NASE in the News

Look Who’s Talking

Are Online Reviews Helping Or Hurting Your Micro-Business?
By Mollie Neal

Word-of-mouth referrals have always been a powerful way for micro-business owners to get new customers without incurring costly marketing and advertising expenses.

But, people are no longer solely sharing their opinions over their backyard fences with neighbors or at office water coolers with colleagues. These days, they’re posting their opinions online for total strangers to read. And those opinions are having a real impact on consumers and businesses alike.

Consumers have increasingly populated high-traffic sites like Amazon and eBay with their opinions about products and those who sell them. Now, a growing number of companies such as Yelp, Citysearch, Insider Pages, Superpages and Yahoo Local encourage people to rate and review everything online—from arborists, child care centers, dentists, dry cleaners and hair dressers to plumbers, printers and vets.

Online review sites, otherwise known as local search sites, operate in a variety of ways.

Most of them allow consumers to write reviews about any business, while others are industry specific, such as Chef Moz and Chowhound for restaurants and bars, and TripAdvisor for travel-related services. The Ratingz Network runs 13 individual sites for camps, day care providers, lawyers, salons, vets and other businesses.

“Everyone knows that you can say whatever you want about your business in an ad,” notes Beth Goldstein, founder of Marketing Edge Consulting Group, and author of “The Ultimate Small Business Marketing Toolkit” (McGraw-Hill, 2007). “But you can’t control the things people say about you. Customers are a stronger influence in many ways than media advertising.”

Studies show that a growing number of people use online reviews and give them credence. In fact, online reviews have a significant influence on Internet users’ offline purchase decisions, according to a study conducted by comScore Inc. and The Kelsey Group, which are digital world research firms. This is especially true for automotive, medical and legal services, and restaurants, hotels and travel-related businesses.

Online ratings and comments are second only to word-of-mouth referrals as a purchase influence for most Americans, according to a survey of Web users conducted by Rubicon Consulting in Los Gatos, Calif.

Given the influence of online reviews, it’s becoming increasingly important for micro-businesses to have a positive presence on review sites.

Unfortunately, many micro-business owners don’t even realize that people are talking about their products and services online, says Goldstein, or they have their head in the sand and ignore these amateur critics.

However, those who are paying attention are reaping real benefits.

Use The Power Of Positive Reviews

With no storefront or walk-in traffic, Georgia Kalnin understands the importance of spreading the word about her business. She owns Third Street Pilates in San Francisco and has been in business for just five years. Unfortunately, costly postcards, newspaper advertisements and Yellow Page ads yielded disappointing results.

Now she pays $150 per month for a Yelp business owner account that enables her to post contact information, a slide show highlighting her services and a link to her Web site. It also guarantees premier placement in site search results.

“I know it’s having a positive impact when new customers come into the studio and say ‘I saw your great reviews on Yelp,’” says Kalnin.

Her Yelp listing, Web site and traditional word-of-mouth referrals now account for 95 percent of her business.

Melinda Lucas, owner of Paneless Window Cleaning in Shoreline, Wash., is also reaping the benefits of positive praise. She acquires an estimated 30 to 40 new customers annually from people who learn about her business through Angie’s List, an online referral program in which paid members share their experiences of dealing with local contractors, service businesses and health-care providers.

Roughly 750,000 consumers in 124 cities across the country are using the list. “Without the Angie’s List referral, these people could easily have relied on the Yellow Pages and hired someone else,” says Lucas.

She gladly pays the modest $50 annual membership fee to be able to read the critiques posted about her services, and have access to contact information so that she can call and send notes thanking customers who have praised her business on the site.

“It’s a valuable tool for me to know how I am being perceived in public,” says Lucas. “Reviews can make or break your business. You want to bring your A game to every interaction with a customer or prospect, whether it’s communicating with people in the office or the guys out on the job. If someone reviews us on the Internet, the whole world can see it. That makes us want to be the best that we can be.”

The service is a real money saver, too. Like most small-business owners, Lucas used to rely on large Yellow Page ads. Now she runs a two-line ad with her phone number and Web site, and saves $24,000 annually.

“For a small business, the savings are unbelievable and have lifted a huge financial burden,” she says.

Lucas includes a link to Angie’s List on her home page to encourage people to read the reviews, and says you can’t buy the kind of advertising she gets through the referrals.

“You can only get it by doing good work and making customers happy.”

Lucas has even used the reviews as a motivational tool for employees.

Last year, she held a contest and promised to give a $500 bonus to the worker who had the most positive reviews. When jobs were completed, workers asked Angie’s List members to go online and post a review. Lucas printed all of the comments and shared them with the entire staff, which encouraged stellar on-the-job performance and fostered employee camaraderie, she says.

Capitalize On Lackluster Reviews

Micro-business owners know that they can’t make all of the people happy all of the time. So it’s inevitable that a disgruntled customer will post negative comments.

Peggy Wynne Borgman, owner of Preston Wynne Spa in Saratoga, Calif., is pleased that she’s getting eight to 12 new customers each month from positive online Yelp reviews. And she doesn’t have to spend a dime for her free business listing.

There is, however, a periodic customer who will dissect every aspect of her operation, from the staff, ambiance, décor and amenities to specific treatments such as a mineral wrap, facial or massage. Borgman says many business owners would be angered or “plug their ears and chant la, la, la, la.”

Instead, she’s found a way to leverage these “public floggings” to create opportunities to improve customer relationships and business processes.

Borgman points to an old rule of thumb: A happy client tells three people, and an unhappy one tells nine. That number is amplified online, so it’s particularly important to resolve issues.

Fortunately, Yelp research has found that 85 percent of its site reviews are in the three, four or five star categories, with the latter being the highest. That means people are much more apt to go online and praise a business than they are to rant and complain.

“The conclusion people draw when they aren’t happy with a business is they don’t care,” says Borgman.

Whenever possible she uses a free Yelp interface to communicate with anyone who voices displeasure online. She tries to resolve any disputes and invites some individuals to return for a free visit. She doesn’t ask these individuals to post subsequent reviews, yet many take it upon themselves to do so.

After reading some complaints about how her staff was recommending and selling products, she trained them to be more sensitive to clients and not overwhelm them with product regimen recommendations. Through these efforts, Borgman is able to reduce defections and turn some dissatisfied clients into loyal customers.

“It’s gratifying to salvage relationships and take them to another level,” she says.

5 Online Review Pointers

Online reviews can produce a treasure trove of valuable information for today’s micro-businesses. If you aren’t sure where to start, here’s some handy pointers from Beth Goldstein, founder of Marketing Edge Consulting Group and author of “The Ultimate Small Business Marketing Toolkit: All the Tips, Forms, and Strategies You’ll Ever Need!” (McGraw-Hill, 2007).

1. Find out what people are saying.
Simply enter your business name along with the word review (i.e. ABC Inc+review) into one of the more popular Internet search engines like Google or Yahoo.

“It’s a great, inexpensive way to do some research and see what your customers think,” says Goldstein.
You may also want to search your competitors to learn what’s being said about their products or services.

2. Don’t be shy.
Encourage happy customers to go online and post a quick review.

3. Don’t be put off by bad reviews.
“Customers don’t expect perfection. They do, however, expect excellence,” says Goldstein.
Reach out to disgruntled posters and try to revolve issues. You may well turn these naysayers into loyal customers. If they update their opinion of your business online, it will also demonstrate your commitment to customer satisfaction.

4. Look for trends or patterns.
Numerous negative comments regarding an employee, product, service or business process are clearly red flags that should be addressed.

5. Take advantage of review sites.
Look closely at those that offer free business listings or charge a modest fee, especially if your competitors have a presence.

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