Reviews are important—that’s an undeniable fact! However, there’s one thing that’s not entirely clear—the relationship between star rating, reviews, and revenue—even though numerous studies have been conducted in regards to this.

Womply, a small business SaaS provider, has recently conducted a large scale study, with the main of showing the strong connection between revenue and reputation management across numerous industries.

This research involved over 200,000 business

When performing its analysis, Womply analyzed transaction data and reviews for over 200,000 small business bases in the US. The research included businesses in every state and spread across different industries, including salons, restaurants, medical, retailers, auto shops, and dental offices, among others. The major difference between this study conducted by Womply and other studies on reviews is the local business transaction data. In the survey, Womply managed to connect presence management best practices and reviews with revenue outcomes.

Here are brief findings of the study:

  1. Businesses that claim their listing on different websites earn 58% more revenue.
  2. Businesses that respond to customer reviews earn an extra 35% revenue.
  3. Businesses that have ratings of 3.5 – 4.5 earn more revenue compared to those with lower or higher ratings.
  4. Businesses that have more reviews than the average reviews across different websites generate 54% more revenue.

Claims and responses

According to Womply, businesses that did not claim their listing on different sites earned $72,000 less in their annual revenue. By claiming listings on major platforms like Google My Business allows consumers to find and engage with a business in a better way—this shouldn’t be something new to business owners.

Here is another interesting fact that shouldn’t be a surprise—consumers are more inclined to buy products or services from businesses that respond back to online reviews. The main assumption here is that by responding to reviews, the business is bound to offer better services. Interestingly, the research also revealed that 75% of the businesses that participated in the study don’t reply to online reviews. However, those businesses that respond to the online reviews, they earn much higher revenue.

Moreover, businesses that respond to more than 505 of their online reviews were not earning as more as those that respond to 25% and 50% of their online reviews.

The ideal rating rage

In the study, Womply discovered that there is an ideal star-rating range—and no business has control over this. However, the research company discovered that businesses that had a star-range of 3.5 – 4.5 earned more revenue than the businesses below or above that range—and this includes businesses that have 5-star ratings.

According to Womply, there are two main reasons that explain the potential under-performance of 5-start business in comparison to the businesses in the ideal range:

  1. 5-star businesses have shown to have fewer ratings.
  2. Consumers don’t trust 5-start businesses—they tend to assume that they are manipulative.

Review counts outdo star ratings

In the study, it was also discovered that review counts are more have a relationship with revenue performance compared to the average star ratings. According to Womply, businesses that more reviews than the average number attract 82% more annual revenue that businesses that have a review count that’s below the average.

Reasons for businesses to take this with the seriousness it deserves

This is where we apply the famous saying—“Correlation does not equal causation.” Businesses that already understand this saying will definitely outdo the businesses that don’t—mostly, because that they have better management. These businesses are also more likely to execute their local SEO campaigns and tactics effectively.

Therefore, businesses need to claim and occupy major sites like Yelp, YellowPages, and GMB, among others, respond to online reviews, and then put a program in place that helps the business to generate a steady flow of online reviews.

However, this research didn’t reveal whether the percentage of these businesses that worked with third party providers or agencies. However, what we need to understand is that the revenue analysis confirms the real-world impact of the best practices that we’ve highlighted above.