Online reputations continue to play an ever more important role in customer’s decision to purchase a product or service.
A new study shows how an improved online reputation translates in very tangible ways into increased revenue and business.
Those in the hotel/hospitality industry have known this anecdotally at least, and have used social media to engage with guests and to generate bookings. But the study, by Cornell University Professor Chris Anderson at the Center for Hospitality Research, discovered three important points that focus on online reputations:
- Better Online Reviews Means A Business Can Charge More
For each increase in online review scores, revenue can be increased. For the Travelocity website, this means that a 1 point jump in hotel ratings—say from a 3 to a 4—the hotel can increase its price by 11.2%.
- More Guests Look at Reviews First
The percentage of customers looking at reviews—and making them–on Travelocity has increased progressively.
- A Good Online Reputation Improves Revenue
Each 1% increase in a hotel’s online reputation score leads to 1.42% increase in revenue per available room as well as a 0.54% increase in occupancy.
The study included data from more than 3,000 hotels in 20 cities, including several international locations, as well as from Travelocity. Anderson spent about six months reviewing occupancy numbers, daily rates and online reviews.
The basic tenants of the study could be applied to other fields or industries, such as the legal, medical or financial professions, or anywhere an online reputation or review influences a potential client to make a purchase.