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The Secret Ratio That Proves Why Customer Reviews are So Important

It’s what you don’t know that hurts you.

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BY Andrew Thomas - 26 Feb 2018

The Secret Ratio That Proves Why Customer Reviews are So Important

PHOTO CREDIT: Getty Images

While great customer reviews can boost sales, bad reviews can hurt them - those are obvious correlations. But did you know that there is a ratio between good and bad reviews is even more important than the reviews themselves? It's true, and it could make or break your success.

Understanding how customers interact with your brand and the customer experience you create is vital in your success. Consider the following:

  1. When customers are unhappy, there's a 91% chance they won't do business with a company again. (Lee Resources)

  2. Dissatisfied customers typically tell 9-15 other people about their experience; some tell 20 or more. (White House Office of Consumer Affairs)

  3. A negative customer experience is the reason 86% of consumers quit doing business with a company. (Customer Experience Impact Report)

  4. Good customer experiences lead 42% of consumers to purchase again. (Zendesk Customer Service Study)

Negative customer experiences lead to bad reviews, and a bad review can do serious damage--the kind that takes more than a good review to fix. Continue reading to get the theory behind the good-to-bad review ratio, and learn how you can use it in your favor.

The ratio revealed

Here's the ratio: it takes roughly 40 positive customer experiences to undo the damage of a single negative review. The ratio is derived from a combination of human behavior, math and logic. Here's how I discovered it:

  1. A customers who has a negative experience is highly likely to share that experience by leaving a bad review.

  2. A customer who has a positive experience, on the other hand, is unlikely to leave a good review. In my experience, only one in ten happy customers leaves a good review.

  3. Your company or product rating (typically out of five stars) reflects an overall average of good and bad reviews. So, if your goal is to maintain an overall rating of four stars, you'll need four five-star reviews to make up for every one-star review.

  4. Assuming that only one of every ten happy customers leaves a positive five-star review, and knowing that it takes four five-star reviews to make up for each one-star review, you can figure it takes 40 positive customer experiences to make up for a single bad review.

All of this makes for a good-to-bad review ratio that is virtually impossible to ignore. I've witnessed this first-hand with my company, and it increases the importance of getting great reviews by providing great customer experiences.

Great customer experiences are priceless

There are myriad of ways that positive customer experiences and ratings can benefit your business. Here are just a few:

  1. Increased sales - In a study done by Zendesk, 88% of customers read an online review that influenced their buying decision.

  2. Brand reputation - Good reviews amp up your brand's reputation without any additional work on your end.

  3. Free marketing - Satisfied customers provide valuable word-of-mouth marketing and often prove to be your biggest advocates. According to a study by American Express, 42% of consumers said that a recommendation from a family member or friend would influence their purchase more than a sale or promotion.

  4. Product and company validation - If you're raising money, investors and partners will unquestionably look at your ratings and reviews. A strong rating affirms that you have a great company that is worth investing in.

  5. Promotional material - Great reviews can be used as testimonials on your website, in your marketing creatives and as a part of your social media marketing campaigns.

There's only one solution

If a single bad review can undo the value of 40 good customer experiences, then the best solution is to focus on customer satisfaction. If it isn't already, customer happiness should be just as important to your business as the product or service itself.

Here are three keys to customer happiness:

  1. Product quality - Your product, service or app needs to provide the value you promise in a reliable way. It should work so well that 99% of your customers never call customer service.

  2. Customer service - Great customer service not only prevents bad reviews, it helps define your brand. The keys to the customer service equation include competent and compassionate reps, a manager who can effectively handle escalations, multiple means of contact (email, phone, chat, etc.) and convenient hours of operations.

  3. Educating users - I'm an advocate of educating customers on how to use a product. For example, when some of our customers at SkyBell complained that the motion sensor on our video doorbell didn't activate immediately, we responded by explaining why we added a 5-10 second delay. Once educated, our customers were grateful for the feature, instead of frustrated.

When you focus on boosting customer happiness, it helps prevent the negative experiences that lead to bad reviews. And, based on the math, avoiding bad reviews is even more important than getting good reviews.

Conclusion

Positive customer reviews are one of the most important factors for your success, and the surest way to get them is by providing an outstanding customer experience. Take the time to understand the customer review ratio and then evaluate your product, customer service and education efforts. Doing so will help you to master customer satisfaction and avoid the bad reviews that are so challenging to overturn.

 

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