How will online reviews in Internet directories such as google local and yahoo local impact local business?

Don Wood of the Norman Economic Development Corporation asked a great question during my lecture on creating successful websites for local businesses at the Cleveland County Business & Industry Council.  His question was how abuse of on-line reviews in local Internet directories would affect their validity.  In other words, will consumer purchasing behavior be affected knowing the review could have been submitted by the business owner, or a competitor. 

My answer was yes, online reviews will still influence purchase decisions.  I believe consumers give more merit to a peer reviews than they do to companies marketing copy.  I think perhaps the question is, how many reviews does a business need to have before they become relevant?  A single review is not as convincing as 20 reviews, positive or negative. 

I know when evaluating local services or businesses, I give more credence to the reviews when there are five or more reviews.  I'm also skeptical of reviews that are overly glowing, or over the top negative.

"Search Engines are Reputation Engines"

Managing the on-line reputation of your local business is going to become a significant factor in the number of new customers you receive from the Internet.  This effect will be intensified as more and more consumers turn to on-line directories, and away from paper books when accessing contact information. 

I feel the implications of on-line reviews are magnified for local businesses. Why you ask?  When shopping for local services consumers use Internet directories such as Google Local to find contact information.  You can't find a phone number for a local business without seeing a link for their on-line reviews.

What are your thoughts?  Do you find on-line reviews useful when evaluating local businesses?  Does it influence who gets your business?