s Google My Business listing (with no wording, just the 1 star review)
  • The same as above, except with a negative mention of the individuals or business itself — whether or not the person leaving the review even was a customer/client at all
  • A negative review on a local business directory-oriented site like Yelp
  • A long, story-based negative review on a Facebook page (often accompanied by video or images)
  • A negative comment on a YouTube video, often along with a thumbs-down (aka “down vote”)
  • Personal blog posts by customers/clients (real or fake) leaving a long-form blog post, often then with the link shared on social media
  • Actual negative stories carried by online publications which have local orientation, national niche publications, and even major national publications which have broad appeal and readership/viewership

 

In a top 10 population region, like the Dallas Metroplex, there often is a wide range of negative news about local individual business owners and businesses themselves.  This can range from negative publicity nationally against an individual whose business primarily is limited to just the county (in this case, Dallas County), all the way to a business which serves all 50 states and international customers in the same county (in this case, Dallas County).  That is why a good reputation management firm, which can clean up one’s reputation online is so helpful.

 

These resources explain just some of the impact of negative comments/reviews on these businesses:

https://cmglocalsolutions.com/blog/yes-negative-reviews-can-impact-your-business-but-you-can-overcome

1. Loss of revenue

According to Womply research, bad reviews on Google, Facebook, and Yelphave a significant effect on your revenue. A business with a 1-1.5star rating reports 33% less revenue than the average enterprise. Forbes reports that 94% of consumers avoid a company with bad reviews.

 

https://reputationdefender.medium.com/what-is-the-impact-of-positive-and-negative-reviews-on-your-business-faffc7d51ae7

 

More importantly, a large portion of that research comes from browsing reviews. Negative reviews have become quite powerful in undermining a business’ reputation, leading to consequences:

  • Lowered search engine ranking: The star rating on major review websites has an immediate impact on consumer perception. As a result, search engines will also rank your business based off of review ratings.

  • Reputational risk: Negative reviews cause potential customers to trust a business less.

  • Hard to fix: Having an abundance of negative reviews makes it difficult to regain trust and rebrand.

 

https://www.forbes.com/sites/forbesfinancecouncil/2018/10/05/how-review-sites-can-affect-your-business-and-what-you-can-do-about-it/?sh=3c9602e3266a

 

The 2018 ReviewTrackers Online Reviews Survey found that negative reviews convinced 94% of consumers surveyed to avoid a particular business.

In addition, the BrightLocal survey found that 73% of consumers surveyed said they trust a local business more if it has positive customer reviews, whereas 50% of consumers said that negative customer reviews make them question the quality of a business.

More surprisingly, 85% of consumers in the BrightLocal survey trusted online reviews as much as they did recommendations from friends and family, which suggests that online reviews now hold nearly as much sway as personal referrals.

 

https://www.brightlocal.com/blog/the-impact-of-online-reviews/

 

The Negative Impact of Reviews on Businesses

 

 

Some examples of this impacting two totally different businesses happened in Dallas County:

  • A situation accusing an individual of politically incorrect entity structuring hurt the reputation of a local politician and local business owner:  123456 and 7
  • A company on the Eastern side of the same county (Dallas County) got fined over $10 million for business practices which it disputed, but the reputation management damage hurt the company significantly across the county as it serves the real estate industry in/around college campuses:  1, 2, 3, 4, 5, 6, 7

 

 

The additional negative impact on these businesses requires hard costs for cleaning up one’s reputation, if at all possible, besides the long-term impact of the negative publicity.  Some of these costs include:

  • Paid press releases
  • Video production costs
  • Link building costs
  • Profile creation costs on reputable websites/blogs
  • Time costs to address the negative reviews
  • Much more

 

As you can see, even just one negative mention can harm a business’ bottom line — especially if the review is fake.  Not many safeguards exist for these parties who receive the impact of negative reviews as the websites which permit the reviews do not have many options for the business receiving the fake review.  Many sites won’t pull down the fake review if the person leaving the review actually wasn’t even a customer or client; and oftentimes a court order is required to have the search engines de-index the link (URL) — yet the original source with the negative review will still host it and still be indexed by other search engines.

Negative reviews and comments and stories have tremendous impact so having a solid reputation management plan in place seems to be an increasing priority for business owners, regardless of whether they market locally or nationally.