Are Referrals Really the Most Important Factor for Local Businesses?

A recent analysis of a poll by StreetFight provides some interesting information for home performance businesses - the questions seemed to focus on local retail stores but there is still something to be learned for local service businesses as well. And while we think there is a lot of credibility in the original analysis we also think there is another useful way to consider the data.

The poll found that by far the single most influential factor amongst those listed that contributes to a consumer shopping with a local business was a recommendation from a friend or colleague at 43.2%. This factor was followed by being emailed a deal at 29.6%, seeing a locally targeted ad at 15.4%, and reading a positive review at 11.8%. We don't want to dispute the power of referrals and recommendations - that's why we advocate asking for reviews from your customers and putting testimonials on your website. But what stands out is that the group of online or digital factors in total at 56.8% outweighs the friend's recommendation by over 10%.

The same effect holds true for the 2nd poll question - when asked what they would be most likely to do before visiting a local merchant 37.4% of people who answered said they would ask peers about their experience with the business. The gap between online and offline is smaller here though as 35.8% said they would visit the merchant's website. And once again if you total up the online factors they add up to 62.6% and exceed the peer referral by almost 30%!

So what's the takeaway? Referrals are still important and no one in their right mind would dispute that. But we think you can clearly see that the totality of your web presence can play a significant role in leading a consumer to do business with you or in their vetting process before they work with you. If you don't have a nice looking usable site, aren't showing up in local search, and have bad or inconsistent reviews lurking out there that you haven't responded to, it could lead that person to do business elsewhere. It is also important to keep in mind that the nature of referrals and recommendations from friends is changing. Social media has the power to take those referrals and amplify them across huge networks of people. If you've ever posted to Facebook that you're going out to a restaurant and gotten a slew of opinions from your friends you might know what we're getting at.

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