You may believe word-of-mouth recommendations are your best source of new business, if so, you are right – and wrong.

Traditional, friend-to-friend referrals, delivered during chance meetings in the grocery store or at the gym, are still an important way to gain new customers. But thanks to social media, word-of-mouth recommendations now occur on a much larger scale. What someone shares about your business through an online review can go far beyond a one-on-one conversation, but instead, has the potential to reach and influence thousands of potential customers.

According to a study by Northwestern University’s Spiegel Research Center, “Online reviews have a significant and quantifiable impact on purchase decisions.” The study, “How Online Reviews Influence Sales,” reveals that when a product or business website displays at least five reviews, sales can increase by 270%. Displaying reviews is particularly important for expensive, or “riskier,” items; reviews increase their purchase likelihood by 380%.

Percentage of sales increase when a business displays at least five reviews.

Shannon Good, partner at Good Marketing Group in Trappe, Pennsylvania, points out that, “Online reviews are an important part of the consumer purchase decision today and a critical part of the marketing mix for retailers,” she says.

According to a report in Inc., 91% of consumers say they regularly or occasionally read online reviews. Findings from a 2017 survey by “eMarketer Retail” are similar. It reveals 89% of all U.S. Internet users always or sometimes use online reviews to inform purchase decisions. Younger generations consult reviews the most; 92% of 35- to 54-year-olds, and 93% of 18- to 34-year-olds, always or sometimes rely on them.

People have confidence in reviews. Good says 88% of Internet searchers trust an online review as much as a personal recommendation from someone they know. “And,” she adds, “people are definitely more willing to take advice from a stranger’s review than from a salesperson’s.” A study by “eMarketer Retail” shows consumers’ comfort with online reviews is growing. In 2015, 20% of U.S. Internet users did not trust online reviews; by 2017, that figure dropped to 3%.

According to Good, studies show 85% of consumers read up to 10 reviews while researching prior to a purchase decision, particularly when it is a big-ticket item. Consumers are not just researching prior to pricy purchases (for example, a kamado grill), but for small ones, too (such as which is the best natural lump charcoal to use).

Online research is not just for online purchases. According to Forbes, 74% of consumers say positive reviews improve their trust in a local, brick-and-mortar business. The report indicates that for every dollar spent on the Internet after researching and reading reviews online, nearly $5 is spent in brick-and-mortar stores. It also says, 82% of smartphone users use their phones to research, and 45% use them while in-store to read reviews before making a purchase.

Percentage of consumers who say positive reviews improve their trust in local brick-and-mortar stores.

How to Get Good Reviews

Given that in-store buying decisions increasingly start with online research and reading reviews, retailers need to create a system for encouraging, monitoring, and leveraging online reviews.

According to Northwestern University’s Spiegel Research Center, it’s important to implement a “post-purchase plan to collect reviews from verified buyers.” Reviews from verified buyers – those who can be authenticated as actually having bought the product or done business with your store – are viewed as more credible and trustworthy. Good says asking satisfied customers to post reviews about their positive experience with your store is the best way to increase the number of authentic reviews about your business, and helps to ensure that your positive reviews outnumber any negative ones.

The Spiegel Research Center study reveals 80% of reviews originate from a business sending follow-up emails asking shoppers to review their purchase experience. To facilitate this, retailers should request customers’ email addresses during check out and when scheduling service appointments, and then send the customer an email after a purchase, installation, or service call to ask, “How did we do?” Ask them to rate their experience with your company on a scale of one to five, and to write a few thoughts explaining what warranted the rating.

Eighty percent of reviews come from follow-up emails from businesses.

If they’ve written a positive review, you can email back asking them for permission to post it to your website, Facebook, and/or other platforms. When re-posting, use only the customer’s first name and last initial, or first name and hometown to protect their privacy. If your follow-up survey reveals a dissatisfied customer, forgo the request to post the review. Rather, use the information as a teaching tool to improve your operation and educate your staff. (Read on for tips on how to respond to a negative review.)

If a customer compliments you or one of your employees verbally in the store, ask if they would be willing to post that compliment online in a review. Have pre-printed cards available to hand those customers, with URL addresses listed for posting reviews to your website, or, if you prefer, to your Facebook page, Yelp, Houzz, Angie’s List, or other sites you maintain.

Or, like retailer Nash Shivji, owner of The BBQ Shop in Port Coquitlam, B.C., Canada, consider taking the initiative. “At the end of a transaction with a customer, we humbly ask, ‘How was your interaction with us?’ If they respond positively, we ask, ‘Would you mind putting in a review?’”

The strategy has helped Shivji’s business increase its pool of reviews, particularly positive ones. “Previously, before we started asking, we might only get a review if someone had a problem, and then it ended up being a negative review,” he says. “Now, our large volume of good reviews is burying any negative reviews.”

Get more mileage out of positive reviews by sharing them, or passages from them, on your social media accounts. This third-party endorsement is more convincing than any paid advertisement, and turns customers into brand ambassadors who promote your business.

82% of smartphone users use their phones to research products.

Good says, when reposting, it’s better not to rewrite or paraphrase the review, fix the grammar, or substitute proper industry terminology. “Posters tend to use the same layman’s terms that others will use when searching a product or business,” she says. “These laymen’s terms can help with your SEO (search engine optimization).”

Add a “Testimonials” or “What People are Saying About Us” tab on your website to make it easy for searchers to read these positive reviews while perusing your site to learn about your company.

Print out and frame some of your positive reviews and position them by your checkout and in displays throughout the store. There is persuasive power in testimonials about an above-and-beyond service call, a knowledgeable salesperson, a gorgeous fireplace installation, or the enjoyment of entertaining in their new outdoor kitchen.

In addition to reading reviews that have already been posted online, researching consumers also use social media to proactively ask their extended circle of friends and contacts for reviews and recommendations. Facebook offers the “Looking for Recommendations” status, where posters can ask for suggestions while searching for anything from a new dentist to a great sushi restaurant to a retailer that services grills.

Likewise, Instagram users can ask followers for referrals using the new “Instagram Stories” feature. Accordingly, it’s important to establish social media accounts for your business and keep them current with updated photos and information, so when people make recommendations, they can tag your business and let searchers link directly to your accounts.

Another imperative: You should respond to every review – good or bad – in a timely fashion. Responding to positive reviews is easy; simply acknowledge the customer’s post with a reply that thanks them for taking the time to share their experience, and that you appreciate their business. Your comment need not be long, but should be authentic and customized to each poster – no boilerplate, cut-and-paste replies allowed.

Ratings in the 4.2 to 4.7 range are more likely to lead to purchases.

When Bad Reviews Happen to Good People

Though logic would suggest otherwise, bad reviews are not necessarily a bad thing. In fact, according to Northwestern University’s Spiegel Research Center, 82% of shoppers say they purposely read negative reviews as part of their research process. The report indicates consumers are skeptical when they see only five-star reviews for a product or business.

Shoppers understand nothing is perfect, and believe seeing an occasional negative review among the positive ones conveys authenticity. The study also shows that average ratings in the 4.2- to 4.7-star range (out of 5 stars), are more likely to lead to purchases than those in the 4.7 to 5.0 range.

Of course, on the flip side, an extensive number of bad reviews can hurt business. Forbes reports businesses can lose up to 70% of sales if online researchers find four or more negative articles or reviews on the first page of Google search results.

So, what do you do if someone posts a bad review? In the event of a negative review, it’s important to address it quickly to mitigate any potential damage to your reputation. Your reply is important because it shows you are responsive and care about your customers and their satisfaction. It also allows third-party researchers to see both sides of the issue and judge for themselves.

Percentage of customers who read reviews while in-store.

When replying, Good suggests first acknowledging to the customer that you are sorry he or she is unhappy, that you appreciate the input, and will investigate further. If appropriate, explain why the situation happened and what you will do to rectify it. However, if the customer is irate and the review is confrontational or heated, refrain from getting into a blow-by-blow rehash for the world to see online.

It’s better to calmly reply that you would like to discuss the situation with the reviewer personally by phone or private email. When possible, Good says it can also be a smart idea to have a neutral party read your reply before posting, to ensure it is accurate and on-message, rather than reactionary and defensive.

Many times the problem that leads to a bad review is a result of miscommunication. According to Good, “Your response allows online searchers to read between the lines and judge for themselves.” How you respond when things go wrong can generate good will and show future customers you care. Properly handled, a negative review can do as much as a positive review to gain a prospective customer’s trust – and business. “Simply saying ‘thank you for taking the time to make us aware of the situation,’ goes a long way when responding to a negative review,” says Good.

If the situation that generated the poor review can be satisfactorily resolved, ask the customer if they would consider updating their review. If not, at least you can use it as a teaching tool with your staff to see how your company might communicate better, adjust procedures, or improve customer interactions to avoid repeating the problem in the future.

Percentage of 18-34 year olds and 35-54 year olds who always or sometimes rely on online reviews.

How to Know What People Are Saying About You

Experts say it is vital to vigilantly protect your online brand by monitoring all platforms where customers might leave a review. Besides your website and social media profiles, such as Facebook, Instagram, and Twitter, you’ll want to keep tabs on what customers may have posted about your business on search engines (Google, Bing, Yahoo), directories (Google Places, Yahoo Local, Superpages.com), review sites (Better Business Bureau, Angie’s List, Houzz, Yelp), local blogs, or any other website or platform on which your business has a profile.

You or a staff member should take ownership of this responsibility and tend to it regularly and consistently. If you are unaware of current reviews that may exist about your company, search the business name on Google and see what comes up. Good suggests setting up monitoring alerts so, in the future, when someone posts a review about your business or uses your company name in a blog, you will receive notification. Free alert services include Google Alerts, TweetDeck, Hootsuite, and FreeReviewMonitoring.com.

If no one on your team has time to devote to this effort, you may want to consider hiring a reputation management company. These experts can help you increase the number of positive reviews to improve your online exposure, protect your business against negative attacks online, or restore your company’s reputation in the wake of multiple negative reviews. Good says, just as consumers will be reading reviews before doing business with you, you should read reviews before hiring any reputation management expert.

Of course, whether your business’ online reputation is managed internally or externally by the savviest strategist, the best way to ensure good reviews is to provide good customer experiences and positive customer interactions. Therefore, before you start asking for reviews or sharing them, you might want to take an honest, unbiased look at your operation to assess any pain points and clean them up, first. You need to be sure you have satisfied customers who are willing to share their positive opinions and go on record recommending your business to others, otherwise the public may hear things you wish they hadn’t.

The bottom line, according to Forbes: “We live in a world where your online reputation can be your strongest asset or your biggest liability.”