The reputation marketing field has evolved from the marriage of the fields of reputation management and brand marketing. In the socially connected world of the new millennium a brand's reputation is vetted online nearly in real-time by consumers leaving online reviews and citing experiences on social media websites.
A study done by Neilsen in 2012 suggests that 70% of all consumers trust online reviews (a 15% increase in the last four years), second only to personal recommendations. This gives credibility to the social proof theory, in the famous study done by Muzafer Sherif and is also highlighted as one of the Six Principals of Persuasion by Robert Cialdini.
Impact on academia
Increasing numbers of review websites such as Yelp and ConsumerAffairs, are gaining credibility and influence over consumer purchasing decisions. This has attracted the attention of Harvard Business School which conducted a study of online reviews and their effects on restaurants. The study found that a one star increase in Yelp rating led to a 5â"7% increase in restaurant revenue, which was a major impact on local restaurants and very little on big chains A similar study done at UC Berkeley reports that a half star improvement on a five star rating could make it 30â"49% more likely that a restaurant will sell out its evening seats.
Influence of Amazon on consumer purchasing habits
With the internet fresh on everyone's mind in 1997, Amazon was the first to have consumers post reviews on the internet. Online reviews had tremendous influence on consumers' purchases since they could read evaluations and opinions of the items they were considering, which were primarily books at that time.
Small business and reputation
The global influence of the online reputation is enormous for a small business. Accredited institutions such as banks and investors will most likely look at a business' online reputation to see if it is good for a loan. In today's non private social society, it would be plausible to see that one's business could be affected by what people say about it or the owner or employees online.
Although the restaurant business seems to be most impacted by online reviews, experts predict that doctors, contractors, surgeons, accountants and many other local business owners will see more and more online reviews due to changes in search engines over the next 12â"24 months. Reputation marketing and building a good online reputation are critically important. However, they are not stand alone growth strategies. Reputation marketing yields the most positive returns when coupled with other online and offline marketing efforts since the effectiveness of these efforts are increased by a good reputation.