Local search engines consider online reviews very important for one primary reason, consumers love reading online reviews. Search engines like Google/Bing/Yahoo are in the business of providing people on-the-go or at home with the most accurate information possible to help them make decisions about which services to use or products to buy. The faster an internet user can find accurate information on a search, the more they will return to that particular search engine.
A survey conducted by Dimensional Research found that 90% of their respondents claimed that positive online reviews influenced their buying decisions, while 86% had responded saying that negative reviews impacted their decisions.
The bottomline is that Google/Yahoo/Bing ALL consider online reviews (Especially Google) on how they rank local businesses on search results. The more “5 Star Reviews The Better”… But also the quality or relevance of a review matters as well. A relevant review with good context will be shown more prominently. A short review that says “great company” will not show up in reviews results as high as a review that has 2 paragraphs about the buyers experience. There are many factors that influence how high a review will rank in the review list. As far as your listing ranking higher, the more attention your listing gets, the better. Being active and responding to reviews is a plus also. Google and most review sites allows you to respond to reviews publicly.
Can bad reviews have a negative affect on your ranking? I think there are more important factors such at trustflow, online citations, business type, who left the reviews, and so on… Bad reviews are not good but your star rating matters cosmetically and technically on search results. Having 1 star beside your name is bad, 3 or more stars are ok. 4-5 stars are most trusted. Raise your star rating and I would wager your listing will show up more often and higher within results. Not only will it rank higher, you will get more clicks, calls, and business with higher star ratings.
So in closing, online reviews matter and you need to pay close attention to them just as the search engines and searchers do.