Why Reviews Matter

Low Incentives for Reviews? “BIG mistake…Huge.” Consider LTV and Buyer Intent.

Google knows exactly how valuable reviews are to consumers. Nearly 90% of consumers have said positive reviews influence their purchasing decision. It’s why reviews are featured prominently in the Knowledge Panel, and the algorithm is built to reward businesses that have more positive reviews.

Google’s mission is to reward search intent with high value results. As a business, our goal is to BE the most relevant. Ask yourself: if you were Google and a customer wanted to find a great (what you do) in the local area, what’s a great indicator of a VALUABLE search result? You got it – Reviews. And here’s the kicker: Over 67% of those who read reviews make a purchase decision within a week. Still not sure if reviews matter? The data says they’re huge. And they are.

Reviews are a powerful way for Google to recognize that your business is doing a good job. Google may be smart, but they cannot see your sales data. However, they CAN see how many people are going to your site, and how many of those people bounced and went right back to search for another provider. Remember, Google also sees the Time on Page and Depth of Visit (so if you think “success” means just getting reviews, read more on Conversion Rate Optimization). Google weighs all of these user experience data points to calculate just how good your business is versus your competitors. Remember everything is relative – to your industry, to your competitors, and to other external factors. So “Keeping up with the Joneses” just took on a whole new meaning.

At the end of the day, Google’s mission is to allow the searcher to find exactly what they want on their first search, on their first click. So, it behooves them to make user experience a major factor.

The Real Value: LTV

So that begs the question: “Will you review us?” The requests have grown exponentially over the past few years. We receive requests every week to review a product or service we just used. From professional services, to Amazon, to the dog-walker (for whom it’s SUPER important – small business especially).

But we’re all busy. And the incentive is often low (10% off, a free cupcake, etc.), which begs the question: How valuable IS a review? The answer lies in relativity, and where we refer to lifetime value, or LTV.  LTV can be simply calculated as the net profit generated from that customer over the entire life of the relationship. If a customer generates $20/month profit for a service, multiplying $20 against average number of months customers are retained, provides the true LTV. Lifetime value is the first dimension of the assessment.

But here is the larger question: “What should you pay to ingratiate yourself to a potential customer? They have already found you online, they’re in the second phase of the buyer’s journey (Consideration), and they’re contemplating YOUR product or service. The final feather they need is SOME form of social proof in order to move to “Trial” in the buyer’s journey, to choose you vs a competitor.

(ARE YOU KIDDING ME!) The answer is a LOT! A warm lead has demonstrated buyer intent, is standing at the doorstep and at the critical inflection point. It’s a significant amount. Consider the cost of warming another lead to stand at the doorstep and consider your service! In fact, knowing that positive reviews affect 90% of customers, and nearly 70% who read reviews make a purchase decision within a week, the value of a positive review just skyrocketed. Calculate LTV and consider what you can afford to pay for positive brand evangelists who you retain FOREVER. Then turn that into a valid incentive for reviews. This consideration should significantly change the equation for many businesses from a 10% offer to a significantly higher number, perhaps even equating to a full month of service!

And consider this: your brand will experience a double-lift. One from the review itself, and one in the positive brand reinforcement generated with your current customer, increasing loyalty and affinity. Remember, the leader in positive reviews wields HUGE clout weight on the market of social proof.


The final consideration – relativity. How many reviews do competitors have? Where are you on the competitive continuum? How many do you need to be in the mix? And what is the potential value if your brand had the highest number of reviews?

To add another level of difficulty, there’s three major places where reviews take place: Google, Facebook, and Yelp. Reviews are needed from all of them, it’s not enough to have a thousand reviews on Facebook, and completely ignore Yelp. Even if your only goal is to rank higher in Google, you still need to get reviews across all three. Google pulls data from Facebook and Yelp, and one of these data points is reviews. So, even though Google may give more weight to Google Reviews, you still want reviews funneling in from these other channels.

But it may be that the top 3 competitors have an aggregate total (Google, Yelp, FB) of 40, 25, and 10 reviews, respectively. The key is to evaluate competitors by proximity and number of reviews, and to create a target goal. Examine the competitors’ local profiles (remember local integrity is also a factor), and then create a plan to target the number reviews as the competitive landscape, and add 20% for a margin of safety.

Considering LTV, Local Listing, and the Buyer’s Journey should give you an understanding of just how important reviews are today. Don’t forget to read our other posts on Local and CRO! Good luck, and call or email us with any questions. We’re here to help!


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