It is something every restaurateur knows: good reviews boost takings while terrible ones can close you down. And, in an age when everyone can be an online critic, ratings have never been more important.
Work by two economists at the University of California, Michael Anderson and Jeremy Magruder, aimed to measure the relationship between online star ratings and customers’ purchasing decisions.
They found that a restaurant with a rating improved by just half a star (on a scale of 1 to 5) was much more likely to be full at peak dining times.
This was further backed up by Michael Luca, who published research in 2016, and found that a one-star increase in Yelp rating leads to a 5–9 percent increase in revenue.
Importantly, the two economists found that the increase in trade happened without any change in prices or the quality of food and service, confirming that it was the reviews that brought in the new customers.
The economists conceded that, while restaurants with strong reviews on the site did better business than poorly reviewed restaurants, establishing cause and effect was difficult.
“After all, restaurants that get good reviews are those that appeal to consumers and they would probably do well even in the absence of any reviews,” the pair write. However, they are confident the research is robust. They note that, when Yelp computes a business’s average rating (which ranges from 1 to 5 stars), it rounds off to the nearest half-star.
So, two restaurants that have similar average ratings can actually appear to be of very different quality to online viewers. For example, a restaurant with an average rating of 3.74 displays a 3.5-star average rating, while a restaurant with an average rating of 3.76 displays a 4-star average rating.
This, the economists claim, allows them to make important comparisons between restaurants that have different ratings — for example, 4 stars versus 3.5 stars — but are of nearly identical quality (for example, a 3.76 average versus a 3.74 average). Their conclusion? That half a star makes all the difference.
Furthermore, they found that the effect was more profound when alternative information was hard to come by, opening up the possibility that invented reviews could boost fortunes.
The pair write: “These returns suggest that restaurateurs face incentives to leave fake reviews, but a rich set of robustness checks confirm that restaurants do not manipulate ratings in a confounding, discontinuous manner.”
So what can you do about it?
We believe that there are 4 key steps to turning around social media performance.
- Inspect the data
- Incentivise your staff
- Be proactive and respond
- Address root causes
Inspect the data
To quote Louis Gerstner, ex-CEO of IBM :
“You don’t get what you expect, you get what you inspect”
… and the same is definitely true of social media scores.
Can you answer the following questions:
- Which was my top performing store on social media this month?
- How many likes do I get for an average post on Facebook and how did this month compare?
- Do I have any critical reviews outstanding that I need to respond to?
If you can’t answer them within a minute or two — you need to work on your tools. Whether you invest in a solution to aggregate reviews for you, or have someone collate a regular report — you need to understand this data in some detail.
Incentivise your staff
Just making sure managers are aware of social media reviews will help — but there’s nothing quite like making social media scores part of an employee scorecard to help drive positive reviews. We’ve seen customers include an average review metric as 10% of a balanced scorecard impacting bonus at the end of each month. Of course, go to far and you could start seeing odd behaviours — an employee may push customers to make reviews — so use in moderation.
You can also run competitions, or have a “mention of the week” type award to rewards one-off performance.
Lastly, it’s important to role model the behaviors you want to see — make social media scores a topic at team meetings, and an important part of the day to day.
Be proactive and respond
Don’t just let negative reviews sit there — make sure you’re responding to them, and trying to remedy the situation. Customers are looking at the responses and well, and want to see an engaged restaurant.
Best in class restaurants can respond within a couple of hours — and it shows you’re thinking customer first. It’ll also help you get closer to the pulse of customer feedback.
Address root causes
Of course, you also need to listen to the content of customer feedback. Not all of it can be fixed with a staff incentive or by listening more closely.
Example of structural issues may be things like poor menu selection for vegetarians, or long wait times on certain days. Each of these comes with an obvious action that you can then decide to make if the reviews persist. Listening closely will help give you this feedback.
If you’d like to see how Tenzo can help you power all of the above — please get in touch for a demo.