Customer Reviews and Ratings can Blur the Bigger Picture of What’s Actually Impacting Revenue Growth.

Most CEOs today want to know what customers are saying about their businesses, so they frequently refer to customer surveys, listening tools and online review sites to hear what customers are saying. In the back of their minds is the agonizing question, “How do consumer reviews actually impact revenue and which consumer feedback should we focus on first?”

The challenge for CEOs and other C-Level executives is distilling and interpreting massive amounts of consumer feedback from numerous channels to fully understand its impact on revenue.

A Paradigm Shift in Consumer Spending Decisions

The proliferation and growth of consumer review and rating services, like Yelp, Facebook, and Google has transformed the business landscape. Location convenience and once trusted advertisements and word-of-mouth referrals are taking a back seat to the voice of the larger online customer community that openly shares its unfiltered opinions and feedback.

Consumers now leverage the purchasing experiences and opinions of thousands of people in their respective local markets before deciding where to eat dinner tonight, get their oil changed, to get a haircut or even something as simple as where to drink a cup of coffee. Consumers are not only making everyday choices by tapping into reviews and ratings, but also leveraging this information to make much more important purchasing decisions like choosing the best doctor, selecting a childcare facility or the best veterinarian for their pets.

The Impact on the Multi-Location Business

Many businesses have benefited a great deal since the advent of consumer review sites. They’re able to collect nearly real-time feedback and (hopefully) respond, creating a valuable two-way dialogue, which 87% of consumers today expect. This consumer feedback helps quickly identify areas in need of improvement, or praise for the products or services provided. Conversely, without proper analytics to interpret the information, there is a risk of leading your company down a costly path. The question is: How do you make smarter decisions based on the available information?

Most Current Solutions Don’t Tell the Whole Story

There are companies that provide robust application solutions and services that aggregate, organize, and distill data into advanced reporting suites. The information gleaned from this data allows companies to learn more about their businesses and customers than other available research methods, like surveys and comment cards, at a fraction of the cost.

Using these products and services, enables businesses to track customer sentiment on specific themes. These may include employee demeanor, quality of service and countless others. These companies also monitor and analyze customer engagement on an ongoing basis, illuminating trends within the data. Most provide comparative views into ratings by a number of segments including all of a business’s locations, subsets of locations and down to the individual location, as well as competitive and geographical segmentation.

In addition to providing valuable information, the reports generated are frequently full of easy to read infographics, word clouds and eye-catching report cards. After all, who doesn’t like colorful pictures?

wild-chart

Unfortunately, these pictures are often the problem. Cool pictures often distract the most well intentioned and brightest minds from seeing the true picture and fail to identify what matters most: revenue. The data tells what happened, but does not explain why it happened and what actually affects profitability. Not only do employees have to consider this, but the CEO is the one ultimately responsible and accountable.

Most would assume that higher ratings result in higher revenue, and that could be the case. Based on the available data, most executives have a hunch of what themes are key drivers, but it’s rarely that straightforward. Would you be willing to risk your reputation and company’s profitability based on hunches?

There is a Solution

The answer to the big question may be right in front of you, and it could remove the guesswork by shining a light on what matters most in driving revenue, without having to hire a “data scientist” and a team of “experts.”

Every business today with even the most basic POS system collects a tremendous amount of data: Average sales size, number of customers per ticket, items purchased, new or repeat customers, etc. Additionally, existing survey data and other factors, such as, store type, hours of business, square footage, business location, competition and available services can all contribute to a more robust and complete analysis of the data.

The first step is to combine individual location reviews and ratings data with those additional components, into a single database or platform. It’s generally a good idea to limit the data analyzed to your most important KPIs and then consider drilling down from there.

It is important to scrub and mine through your business’s reviews   to remove the noise associated with consumer review sentiments, in order to identify key themes that your customers are focused on, like price/value, product quality, service level, selection, etc.

By correlating the identified themes with your transactional data (i.e. revenue), you’ll be able to identify those themes that actually influence revenue the most. Moreover, you will be able to identify the locations that are getting it right and see this reflected in the revenue numbers. You’ll also be able to see the locations that are performing poorly relative to your higher performing locations, locations that show potential, and most compelling, those that are at risk and you weren’t even aware of it.

While some of the results won’t be a surprise and will confirm your previous hunch that higher ratings often result in higher revenue, there will be “aha” discoveries. The confirmed hunches along with the previously hidden discoveries combine to make your roadmap to revenue. For example, some will conclude that customers complaining about the value of the product or service indicates that the business should lower its prices. However, the true driver of consumer price-value dissatisfaction is often revealed in some element of poor customer experiences.

BPA-themes-v3

The reality is if a consumer has a poor experience at a business, she will undoubtedly link the experience to the price she paid and voice her displeasure with both – experience AND price. For the business to identify and understand the root issue, it requires the means to correlate, what is often, unstructured content with meaningful business objectives, like revenue per location.  This enables businesses to identify the meaningful actions to implement and focus on strategically, that will drive revenue.

Answers to Action

Now that the guesswork has been eliminated and you know with statistical accuracy what’s impacting revenue, you’re ready to take meaningful action. So, how do you do it?

You Manage What You Measure

Employing such an analysis allows management to confidently take action and start measuring results.

Now that you know the financial impact to your multi-location business, you’ve identified the specific actionable items to ensure revenue growth and know where to specifically focus your company’s efforts, it will be a lot easier to get everyone’s attention.

Business review sites are one of the most influential factors consumers use when making a purchasing decision and everyone in your company should understand that impact. This is a full top-down focus since the majority of your organization interacts with or is knowledgeable about your customers’ experiences. This is why report monitoring is critical and should be distributed to all members of the organization responsible for improving the customer’s experience and driving revenue.

Who Owns the Process?

female-exec-ratings-reviews-revenue

Here’s how it can be done. Picture a CEO getting on a plane scratching her head while she reviews a ratings report on her phone. Flustered, she takes a seat and then immediately shoots off an email calling a meeting. “I want the COO, CFO, CMO, someone from HR and the Director of Customer Service in the conference room first thing tomorrow!”

After rearranging schedules and waiting for Don, the CFO, to show up, they finally settle in. And what do you see? Four more people scratching their heads and one very nervous Director of Customer Service wondering why they’re in the room, hoping nobody notices them. After all, they have nothing to do with the ratings reports.

Now we’re back in the conference room with some very smart people with a good understanding of the importance of the company’s reputation, but have never taken an active role in contributing to this area of the business. They all know Whitney in marketing sends out those cool reports every week and they read them regularly. They even inquire about subjects relevant to their business units, but it often stops there.

This disjointed approach is a common obstacle with many large, multi-location businesses. By saddling one functional group or a single person with sole review responsibility, it is easier for other equally accountable groups to overlook the importance and impact of the customer voice. It’s akin to the shortstop on a baseball team calling off all of his teammates whenever there is a pop-up in the infield; even if the pop-up is two feet away from the second baseman. This approach may work sometimes, but eventually it fails and these teams don’t make the playoffs. Functional groups should communicate and cooperate with each other regularly to ensure the customer experience is positive, and thus, customer sentiment improves.

The Three Rs

In summary, to increase revenue a company must learn how to remove the noise and focus on what actions really matter the most. Remember, it’s important to understand what is happening, but more important to understand why. The Three Rs (Reviews, Ratings & Revenue) are the foundation to the data that needs to be gathered and properly interpreted to drive revenue. Once the actions are identified, it’s up to the team to work together to create change and monitor the progress.

See what impacts your revenue using Business Performance AnalyticsSM. Combine findings from your customer feedback data with your internal transaction data to eliminate noise, identify what impacts revenue and get actions to increase revenue.

Request Free Analysis