by Scott Gordon, The Chief Reputation Officer
As part of my Podium practice, I work with many clients who are grappling with online reputation challenges (see my recent piece on quadrant 2 activities). Many are baffled at their low online reputation scores and cite hundreds if not thousands of “happy” and “repeat” customers as the proof that they run solid, reputable businesses. Yet, even with this repeat business (the holy grail for most companies), they struggle to grow revenue and profits at the pace they would like. They find themselves stuck on a hamster wheel.
Whenever I begin to peel back the onion and look more deeply into these companies’ internal processes, I find that they are correct in all regards. They do, in fact, run solid, reputable businesses that truly care about their customers and do quality work, and they are concurrently stagnant. So, what’s the deal?
At issue here, is the bully pulpit of the internet. While these legitimate businesses do indeed have lots of happy customers, they are not actively soliciting any of them for online reviews by driving them to top customer review sites like Yelp, Google, Facebook, Houzz, among myriad others.
Here’s what business owners are up against: unhappy customers are 11x more likely to leave online reviews to “warn” other consumers about their bad experience so they may avoid a similar fate. As if that weren’t a tough enough item to deal with, competitors are also more likely to leave your business reviews than happy customers, and their reviews, in large part, tend to be unflattering attempts to drive existing and potential customers away from your business and (hopefully) to theirs.
Of course, while many of these spurious reviews read as if they were written by non-customers, they still impact the star rating potential clients see when they type “your name” plus “reviews” into Google.
If your star rating is below the magic number ‘4’ on any of the major reviews engines, 93% of consumers will hesitate to contact your business. Additionally, they are subsequently unlikely to dive any deeper than what they see on the first page of Google. They simply move on to the next 4+ star competitor they find (oft assisted by a Google Map, replete with star ratings, listing you along with your top two competitors – thus, this prospects work is done for them).
To make matters worse, there’s a third group of co-conspirators who wish to drag your business through the mud in a public forum: your disgruntled former employees. Again, these unsavory and disingenuous individuals can do significant harm to your reputation if you take your eye of the reputation ball. Some will wait months or even years to inflict their particular style of brand damage, as revenge is a dish best served cold (and the longer they wait, the less likely they are to be caught).
Thus, with the three major threats constantly looming (unhappy customers, competitors, and ex-employees), it is imperative that your business devise an online reputation strategy and empower it with the latest technology to drive more happy customers to leave reviews where they matter.
Because it’s not only your star rating that matters, but the total number of reviews you’ve amassed.
Consider this, you may have a 5 star rating on Google or Yelp (if so, congratulations!), but if you have a low number of reviews, that 5 star rating is very much at risk.
For example, if you have 5 stars, but only 5 total reviews on the site, the following could happen in a very short period of time:
In this example, you are a mere two reviews away from dropping below the magical 4 star threshold. Just two negative reviews and suddenly, 93% of customers hesitate to contact you!
We call this your Reviews Risk Factor. A reviews risk factor is determined by the total number of reviews needed to take your current rating (assuming it’s above 4 stars), to a sub-four star rating. The lower the number, the higher the risk. In the above example, this company’s Review Risk Factor is 2.
On the other hand, a company with a lower star rating, say 4.3, that has 100 reviews looks like this:
When we use this same example with 5 stars and 100 reviews, it takes 36 consecutive 1 star reviews to breach the 4-star mark! This is a risk factor of 36 – a much safer number and something you should be striving for!
Therefore, the solution is to get more happy customers to leave more reviews more often, so that any ‘star impacts’ a negative review causes will be increasingly muted over time.
As you get more reviews, this strategy has the knock on effect of disincentivizing additional negative reviews (particularly from competitors and former employees) as their individual contributions to your overall star rating seemingly have no effect. Since their goal is to get your star rating to drop, the more reviews you collect and distribute across the various customer reviews sites, the harder this goal is to achieve, so they’ll often leave you alone and seek out easier prey.
In sum, the fewer reviews you have, regardless of star rating, the more impactful each new review is. This impact diminishes as more reviews are collected. If you have a high star rating and a low number of reviews, you need to get started building your moat with feature rich reviews management software.
If you have low stars (anything under ‘4’) and a lot of reviews, it’ll be a bit of a climb out of the hole you’re in, but again, with the right strategy and a little time (6-12 months), you’ll be amazed at your change in online reputation fortunes and begin reaping the benefits of more customers and higher profits. Unfortunately, the longer you wait, the deeper the hole and the steeper the climb out.
Don’t let your online reputation management (or lack thereof), get the best of you.
There’s an old Chinese proverb: The best time to plant a tree is 20 years ago. The second best time is now.
By Scott Gordon, The Chief Revenue Officer
Writing blogs, like this one, is a Quadrant 2 activity. Sure, we all know that we need to write more blogs to promote our businesses, but we just never seem to get around to it. The same is true for a lot of things that move the needle: process improvement (we’ve always done it this way), networking (who has time for that?), training, strategic planning, preparation, and prevention (see preparation).
While all of these are important to the long-term success of any business, they are not jumping up and down screaming for immediate attention like the latest customer mishap or the missed shipment. Now everyone is pulling their hair out. Make no mistake, that customer mishap and missed shipment were first seeded in Quadrant 2.
According to Steven Covey in his seminal book The Seven Habits of Highly Effective People all our activities (re: focus) are spread across four quadrants:
Quadrant 1 is Urgent and Important. I like to call this the ‘firefighting’ quadrant. This is where all your angry customers, dropped balls, deadline driven projects (which generally start as quadrant 2 initiatives but transform themselves into Quadrant 1 fires via procrastination), and crises live. While some crises are inevitable, much of the noise and confusion resident in Quadrant 1 is self-inflicted. They are the result of a lack of preparation, planning, relationship building, etc that became the sparks that ignited the fire you and your teams are now fighting.
Yeah, I know I’m skipping Quadrant 2, but indulge me for a moment. I promise I’ll come back to it. Quadrant 3 consists of tasks, interruptions, meetings, and emails (other communications) that are Urgent but Not Important. They are typically items that are urgent for others, but not important to you or what you need to accomplish. Let’s face it, most email we receive is some CYA info piece sent to maintain a paper trail.
Simply schedule time for email and blast through it. Never loiter in your inbox! I check mine 3x a day for 10 minutes each:
The problem with Quadrant 3 is that, to the untrained eye, it can look a lot like Quadrant 1. Unable to discern the difference, many executives and employees toil away in Quadrant 3 under the illusion that they are accomplishing something, when, in fact, they are not. It’s a ruse. It’s busy work. Nothing more, and it sure as hell doesn’t move the needle. At all. Ever. You can hit it out of the park in Quadrant 3, and the points don't count.
If your work feels unrewarding, this is probably why.
How much time do you spend each day checking Facebook? Instagram? Twitter? Unless you’re in the marketing department and running campaigns in these media (like this blog post), bopping around in social media is a complete waste of time. Yet, many of us spend hours a day checking up on the latest baby photos and enviously perusing some long lost high school friend’s latest European vacation galleries.
Quadrant 4 is the dimension of the time suck. The things that live here are neither urgent nor important. It’s social media, binge watching, and otherwise procrastinating.
Unfortunately for many people, Quadrant 4 is an entertaining distraction, and therefore, alluring. Quadrant 4 is where we go when we are weary of the world around us and need a break or we simply don’t know what to do with ourselves. Quadrant 4 is where overtime in Quadrant 1 will send us.
While the action items that inhabit Quadrant 2 are important (the most important over the long term, I’d argue), they are not urgent, therefore, most companies never get around to executing on them.
The result? Executives and employees are embroiled in the maelstrom of Quadrant 1, with requisite Quadrant 3 bleed over (since most can’t tell the difference between the two anyway). Quadrant 4 thus becomes the place where they take a break from the ‘action’. Meanwhile, Quadrant 2 remains on the back burner, constantly getting kicked down the road, until it finally falls off everyone’s radar. A victim of Quadrant 1 exhaustion.
Then, the shit hits the fan. Quadrant 1 is boiling over. Customers are screaming. Employees bail and burnout. Morale plummets and no one can see a way out. You’re behind with your vendors. Your credit’s getting yanked out from under you. BK.
In the movie version, a charismatic and visionary hero steps up, unites the employees, comes to terms with the creditors (or raises a ton of money), and saves the town.
In life, that visionary is Quadrant 2 and the people focused there.
Ignoring Quadrant 2 in your business is like building a rocket only to discover that no one thought to build a launch pad to go with it.
The result are:
The launch pad does several things for the rocket, but most important are:
Yet many companies that approach me for help have already launched the rocket, often in the wrong direction (or several directions at once – I call these squirrel chasers), at a low altitude, and without enough fuel for the journey.
If we are early enough in the process we can often correct the trajectory and perform an aerial refueling exercise, but both of these are time intensive and expensive. Of course, the longer a company waits to get back on course, the more complicated and expensive the eventual fix. The irony is that the shallow trajectory of their business often isn’t throwing off enough cash to bring in consultants to get Quadrant 2 strategy formulated and executed.
And that is where we consultants live – Quadrant 2. When you hire us for strategic direction that’s Quadrant 2, so is fixing most of your HR issues. That angry customer call is likely due to a process that is inconsistent or undocumented, as is the missed deadline, prolific margin bleed, and the resulting lack of profitability. If you are running your business off a spreadsheet, Quadrant 2 trouble is likely brewing.
Some companies think they can outrun Quadrant 2 by selling more, faster. While the rocket may fly higher, when it crashes, it crashes a lot harder and hurts a lot more people (employees, customers, and vendors). That rocket burns way too much fuel (cash) way too fast (cash burn) and is housed in an ineffective design that could explode long before it runs out of gas.
Quadrant 1 is where heart attacks, burnout, and customer churn happen. It’s how your competitors outmaneuver you. They’re in 2 and you’re in 1, 3, & 4 because you don't make time for 2.
Fortunately, a strong and consistent focus on Quadrant 2 not only moves the needle across the organization, the more time we and our teams spend here, the less time we spend in Quadrant 1 (unplanned crisis mitigation & overdue projects).
Like the old Italian saying goes, 'It ain't rocket surgery.'
By Scott Gordon, The Chief Revenue Officer
Most businesses I work with have a love/hate relationship with online review sites. Yelp is particularly challenging for many businesses as their review platform appears to be controlled by an all-seeing, all-knowing algorithm that is immune to all outside influence short of buying Yelp’s advertising.
Yelp’s reputation is so bad among business owners that many will scoff, “Real reviews? Sure, for the right price!” As a result, many small businesses get their arms twisted into signing on as advertisers or else end up with a dreaded 1 star rating.
They begrudgingly see this unfortunate situation as the cost of doing business, since many consumers seem unaware that Yelp’s entire business model is built on greasing the ‘reviews filter’ (you know that grayed out link at the bottom of the page that says, “reviews not currently recommended”). This is where Yelp moves your 5 star reviews when you don’t pay them and your one star reviews when you do. Shuffling reviews between these two locations is how Yelp makes money. Of course, Yelp vehemently denies this.
The reason Yelp wields so much power is that they know online reputation has a direct impact on revenue generation. The higher the star rating, the more revenue comes in. Of course, the opposite is true with lower star ratings.
Here are some studies to consider:
I’m going to apply the formulas from the Forbes Magazine article and the HBR study to a local garage door company I’m familiar with to illustrate the impact of a negative online reputation.
For starters, the company in question has 2.5 stars on Yelp.
What the Forbes formula says is take the distance from 5 stars (5 – 2.5 in this example) and multiply that by .07 (the median of the HBR report) to determine the percentage of lost revenue.
2.5 stars x 7% = 17.5%
This means a company with 2.5 stars on Yelp is losing 17.5% of its potential customers.
Our friends at the garage door company are selling about 1,200 garage doors per month with an average ticket of $2,500.
1,200 x $2,500 = $3,000,000/month
Now here is where the magic happens. We’ve established that because of their 2.5 star rating this company is leaving 17.5% of their potential revenue on the table. Let’s see how much more monthly revenue they could expect if they had a 5 star rating:
$3,000,000 x 17.5% = $525,000 more revenue per month.
Even a single star improvement would make a meaningful impact on their business:
$3,000,000 x 7% = $210,000 more revenue every month.
That’s $2,520,000 annually by adding just 1 star – 2.5 to 3.5
What if they got all the way up to 5 stars? That’s a cool $6.3 million annually.
You can see the power a consumer review site like Yelp wields in the marketplace and how it can coerce businesses into spending large sums of money on its advertising. Yet succumbing to high pressure sales tactics isn’t the only way to drive up your online reviews.
Review management platforms like Podium empower businesses to drive customer reviews to sites of their choosing. Some of the more popular choices are Google Reviews (these are always on the top right AND map widget of page one search), Facebook (who isn’t on Facebook?), YellowPages (do people still use these?), Houzz, TripAdviser, and Cars.com.
By soliciting more reviews from happy customers, you can mitigate the triple threat of:
All three of these can and do leave reviews and sometimes all at once. When these threats are combined with the statistic that unhappy customers are 11x more likely to leave reviews than a happy ones, businesses can’t afford to opt out of reputation management.
And it isn’t enough to be reactive to reviews. Businesses must be consistently and aggressively proactive. It’s tough for your competitor or ex-employee to negatively impact your star rating when you have 500 reviews. The sooner one gets there the better.
Funny enough, if you Yelp Yelp, you’ll find it has a 2.5 star rating. Maybe they should buy some of their own advertising.