Years ago it used to be that word of mouth marketing happened by well… word of mouth. Today word of marketing takes place online. Think about it. Before you purchase new shoes online how do you verify if they are a good pair? If you are like most people, you likely read customer reviews on websites like Zappos. How about a new book? You probably check out reviews and ratings on Amazon.
The same is true for restaurants. According to market analysis study published in 2011 by Cone Inc., online customers reviews have a significant impact on consumer behavior.The study found 89% of consumers trust online reviews when researching a product or service. The study also discovered that 80% of consumers have changed their mind about a product when they read negative information online. Today consumers use sites such as Yelp and TripAdvisor to research new restaurants.
These websites allow consumers to conduct research online before spending money offline. The ranking of a restaurant on these websites can have a significant impact on the success of a restaurant. According to a study conducted by Harvard Business School Professor Michael Luca (http://officialblog.yelp.com/2011/10/harvard-study-yelp-drives-demand-for-independent-restaurants.html), a one-star rating increase on Yelp leads to 5-9% increase in revenue for restaurants. Higher rated restaurants are more likely to show up at the top of Google search rankings, creating a positive feedback loop that leads to more customer leads and ultimately more business.
So what does this mean for restaurants? Websites such as Yelp, TripAdvisor, and UrbanSpoon essentially create a level playing field that allows smaller independent restaurants to compete with large chains. It’s becoming more and more important to deliver excellent customer service and food. Once a customer review is posted online, it is public information. Restaurants should develop relationships with their customers. Restaurants can then use these customer reviews to improve their services.