Wow, have the times changed! I was recently having a discussion with a friend about the impact Yelp reviews were having on his business and how concerned he was whenever they received a negative review. I also routinely watch my own wife rely on Yelp reviews and friends’ recommendations on Facebook as primary factors when determining what company we use for services around the house, what new restaurant we should try this weekend, what community attraction is worth going to see, etc. Social media and sites like Yelp have changed the way we make decisions on where to spend our money.

In the past, people used the Better Business Bureau, Angie’s List and other services to help us avoid making a mistake, and many people still use these services, but in a different way. The main thing that has changed is how accessible review information is today. It is not uncommon for people to make buying decisions on the fly by using one of the apps on their phone to check out their choices. All of the primary rating and review sites are readily available on your phone with just a few clicks. With this information so easily accessed, the benefits of a positive review ranking is that you will remain a choice when the decision of which business to choose is made. However, businesses with negative reviews are often dismissed immediately and no longer even considered as an option.

In addition, these sites have made leaving a review very simple so that more people are encouraged to document their experience with a business. This has empowered the consumers in a way that creates a sense of community with others on the site. A user feels a responsibility to notify fellow users about a company that is providing sub-par services. However, they also want to reward the businesses that really exceed expectations and many users enthusiastically leave positive reviews as well. Often, the user links their Facebook, Twitter and other social media accounts to their review, meaning that the review spreads to their social network as well.

Why are these review sites and social media so powerful with consumers? As mentioned above, these sites cultivate a sense of community between the users that creates trust in the group. The fact that the reviews are given by similar consumers or friends give the ratings credibility. While there are certainly people that try to “game” the system by creating positive reviews for their company, or even negative reviews for the competition, most consumers trust that the reviews they are seeing are credible.

So, what does this mean for your business?

We have all heard the old saying: “A happy customer will tell two people about an experience and an unhappy customer will tell 20.” I say “old” because the numbers used in that saying are no longer relevant in 2014. Twenty years ago, even if you vastly exceeded expectations and your customer was the town gossip, they may only tell 10 people how happy they were with your product or service. With social media and various review sites, those numbers, both positive and negative, can be multiplied exponentially.

On the negative side, one unhappy customer would be able to easily tell 500 people in their social network and countless others on the review site about their bad experience with your company, whether true or not. The power of a bad review posted on Yelp, Facebook or another review site can be far reaching. As I mentioned above, many current apps allow you to post a review to the rating site and have it automatically post on to Facebook, Twitter, etc. Because this negative review can be spread so quickly to many people, you need to do everything reasonably possible to keep your customers thrilled with you and your company.

Now, on the positive side, a satisfied customer can easily use these same tools to reach just as many people with news of how thrilled they are with a product or service they received from you. Moreover, the review will have been shared by someone that the recipient has context with through social media or just the community of the fellow users of a rating site. A positive review given by a person that someone trusts is more valuable than any advertisement money can buy.

This kind of momentum based on a single customer interaction would not have been possible just a few years ago. The emergence of these rating sites and social media as part of our daily lives has made great products and customer service imperative. The penalties for doing it wrong can be so damaging and the reward for doing it right can be unbelievable. You can no longer put your head in the sand regarding how people make buying decisions in 2014. Use of these review sites and social media is part of everyday life for a large segment of society. It is imperative to understand the current landscape so that you can leverage the potential while avoiding the pitfalls.

So I’ll ask again, what are people saying about your business?