Startups and ROI

A recent piece in Forbes encourages business owners and entrepreneurs to think critically about return on investment (ROI) when it comes to online reputation management. According to the author, Ryan Erskine, many executives see reputation management as the icing on the cake, a low priority task that they’ll get around to when they have more time. But for Erskine, this is a potentially dangerous view to take since most leaders aren’t seeing the big picture.

The problem is that many don’t take into consider lost revenue. Most people can see that were they to put more effort into social media and web presence, they would have some sort of return on the investment. But this doesn’t take into consideration lost revenue due to negative reviews and articles online. Erskine estimates that a single negative article on your Google front page can result in a 22% loss in potential business. The number rises quickly with each additional negative search result, so for businesses facing a barrage of negative results online, online reputation management may be necessary to increase or restore profitability.

Negative reviews on sites such as Yelp or Google Reviews can likewise be devastating. Losing a star can be particularly bad for restaurants, which, on average suffer revenue losses in the neighborhood of 10% when they are downgraded. But in addition to negative online results, many entrepreneurs fail to grasp just how essential an online presence is to the pipeline. The impact on ROI can be absolutely amazing.