Google's own guidance tells owners to "interact with customers by responding to reviews" and treats engagement as evidence of an active, trustworthy business. The direct effect is on conversion: searchers comparing two 4.5★ businesses reliably pick the one whose owner visibly answers — especially answers to negative reviews.
Reply to every review from the last 90 days first (newest visible first), then work backwards. Two sentences is enough: thank them, reference one specific detail. For negative reviews: acknowledge, state the fix, take it offline. Never argue.