Think about the last time you wanted to buy something, hire a trustworthy contractor, or visit a new restaurant you’ve been wanting to try, chances are, before you even took the next step you probably let your fingers do the walking first, online. Online reviews unlock a wealth of knowledge for prospective customers. From the smallest purchases to a huge investment such as a car, online reviews are the new digital word-of-mouth and have the potential to sway purchase decisions and shape the success of your business. 

Birdeye’s latest data report explores the significance of online reviews in consumer decision-making processes and sheds light on how the reputation of a multi-location business impacts its selection in local markets. 

Table of contents

Key Findings:

  1. 51% of consumers purchase products or services from multi-location businesses with a local presence at least once a week 
  2. The top 3 channels influencing the research options for evaluating local businesses are – ‘Friends and family,’ ‘Search engines’ and ‘Customer review sites.’
  3. 68% of the time, consumers check online reviews before engaging with a local business
  4. 85% of consumers didn’t select a multi-location business with a local presence after reading a negative review  
  5. Over the next 6 months, 65% of consumers plan to spend more or about the same as they do today on local businesses
  6. Top 3 local businesses that consumers search for online are ‘Restaurants,’ ‘Retail stores,’ and ‘Healthcare providers’
  7. 73% of consumers have searched for local restaurants in the last 12 months
  8. 92% read at least 2 reviews before forming an opinion about a local business
  9. 54% of customers leave a positive online review after a positive experience with a local business 
  10. 38% of customers leave a negative online review when they have a negative experience with a local business
  11. 67% of consumers tell family and friends about their negative experiences and 62% switch to a competitor

How frequently do consumers shop locally?

The data demonstrates that a whooping 67% of people buy products or use services from local businesses at least once a week. A business’s online reputation management is important because today’s modern consumers want the best local option, it’s no longer just about convenience. When it comes to multi-location businesses, being the top choice backed by positive reviews can help boost the return on investment (ROI). 

Graph showing how often customers purchase from multi-location businesses. Major choice is several times a week followed by weekly, several times a year, and so on.

Projected Local Spending

Are consumers anticipating a change in their spending over the next 6 months? Surprisingly, 65% of consumers expect their spending on local businesses to either remain the same or increase in the next six months. This projection highlights the importance of maintaining a positive online presence to attract these consumers.  

Graph showing how much customers plan to spend on local businesses. Major choice is same as now.

What categories of local businesses are consumers searching for? Across demographics, a consistent 73% of respondents revealed they searched for local restaurants in the last year, followed by 47% looking for local retailers and healthcare providers. This shows just how much online reviews affect many different types of local businesses.

Graph showing what categories are customers searching for local businesses in. Major choice is restaurants followed by retailer, healthcare, and so on.

Research process and consumer behavior

The research landscape for local businesses has evolved considerably, with factors such as friends and family recommendations, search engines, and customer review sites helping shape consumer decisions. Trustworthy personal recommendations, online accessibility, and social proof significantly influence the selection process.

Graph showing who influencers customers for local businesses searches. Major choice is friends and family followed by search engines, customer review sites, and so on.

How frequently do consumers research reputation before selecting a local business?

When in the market for a local business or service, consumers are highly likely to research online first. Respondents said that they research online 68% of the time before making a purchase.

Graph showing if reputation influencers customers on local businesses. 68% consumers said they research before they purchase

Does reputation affect consumer choices?

85% of consumers expressed that they opted against engaging with a multi-location business after encountering a negative review. This just demonstrates that the online reputation of a business profoundly affects consumer choices and, subsequently, the business’s revenue and growth prospects.

Graph showing if customers will choose local businesses with bad reputation. Major choice is no with 49% consumers responding with it.

Do negative reviews influence consumer choices?

Negative reviews impact consumers by eroding trust, influencing decision-making, questioning the value, providing social proof, raising concerns about the customer experience, and damaging a business’s reputation. 

The survey confirmed this behavior. 87% of respondents confirmed that they decided to refrain from using a local business or buying from them in the past 12 months if they had negative reviews.

Graph showing if customers have ever decided not to use local businesses with bad reputation. Major choice is yes with 87% consumers responding with it.

The role of reviews in forming opinions

It turns out that the role of reviews when forming opinions plays a huge role. In fact, 92% of respondents indicated that they read at least two reviews before forming an opinion about a business, with 50% reading five or more reviews. Multiple reviews contribute to a more informed decision-making process, offering diverse perspectives and boosting consumer confidence.

Graph showing how many reviews customers read to choose local businesses. Majority of customers chose 2-4 reviews

Influence of customer experience on reviews

The study revealed that 54% of customers show their gratitude for an excellent customer experience by leaving a positive online review. This finding highlights the important relationship between excellent customer experiences, positive online reputation, and business growth.

Graph showing what customers do local businesses provide great customer experience. Most customers mention they tell family and friends, and buy from them again in the future.

Impact of BAD customer experience

Unsurprisingly, 77% of consumers tell family and friends about their negative experiences, and 74% switch to a competitor. It was interesting to note that only 38% of the respondents left a negative review online when they were unhappy about their experience compared to 54% who would leave a review for a positive experience

Graph showing what customers do local businesses provide bad customer experience. Most customers mention they tell family and friends, and switch to a competitor.

In the digital landscape of multi-location businesses, the role of online reviews is undeniable. The insights gathered from this data report demonstrate the connection between positive customer experiences, online reviews, and the overall success of businesses in local markets. By understanding and leveraging these insights, businesses can successfully navigate the world of online reviews, harnessing their power to create positive consumer experiences, drive loyalty, and achieve a competitive edge in the market. To read the full report, download our free guide today. 

(Survey Methodology: A representative sample of 1,054 US-based consumers participated in the ‘Impact of Online Reviews on Local Businesses – 2023 Data Report’ conducted in May 2023 via SurveyMonkey.)

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