What are they saying about your business when you’re not in the room? In the digital age, that conversation is taking place in the open, on Google reviews, social media networks, forums and blogs.
With public opinion having moved online, more businesses than ever are investing in reputation management, the practice of monitoring, shaping and improving how your business is perceived online. It is very possible to put a dollar value on a good reputation versus direct sales, although it may sound abstract.
Tracing The Line Between Reviews And Revenue
The fastest way to check the impact of your reputation is to visit online review sites. Customers read reviews and do so actively before deciding to buy. Studies have shown again and again that when a business’s average star rating goes up, so do sales. You can track simple data points over time to see how your reputation management is impacting your bottom line.
First, keep an eye on your conversion rate. Compare your website traffic or store visits before and after you began actively gathering positive reviews. If your traffic remains stable but your sales increase, then it’s likely your reputation has improved and more shoppers are being convinced to buy.
Secondly, have a look at your click through rates. When your business is listed on Google with a high star rating next to a competitor with a much lower rating, users are far more likely to click your link. As your star rating improves, watch for organic search clicks to increase.
Monitoring Customer Acquisition And Retention Costs
Your traditional advertising doesn’t have to work as hard when your business has a great reputation. The more satisfied customers you have, the less marketing you have to do, because they’re doing the heavy lifting for you through word-of-mouth. Reputation management can directly lower your costs, which increases your overall ROI.
One key metric to track is your Customer Acquisition Cost (CAC). That is the amount of money you spend to get one new customer, calculated by dividing your total marketing spend by the number of new customers. As your brand reputation improves, your CAC should go down because trust is established before the customer even lands on your site.
Another important metric is Customer Lifetime Value (CLV). A company with a good reputation keeps customers longer. Track how often your customers come back to shop with you. Happy customers that trust your brand will buy more often and try your new products, increasing their lifetime value to your business.
Estimating The Cost Of Averted Crises
The best measure of successful reputation management is often the crisis that doesn’t happen. Catching a frustrated customer’s complaint early and resolving it privately prevents a viral negative review that could have scared away thousands of dollars in future business.
But you can’t measure things that didn’t happen perfectly. But you can estimate the savings of crisis avoidance. To analyse negative review mitigation, you can count the number of negative comments or low ratings your team has resolved or turned into positive experiences. Figure out the average value of a customer and multiply that by the accounts that you saved to see what you preserved.
Also, check out your customer support resolution time. An effective reputation management strategy and tools can flag complaints right away. Speedier response times help prevent small misunderstandings from turning into giant public relations nightmares that need expensive repairs.
Evaluating Your Digital Footprint And Presence
Search engines like Google want to provide their users with the most reliable and trustworthy businesses. Therefore, algorithms tend to favour companies with a large quantity of new and positive reviews and activity on social media. A good reputation management will naturally boost your Search Engine Optimisation (SEO) making you easier to find.
You can figure out the financial value of that increased visibility by monitoring the amount of free publicity your reputation is attracting. Watch your search engine rankings. Check where your business shows up when someone searches your industry keywords. Moving from page two of Google to the top of page one has a huge and quantifiable financial value.
Also, keep an eye on brand mentions and your overall share of voice. Monitor how often your business is being mentioned online compared to your major competitors. The more positive buzz, the larger the market share over time.
The Simple Equation For Reputation ROI
Here is a simple conceptual formula to tie it all together:
Reputation ROI = (Financial Benefits of Improved Trust + Money Saved on Marketing and Crisis Management) ÷ Total Cost of Reputation Tools and Labour
To do this, begin by looking at your data in three-month or six-month chunks. Have you ever experienced the difference between when your brand image is actively managed and when it isn’t?
When you see the cost of getting a customer going down, your rankings moving up and your star ratings pushing up your conversion rates, you’ll have crystal clear, undeniable proof that your reputation is one of your business’s most valuable financial assets. And managing it isn’t a vanity project. It’s a smart financial investment that will pay dividends in long term growth.
