One Bad Review can cost you, 30 Potential Customers
Not all businesses get through their day without getting a bad review. It happens. But the way you respond to the negative reviews says a lot about your business and the way you treat your customers. Recent studies show that most people read negative reviews about a business and the way the business responds to them.
The big question is what does a negative review cost your business?
Fixed costs are easy to calculate. We all have expenses every month but it is much harder to actually calculate the cost of what a bad review costs. The cost of lost opportunity – the chance to serve a new customer is much harder to calculate. There have been recent studies that indicate a single bad review can cause you to miss thirty potential new customers.
Even a fairly low sales price for a volume business, especially one that relies on word of mouth to gain new customers has a lot to lose over the lifetime of a customer.
For the sake of argument, let’s imagine that a carpet cleaner gets a bad review and on average that makes only 10 people not call. If they charge $79. for their service and they clean the average customer’s carpets twice each year they have a $158. sale annually. But if this customer stays with the carpet cleaner for four years and refers two additional customers per year, the business could potentially lose $56,880. for just one bad review!
This loss of revenue can easily be over six figures when someone with a high ticket like an emergency restoration company or a dentist get a bad review. All it takes is a quick glance at the companies reputation online to make a fickle prospect turn to a competitor.
By using our lost opportunity – bad review calculator you can calculate what the real costs are including the lifetime value of a customer and the referrals that are potentially lost.
- 75% of people don’t believe that companies tell the truth in advertisements.
- 86% of consumers are influenced by negative reviews.
- Businesses risk losing as many as 22% of their customers with just one negative review.
- 2009 Convergys Corp. Study: A single Negative Online Review can Cost the Average Business an Average Loss of 30 Customers
- 2011 Cone Online Influence Report: 80% say NEGATIVE online information changed their mind about purchasing a product or service
- How Many Customers Could One Bad Review Cost Your Business?