Stacy Jo Dixon, a Statista researcher, conducted a survey in December 2020 to analyze how online reviews shape people’s perception of local businesses. She found that local establishments with a high-volume of negative reviews are 92 percent less likely to be considered by potential customers. Today’s blog post discusses the impact negative reviews can have on small businesses, along with tips to overcome these challenges.
How Negative Reviews Can Hurt Small Businesses
Negative reviews for businesses on platforms like Google, Yelp, and other search engines can alter public perception, causing a decline in customer trust. Learn more about the other ways these reviews can hurt a local enterprise are discussed in our detailed list below.
#1 — Damage to Reputation
- First impressions matter: People rely on online reviews to decide if a neighborhood store is worth visiting. An overwhelming number of negative reviews can create an unfavorable first impression, making potential customers hesitant to engage with the business.
- Word of mouth in the digital age: In the age of social media, where everyone is connected, a single ‘exaggerated’ negative review about a business can quickly go viral and reach hundreds, if not thousands, of people within a matter of seconds, tarnishing the brand’s reputation on a large scale.
- Long-lasting effects: Bad reviews left by unsatisfied customers are like a curse that can torment a business for years. If not dealt with responsibly and swiftly, a bad review can continue to affect your business long after the incident happened. Proactive reputation management can help mitigate the lasting effects of negative online reviews, showcasing to potential customers that past problems were dealt with and your business is worth their trust.
#2 — Loss of Customer Trust
- Trust as a key business asset: Trust matters for a business’s success, no matter how small or big it is. A Deloitte study found that one in five consumers are willing to spend more than 50% of their money on the products and services of brands they trust.
- Impact of negative reviews on trust: Negative reviews left by displeased customers can make people question a brand’s credibility along with its competence in delivering quality products and services. Customers who have previously trusted the business may feel disappointed after reading negative reviews, also resulting in a shrinking loyal customer base.
- Trust recovery: Trust erosion is one of the most damaging things that could happen to a small business. Fortunately, being consistent at delivering quality products and services, maintaining transparency, as well as demonstrating commitment to contributing positively to the world at large can help the business build trust and retain past clientele.
#3 — Decrease in Sales and Revenue
- Direct impact on purchasing decisions: To demonstrate how influential online reviews are in dictating consumer purchasing decisions, a Harvard Business Review study cited a Forbes article that highlighted how 98% of consumers read reviews before booking a product or service. Having a negative review, even if it’s based on a single isolated incident, can lead to a potential customer choosing a competitor.
- Reduced repeat business: Cultivating a loyal customer base is what allows a small business to survive in a market where cutthroat corporate competition is the norm. Since loyalty is based on trust, frequent negative reviews can undermine that and make customers feels like their concerns are not being addressed, resulting in reduced loyalty and, therefore, loss of business.
#4 — Impact Search Engine Rankings
- SEO implications: How high your business ranks on the local 3-pack and organic results dictates how much revenue it can yield. Google and other major search engines consider customer reviews an important factor to rank businesses. Negative reviews can hurt a small business’ visibility, making it harder for potential customers to find it.
- Google’s review algorithm: Review count and review score help Google determine how-well known a business is. Having more reviews and positive ratings can make the algorithm view a business as an authority in the niche — thereby boosting its rankings, making it easier for potential customers to find.
#5 — Negative Impact on Employee Morale
- Staff concerns and stress: Nothing hurts consumer-facing employees of a small business more than negative reviews posted by unsatisfied customers, as it directly impacts their reputation and morale. Such feedback can adversely impact the employee’s attitudes and can demotivate them, making it quite difficult for them to stay focused at work.
- Internal conflict: Negative reviews can start a brawl among employees. They may start to blame each other for the negative experience highlighted in the review, putting the business’s interest at risk. This blame game would eventually pave the way for a toxic work environment, making the employees less cooperative with each other.
How Small Businesses Can Mitigate the Risks
- Respond promptly and professionally: When in doubt, respond as quickly as possible. Your response should be very professional, addressing the customer’s core concerns. Try to offer a solution or an explanation to resolve the issue. Who knows, you might be able to turn a dissatisfied customer into a loyal one simply by replying courteously!
- Resolve the issue privately: Try to take the conversation offline. By addressing the issue privately, either through a phone call or a personal meeting, you might be able to convince the customer to remove the negative review themselves.
- Encourage positive reviews: Train your staff on how to politely approach happy customers for positive reviews and ratings. BrightLocal’s ‘Local Consumer Review Survey 2025’ found that 96% of consumers will gladly give your business a review if prompted, so it’s always worth a try!
- Learn from feedback: It’s important to not take criticism personally. Instead, use it as an opportunity to learn, improve, and make your business more resilient and adaptable to change.
Wrapping Up
We are living in an era where information can be transferred from one part of the world to another within the blink of an eye. While it benefits us in many ways, it also has the ability to harm us in ways we may not always anticipate. Therefore, how positively your business is perceived by people can be the difference between gaining new customers and losing them to competitors. We recommend making your business more credible by managing customer feedback effectively and constantly improving the quality of the services and/or products you offer.
