How To Prove the ROI of Online Review Management

Andrew McDermottAgency, Reputation Management, Review MarketingLeave a Comment


What's the toughest part of review management?

It isn't getting the review. It isn't even dealing with a flood of negative reviews from a horde of angry customers. No, the hardest part of online review management is something unexpected.

It's demonstrating the ROI of online review management.

It's a difficult thing to demonstrate, but as you'll soon see, it's absolutely necessary.

Ignoring the ROI of online review management means you'll lose

It's not because you aren't doing an exceptional job (you are). It's also not because you don't know what you're doing (you do). On their own, these are legitimate reasons to validate your performance. But that's not the real reason.

Your competitors are looking to take (steal) the credit for your hard work.

If you're serving a large organization, you'll have competition from a variety of internal and external sources. At any given time, each of your competitors are looking to accomplish several specific goals:

1. Internal depts. want to maintain their current budget. Corporate depts. and teams are under a tremendous amount of pressure to justify their usefulness. When internal teams are successful, their budgets are maintained, team members keep their jobs and the work continues. When they're unsuccessful, budget cuts and layoffs are often the result.

2. Internal depts. want to increase their current budget. A select number of organizations like Accenture or Amazon subscribe to the "if you're not growing you're dying" mantra. Their corporate culture is a hyper-competitive form of social Darwinism. The amazing results you achieved yesterday, will cost you your job today. Teams in these environments are expected to move up or move out.

3. Individuals are looking for a career defining moment. In every organization, employees are jockeying for position. They need results to snag an upcoming promotion, win a coveted salary increase or snatch that corner office.

4. External competitors are looking to attract a bigger share of business from the organization. It's common for organizations to work with a mix of external service providers. It's also common that there's a bit of overlap; your agency and a local PR firm both offer review management services.

When it comes to demonstrating the ROI of online review management, you can make a case for the obvious. Decision makers want to know the work is worth their continued investment.

The hidden reason is much more nuanced.

You'll need to demonstrate the value of online review managment because those around you will take credit for your work if you don't.

How are you supposed to do that?

How exactly do you go about determining or proving the ROI of online review management services?

You can't take credit for your work without...

Marketing attribution.

When I mention marketing attribution I'm referring to...

A process that identifies a set of customer actions (e.g. events or touchpoints) that contribute, in some way, to the outcomes you want. Then assigning a value to those actions.

I know, I know, marketing 101.

I'm not sharing this to be condescending and I'm not trying to insult your intelligence here. I want to make sure we're on the same page, because these definitions are our starting point.


With marketing attribution you can...

· Create a comprehensive list of touchpoints. What do surveys, in-store visits, sales calls and website conversions have in common? They're all touchpoints - the points where customers interact with organizations.

· Identify high and low quality touchpoints. When you have a comprehensive list of touchpoints it's easier to determine what is or isn't working. Imagine your positive reviews have given you a nice conversion lift. Your reviews bring in fresh leads but they're not converting. After speaking with customers you realize sales reps are making promises the organization can't keep.

· Assign a value to each touchpoint or event. Imagine that you make a sale after every ten PPC clicks. Using simple math, you'd be able to determine the value of a click in your analytics tool of choice. Now imagine that you're able to assign a value to the vast majority of each touchpoint.

· Optimize campaigns and funnels. With attribution data in place, you're able to quantify the value online reviews bring to the table. This hard data enables you to (a.) show decision makers your ORM campaign is working and (b.) provide the leverage you need to request a bigger budget.

Just one problem.

You'll need an attribution model. Attribution models determine which touchpoint gets credit for what. An important distinction to make when you're determining the value of online review management. If you're working with a client they may already have a preference for the model they choose.

Success attribution models diagram.

You can take the single source, fractional or algorithmic approach. Let's say you're using a service like Google AdWords or the Model Comparison tool in Google Analytics. You can use their tools to identify the attribution model that works best for you.

With your attribution models in place you can...

Calculate the ROI of your online review management campaigns

What specifically should you look for?

And how exactly do you go about calculating the ROI of your online review management campaigns? You focus on two distinct areas.

1. Lost revenue (estimated). The revenue your client has lost as a result of negative reviews. This metric, at its core, is an estimate. The vast majority of customers won't tell you if or why they've abandoned your business. This means our estimates will rely on research data.

2. Earned revenue. The revenue from your positive reviews and review content via review sites, social media, advertising, case studies, etc.

Let's look at lost revenue first

Research from Moz found businesses risk losing as many as...

· 21.9 percent of customers if you have just one negative review listed on page one of Google

· 44.1 percent of customers if you have two negative results

· 59.2 percent of customers with 3 negative results

· 69.9 percent of customers with 4 negative results

So we'll use this data for our formula.

Y = X / (100 - X)

Y = How many more customers you could have had (as a percentage)

X = Average percent of lost customers for businesses like yours

Where are we going to get X? From the data provided by Moz! If you have one negative result X would be 21.9 percent. If it's two 44.1 percent and so on.

Let's say you're working with a client with four negative results.

4 negative review listings on Google SERPs

Your formula would look like this:

Y = 69.9 / (100 - 69.9)

Which means Y = 2.32 or 232% more business!


When you look at the data it makes sense, but this is devastating. If this business isn't on life support now, it will be if this disaster continues.

These negative reviews are killing this business.

With more data (traffic numbers, average order values, conversion rate, etc.) you'll have concrete numbers you can use.

Next, let's look at earned revenue

There are several different methods you can use to calculate this data. I've opted to focus on methods with data points clients are far more likely to share.

Here's a list of metrics you'll need to calculate earned revenue:

  • Average order value (per customer)
  • Average number of transactions
  • How long customers stay with the business
  • Total number of new website/offline visitors per month
  • Your conversion rate

Let's plug some sample numbers for a B2B client, a small business accountant, into this figure.

  • Average order value (per customer): $2,000
  • Average number of transactions per year: 2
  • How long customers stay with the business: 4 years
  • Total number of new website/offline visitors per month: 2,632.5
  • A conversion rate of: 2%

$2,000 * 2 transactions per yr * 4 years = $16,000 lifetime value (per customer)

52.65 customers * $16,000 = $842,400 in projected revenue.

Here's where things get interesting.

Research from Reevoo found "businesses displaying ratings and reviews experience average revenue uplifts of around 18%."

Other sources estimate the lift from online reviews to be even higher.

Northwestern University's Spiegel Research Center analyzed 57,000 reviews from anonymous consumers and 65,000 reviews from verified buyers of more than 13,500 unique products in diverse categories. Their findings mentioned reviews could increase conversion rates by 270 percent!


Research from Harvard University found that restaurants experienced a significant lift in conversion. "Each ratings star added on a Yelp review translated to anywhere from a 5 percent to 9 percent effect on revenues."

Pretty significant, right?

Okay then. How would this affect our $842,400 in projected revenue if we used Reevoo's conservative 18 percent lift?

Revenue balloons to a whopping $994,032!


What if we used Northwestern's numbers? We get $3,116,880! That's a sizable lift in revenue.

Very yes!

Online reviews matter very, very much. Quantifying the ROI of online review management takes work, but as you can see it's worth it. Here's another important detail to cover.

When they're structured properly, online review management campaigns pay for themselves!

What a time to be alive.

The ROI of online review management is there. Now you can prove it...

But it's not an exact science.

Variables like sentiment - how your customers feel about your product, service or business are difficult to measure. But that doesn't mean the value isn't there.

Surveys, focus groups and customer interviews enable you to draw out the qualitative data. The formulas above give you the quantitative data you need to make a solid case for online review management. It's the best of both worlds.

What's the toughest part of online review management?

It isn't getting the review. It isn't dealing with negative reviews from an online lynch mob - that can be fixed. It's demonstrating the value, the ROI of ORM to decision makers.

If decision makers can't see it they won't invest.

When you're missing the qualitative and quantitative data you need, it's easy to feel like your budget is being wasted. But as we've seen, the ROI is there.

Focus on the ROI of online review management.

You'll find a successful campaign is easier than you expected.

About the Author

Andrew McDermott

Andrew McDermott is the co-founder of HooktoWin and the co-author of Hook: Why Websites Fail to Make Money. He shows entrepreneurs how to attract and win new customers.

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