Every restaurant owner knows that reviews on the likes of Trip Advisor are very important these days, but until recently, it was impossible to assess exactly how important. Work by two economists at the University of California Professors Michael Anderson and Jeremy Magruder, is the first attempt to measure the relationship between online star ratings and customers’ purchasing decisions. The pair focused on the effects of positive online ratings on 300 San Francisco restaurants. They found that a restaurant with a rating improved by just half a star – on a scale of 1 to 5 – was much more likely to be full at peak dining times. Indeed, an extra half-star rating caused a restaurant’s 7pm bookings to sell out up from 30% to 49% of the evenings it was open for business.
Many products and services are subject to online review scrutiny these days, and what’s important for restaurants is likely to be important elsewhere too. Something to think about.