When Word-of-Mouth Goes South
Let's say you've gotten into a culinary rut—always going to the same few restaurants—and want to try something new. You visit a site like Yelp.com to see what customers think about various eateries in your neighborhood, and discover that some have uniformly positive feedback. One glowing review after the next raves about the chef's inventiveness or the waitstaff's attentive service. You're impressed enough to bookmark these restaurants; while you won't race to each and every one this week, you'll probably get to them all eventually.
But if a restaurant's reviews skew negative, with complaints about poor food quality, indifferent hygiene or bad customer service, you'll likely decide that there's no need to see if they're wrong—ever.
This difference explains why executives place such emphasis on keeping negative word-of-mouth to a minimum, and why their concern is not misplaced. According to Denise Shiffman of the Engage Daily Blog, a London School of Economics study found that, "Every 1% reduction in negative word of mouth [sic] correlated to .41% growth, while a 1% increase in positive word of mouth [sic] correlated to just .14% growth. In other words, reducing negative comments could grow revenue by 300% over increasing positive comments."
While you might be tempted to clamp down on negative word-of-mouth, Denise Shiffman recommends combating bad press with a measured, open response to vocal complaints, as well as implementing processes that facilitate resolution before unhappy customers broadcast their displeasure in public.
The Po!nt: "The bottom line," says Shiffman, "[is to] monitor what's said about your brands online and enact a plan to reduce negative comments."
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Who knew customer feedback could be your businesses most valuable assets?
Implementing a process to facilitates resolution and proactively manage online reputation is clearly the way to improve customer service and boost your sales. Recent stats show that 77% of online shoppers use reviews and ratings when purchasing, and reviews drive 21% higher purchase satisfaction and 18% higher loyalty.
I work for a company called RatePoint and our web-based customer feedback solution provides businesses with an easy way to collect, manage and promote customer feedback proactively, before negative word of mouth hits consumer driven sites. We've found that by providing customers a way to provide feedback, businesses are able to resolve customer issues and are less likely to read negative feedback about their business on a third party site. Check out the service and sign up for a 30 day trial.