How costly are negative online reviews

As implausible as it sounds, one quite reasonable negative review can be expensive to business revenue and profit.

"When looking at research done by Right Now technologies in 2006, it was found that 68% of customers would not return to a business after a negative customer experience. In two years, that number jumped up to 87 per cent. In 2011, it was 89 per cent. 

"This means that more customers than ever before will now leave your company after a single negative experience" Dawn Wigginton writes.

Prospects, current clients or customers - they can understandably be punitive. Maybe you know this because you and your family are too.

So how do you calculate the cost?

Wigginton details the math in What Does a Single Negative Review Cost You?

"We know that one negative review will cost the company a total of 30 potential customers. This means that if a customer spends, on average, $200 with your business on a single visit then you are losing $6000 a year for every negative review of the company.

"Now, that might not sound like too much, but we can look at it another way. If you have return customers for your businesses, then the losses can be even more staggering. That same loss of 30 potential customers because of one negative review is mad, is even worse if a customer spends, on average, $8000 over their lifetime at your business. One negative review has such a long-lasting impact that your company will be losing a lifetime income of $240,000 for every negative review" Wigginton writes.

That's impact. Painful potential impact.

Even if you believe or know those numbers won't align with your situation, the lesson is that losses (which is what unearned revenue and profit is) accumulate and compound.

Yet how many companies or individuals are valuing each prospect, client, customer or patient interaction, showing emotional intelligence in the "relationship" and skillfully providing a stellar experience (in their mind, not ours), and wisely, with poise, skillfully administering satisfying conflict resolution, to repair a poor experience?

What I observe from leaders and teams is regular blame displacement for any negative review, as if it's always, as in an absolute, the interpretation or fault of the prospect, customer, client or patient. They hold tight to these beliefs, as a defense mechanism, so they don't have to examine products, attitudes, services, care, problem solving and experience.

Look at the online reviews for numerous profitable," successful" companies or healthcare facilities and you will notice scoring that should be viewed by their leaders as embarrassing grades that are setting off alarms for deep and wide examination and prompt adjustment and improvement. Yet rare are the online acknowledgements to shocked and hurting people and rare is the offer to assist in problem solving with and for the reviewers.

What's the client, customer or patient to make of it? What's a prospect to believe about the quality of product, service and experience they might receive?

What is going on? It's a rejection of ownership, felt as an identity attack. It's a rejection of problem solving an arrogant one. It's the previously-mentioned blame displacement. It's rotted attitude.

Yet there are companies and organizations that do care, that show it with winning attitude, commitment to satisfying experience in both word and action. They impress and benefit greatly.

It is possible.

It reveals character. The sad reality is many companies, individuals and healthcare facilities too, are low character when it comes to interactions. They are resistant to learning as well, internally within their teams and towards the people they serve.

Not every company, organization, medical facility or professional who believes they are providing respectful, trustworthy, quality experience is being honest with themselves and accurate in evaluation.

They are profitable "enough" however to not care of the unforeseen costs they are self inflicting on themselves.

"The 2011 Harris Customer Experience Impact Report showed that 50 percent of customers give brands a week to respond to a question before they stop doing business with them" writes Wigginton.

50 percent. Significant. Immediate. Earned expense. Unnecessary. Correctable.

Michael Toebe is a communications solutions leadership practice leader for reputation, crisis and risk for companies and individuals.

He has written for and contributed to Chief Executive, Corporate Board Member and the New York Law Journal. You can also find him on LinkedIn, Twitter, Instagram and a short-segment podcast Communications Solutions Leadership.