What does a negative review cost

What does a negative review cost
What does a negative review cost
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A single negative review costs companies an average of 30 customers - this was the finding of a study by the Convergys Corporation. What does this mean in concrete terms?

Let's take Sven Meyer, a consultant for small and medium-sized businesses, as an example. Mr. Meyer is worried because he has come across some negative reviews of his consultancy online. Now he is rightly concerned about what this means for his company. He is painfully aware that bad reviews do not reflect well on his business. But Mr. Meyer wants to know exactly what is going on and take action.

The customer lifetime value

To calculate his losses, Mr. Meyer needs his average customer lifetime value (CLTV). The name says it all: The customer lifetime value shows how much you as a business owner earn from an average customer - for the entire time that they are your customer.

To do this, Sven Meyer needs to know how much a customer spends on average in a year, how many years his customers stay with him on average and how much profit he makes. Mr. Meyer can of course also use the ProvenExpert calculator for this - he can simply enter the numbers and get the result.

An example: On average, customers stay loyal to Mr. Meyer for 20 years. During this time, they spend an average of 2,500 euros once a year. Mr. Meyer makes a profit of 10% per customer. He then simply calculates

2500 (turnover) * 1 (number of revenues per year) * 20 (years) * 0.10 (profit on turnover).

Sven Meyer now knows: his customer lifetime value is 5,000 euros.

The loss due to negative reviews

Mr. Meyer is now in the picture. He knows his customer lifetime value and can calculate exactly how much money he is losing because of the bad reviews.

To do this, he multiplies the customer lifetime value by the number of negative reviews and then multiplies the result by 30. Sven Meyer is a customer of ProvenExpert and has linked all the review platforms to his profile. This means he always has an overview of how he is rated online without having to spend a long time searching for new reviews. He opens his ProvenExpert profile and sees at a glance: In total, he has 3 reviews with only one or two stars. Of course, the good reviews outweigh the bad. Nevertheless, Mr. Meyer knows that every bad review has an impact on his company.

So he multiplies 5,000 (CLTV) by 3 and gets 15,000 as a result. He then has to multiply that by 30. Mr. Meyer is shocked to discover that his loss is 450,000 euros!

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The factor 30 - where it comes from and what it means

A study by the Convergys Corporation found that for every negative review, a company loses 30 customers. These potential customers see negative feedback online, are put off and choose the competition instead. So the 15,000 suddenly become 450,000 - almost half a million euros in damage!

No reaction is not an option

Mr. Meyer can hardly believe it. Just 3 bad reviews could potentially cost him a six-figure sum if he leaves them uncommented online. We have already explained how to protect yourself against fakes and defamation in the last chapter - what can he do now if the criticism is justified?

Mr. Meyer opens his ProvenExpert profile again and reads the negative feedback carefully. Potential customers like it when negative reviews are dealt with in a friendly, courteous and apologetic manner. Depending on the industry and the scope for goodwill, you can announce a discount or voucher code in addition to a feedback discussion. This not only has a positive effect on the reader, it can even lead to the annoyed writer remaining a customer of yours. An open, honest apology is the best way to get rid of a bad feeling. Sven Meyer immediately sets about responding to every single review.

It is worth asking for editing

In the days that followed, Sven Meyer received repeated replies to his texts. He satisfied the angry customers with his apology and was even able to correct and resolve one or two problems. He took the opportunity and asked the reviewers to adapt their ratings to the new circumstances. A simple adjustment of the stars was enough. The conversation and the original defect can be preserved for posterity to clearly convey to interested parties that he is a fair business partner who appreciates constructive feedback and acts on it.

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