Jun 22, 2016 | Customer Loyalty News

How businesses can fix (and prevent!) bad Yelp reviews

by  Margaret Link — Marketing at Thanx

There's nothing worse than receiving a negative Yelp review — especially when it could have been prevented by some simple communication. Here's how smart businesses address unhappy customers before they go on a Yelp rampage.

Stop the madness before it starts

The internet can be a fickle place — and if you own or run a business, nothing exemplifies this better than online review sites. One minute you're riding high on positive reviews from your enthusiastic guests, the next minute you get slapped with a one-star rant from someone you aren't even sure is your customer. 

Their panic is, in some respects, justified. A 2011 study from Harvard Business School found that a one-star drop in a Yelp rating is the equivalent of a 5-9% decrease in revenue (an effect that's particularly harsh amongst small businesses). Another report  found that 80% of customers actually decided against purchasing a product due to negative online reviews. So, how should businesses protect themselves against the poetry of unhappy customers?

Luckily, there are a few tried-and-true tactics for making internet reviews work in your favor. Quell the occasional bad review before it ever hits the internet — you might just turn an unhappy customer into a vocal brand loyalist.

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1. Be proactive — ask for feedback!

Reaching out to your customers after they dine/transact/shop with you is the best way to gauge their feeling about the experience they just had. This stands in total opposition to the traditional, reactive model of feedback: waiting until someone is screaming at you and trying to handle it.

Smart businesses all over the country have started tying feedback to transactions — reaching out to customers automatically via smartphone to ask them about their experience. Not only do you get a better sampling of customer sentiment (Yelp tends to attract the REALLY HAPPY or the REALLY ANGRY customer; not necessarily representative of the average experience), but also you have the opportunity to interface with customers, whether or not they were planning on leaving a review. 

Perhaps the coolest part of interacting with customers? There's a clear ROI case for why you should do it: Studies have shown that simply ASKING for feedback can increase customer frequency by 7%. Responding to that feedback rasies that number to 14%. Responding to feedback and then rewarding the customer with a personalized reward or discount? +22% increase in frequency. Building relationships: now, with a clear ROI case!

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2. Know where the feedback is coming from

Get an idea about who you're actually trying to appease. Yes, the customer is always right... but here's the less popular view: some customers are worth more than others. For most businesses, the top 25% of customers make up about 65% of revenue.  Picking your battles is an essential part of running a multi-location business — it might not be worth it to jump through hoops for customers who have $12 worth of lifetime value. 

Having customer data readily available empowers merchants to  better understand the nature of their communication with customers, and brings precision to a process that was largely a guessing game before. One of my favorite feedback-related stories is from one of our Thanx merchants. One of their customers wrote them a message - they had an issue with the quality of their food. Naturally, the merchant was horrified, and immediately moved to rectify the situation, offering a full refund and some additional free items. Using their Thanx merchant dashboard, the merchant was able to verify that the customer in question had indeed made the purchase, as well as look up that customer's history. Turns out, this was one of their VIPs: This customer spent $5k annually with them! Even with that hiccup in quality, the customer's frequency didn't wane because the merchant was able to address it so swiftly and satisfyingly, and the guest in question is STILL one of this merchant's best customers.

 

3. Respond to feeback directly and fix the problem

When customers have the opportunity to communicate with businesses directly, the process acts as a filter between the customer and online review sites. It provides customers with a way to get their problems sovled, and it allows businesses to gain valuable insight that they wouldn't have had access to otherwise (because guests don't always speak up).

However, if guests take the time to share their opinion with your busines, it's worth it to respond — and maybe even grant some type of "thank you" gift. This is a powerful way to build relationships with your customers (especially those millennials!).  As I mentioned above, when a customer receives both a written response to feedback and a personalized reward, they are 22% more likely to return within the next 2 months. 

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Let feedback be the goalie between your business and online review sites

4. Ask your happy customers for something in exchange

You want more good reviews for your business (and some new referrals)? Ask for reviews and referrals from your happiest customers! Getting feedback isn't just about responding to problems, it's about identifying and catalyzing the people who love your business the most — asking for feedback allows businesses to know exactly who these people are. When a guest has a great experience — they gave your business a 9 or 10 and they're pumped up – now's the time to ask them to spread the word: provide them with the tools to tell their friends and family about their experience via e-mail, text, or social media.

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Our Thanx Merchant Partners have seen huge results by asking for customer feedback via mobile app — they make sure that all of their communcation with customers is personalized, genuine, and valuable. In turn, they've collected valuable customer data that helps drive their marketing efforts while retaining their valuable customer base long-term. Feedback is about more than just online reputation management: it's about building personal relationships with customers long-term.

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 Want more informtion? Check out more research from our customer loyalty blog series: 

  1. Here's how Thanx customers have created viral marketing campaigns effortlessly with Thanxgiving
  2. This one's for the Pizza people: 10 Pizza Marketing Strategies You're Not Using
  3. Here's a more in-depth explanation for why responding to feedback can increase visit frequency

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We published “2016 Customer Loyalty Benchmarks," a guide designed to help multi-location merchants better understand customer behavior and improve marketing ROI. 

We dug through more than 20 million transactions to understand how customers make decisions... and we're making it available to Thanx Blog readers for free. Check out the eBook here:

 

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