Can a One-Star Improvement in My Online Review Improve Sales by up to 9 Percent?


star Operation ReputationWhile realizing that across industries all consumers are not created equal, I think it’s safe to assume that we can form broad anecdotal conclusions based on specific consumer activity.  For example, an improvement in my online star rating will improve my revenues.  Seems like common sense, but what’s that extra star worth?

A Harvard Business School study suggests that  demand is indeed increased and specific to the restaurant industry it can be quantified.   In the paper Michael Luca finds that an increase of one online review star  leads to a 5-9 percent increase in sales.  Luca’s study also finds that consumers respond more strongly to reviews that contain more information.  The findings would suggest that online consumer reviews substitute for more traditional forms of reputation.

How are you doing at improving your online reputation and review performance?