You likely hear about it a lot. But, just how important are online customer reviews for your business? What’s the impact of these reviews on the average business, and how much would you theoretically lose without reviews?
Fortunately, INVESP has the answer. A recent study whose findings are now available on INVESP shows that customer reviews can make or break your business. The value of every review becomes apparent once you read the report.
Online Customer Reviews Study Takeaways
- Up to 90% of consumers read online reviews before visiting a business: This means you’re completely out of the equation for 9-out-of-10 online shoppers if you don’t have at least a few customer reviews.
- Customers spend 31% more on businesses with positive reviews: This makes sense, given that shoppers are more likely to trust you with their money if previous customers constantly rave about your exceptional services.
- About 92% of users will use a local business with at least a 4-star rating: Many people prefer perfect businesses, i.e., those with a 5-star rating. However, you’ll still do well with a 4-star rating. Unfortunately, trust levels drop massively at 3-star ratings or lower.
Check out the rest of the report to find out more reasons why customer reviews are critical to your business. Also learn how many stars you need to earn the trust of local customers.
Did you know that it costs 6-7-times more to get a new customer than retain one? It sounds unreal, but it’s true. The cost of acquiring new customers in today’s competitive market is extremely high to the extent that businesses are better off committing resources to retention campaigns. Some statistics even show that whereas you’re 60-70% likely to see a repeat purchase from existing customers, there’s only a 20-30% chance of selling to a new customer.
Ultimately, most businesses survive on purchases from a small group of loyal customers. According to Marketing Insights, 80% of a business’s profits come from 20% of the company’s existing customers.
Signal Mind delves deeper into these stats to help SMBs understand the value of customer retention and, after that, offers several tips to boost customer loyalty. The following are a few key takeaways from the blog.
Acquiring New Customers vs. Retaining
- The average conversion rate from promotions sent to new customers is less than 1%.
- Loyal customers are worth up to 10 times more than their first purchase, on average.
- Retaining just 5% of your customers can increase your profitability by more than 25%.
- A 10% rise in customer retention can yield a 30% increase in company value.
Check out the Signal Mind blog to learn more about customer acquisition vs. retention costs and the benefits of building a robust customer loyalty program.
Retaining customers is cheaper than acquiring new ones, so if you’re running a small business, you should allot more resources on earning your customers’ trust and eventually, their loyalty.
Earn Customer Loyalty
The good news is that many people prefer to patronize small businesses instead of big corporations. According to a survey, 86% of respondents said they’re fine with paying a little more to work with a small business. In fact, 47% are also willing to go out of their way to shop from a local seller. If they’re happy with their experience, 59% always tell other people about it. These statistics show that the odds are in your favor.
Deliver Great Customer Service
But that’s only one foot in the door because great products and services aren’t enough. To actually retain customers, you also need to consistently deliver great customer service that’s timely, relevant, and effective. Respondents of the aforementioned survey have different reasons when asked about what earns their loyalty, but great customer service still nabbed the top spot.
Create a Personalized Experience
Next on the list is a personalized experience. People appreciate it when businesses make them feel special and seen, and not just another sale to add to a quota. They like memorable interactions, exclusive events, tailored discounts, sneak peeks, and early access to new inventory.
This is just the tip of the iceberg. To delve into how to earn customer loyalty in more detail, refer to Salesforce’s infographic.
Businesses often focus on acquiring new customers but don’t do as much about keeping current ones. What they don’t realize is that they have up to a 70% chance of selling to current customers as opposed to only a 20% chance of selling to new customers.
Balancing Customer Acquisition vs. Retention
But does this mean businesses should focus on customer retention rather than acquisition? It depends on how mature a business is. Well-established companies should work more on retaining current customers, while startups should spend more effort on acquiring new ones. If your business is somewhere in between, striking a balance is the best approach. Here’s how to balance customer acquisition vs. retention :
1) Assess your current customer base
Not all current customers are worth keeping, so identify those you want to hold on to (like repeat/loyal customers) and those you can weed out (like one-time customers).
2) Turn to online marketing
Both new and current customers are on the internet, making them easy to reach with one go. Social media posts or email campaigns are the usual methods.
3) Keep your current customers engaged
Current customers can be a great source of word-of-mouth marketing. If you make them feel happy and valued, chances are that they’ll tell other people about your business which leads to new customers for you.
To learn more about balancing customer acquisition vs. retention, check out this infographic from First Data.
It’s easier to destroy something than to build it, which is why a seemingly simple mistake in customer service can ruin your business’s reputation. Don’t want to get on the bad side of your customers? Then avoid the following:
Speed is essential when dealing with customers, especially those with complaints. The longer it takes for you to reply, the angrier they get. And even those who weren’t upset, to begin with, will get impatient if you make them wait too long. Note that 77% of adults in the US feel that valuing their time is part of good customer service.
Companies keep their word only half the time, resulting in irate customers. Thus, don’t tarnish your brand’s reputation by making promises you can’t deliver on. Otherwise, people will lose their trust in you. For example, if you say shipping takes one to two calendar days, then ensure purchased items reach their buyers within that time frame. If you can’t fulfill that, set more realistic expectations.
Your customer service agents should be the experts, so “I don’t know” is not an acceptable response. Even if they don’t know the answer, they should tactfully frame their response like “I’ll look this up and get back to you.” Customers don’t like it when they know more than the agents.
Thank you Jitbit.com for this great infographic!