Orthodox Biz Blog

Word of mouth is a proven way of driving sales. When product buyers give a thumbs-up, the endorsement car­ries powerful credibility that retailers and manufacturers cannot duplicate in product descriptions. Little wonder, then, that customer reviews can pack the same punch online. Maybe more, because of the Internet's power to distribute consumer comments more widely and rapidly than word of mouth.

In addition to being a potent means of upping conversion on favorably reviewed items, customer reviews on e-commerce sites offer more to retailers. Retailers can leverage the consumer-generated data in e-mail, catalogs, circulars and in-store signage. And they can feed what customers are saying online about brands and products into company wide initiatives on merchandising, marketing, and vendor relationships. Studies have shown that shoppers who navigate to pages with top-rated products convert at a 50% higher rate than others. Studies also found the influence of online customer reviews wasn’t limited to shopping the site. When a studied retailer conducted an experiment to test the effects of including customer-generated star ratings in marketing e-mail, the test campaign had a click-through rate five times the usual rate. Consumers are highly influenced by the experience of other consumers—far more than they are by marketing professionals. Many of those retailers, now with several months or even a year or more of experience with ratings and reviews, can point to lifts in sales of reviewed products as a result.

And a 2007 study from the University of Nebraska at Omaha’s College of Information Science on the effect of reviews at online retailer NetShops Inc. supports the notion of a causal relationship between consumers reading online reviews and consumers pushing the Buy button. The study determined that reviewed products experienced a 26% lift in sales. E-mail was the first place off-site that many retailers put online customer reviews to work. Bath & Body Works last year tested marketing e-mail containing customer ratings and reviews and compared its performance against that of e-mail without review content. It found e-mail containing reviews produced an average order value 10.4% higher than other e-mail. Customers who clicked through on e-mail containing review content viewed 7.48% more pages on the site, and the average sale per visitor was 11.46% higher.

Poor reviews

As retailers experiment with new ways to leverage online customer review content, one of the newest paths has led not to use in other channels but deeper into site operations. For one thing, merchants are using poor reviews to get improvements from manufacturers and as a reason to boot products from the lineup. One retailer who does not wish to he identified was getting good sales of a product that was an ele­ment of a popular kit. ‘When major complaints about the item surfaced in reviews on the retailer’s site, the retailer dropped the item from the kit and included another product of higher quality.

Reviewed products sell

Products that sell are typically attached to reviews. Visitor trends show they’re starting first by looking at what other customers are saying. What customers are inputting when they write a review could be very helpful, In fact, there now are custom­ers who will not make any purchase without first reading some reviews.

Critical mass

That highlights a limiting factor in leveraging reviews in other chan­nels or putting them at the center of marketing and planning: the problem of getting enough reviews on a site to provide meaningful insight. Any of these expanded uses of review content requires a critical mass of reviews—enough to serve as a reliable basis from which to draw conclusions or even make assumptions.

If you only have one or two reviews, it might suggest all kinds of things that aren’t true, a minimum of 20% of products on a site need to be covered with at least three to five reviews. The University of Nebraska study reported a 26% lift in conversion on reviewed products over those that weren’t reviewed. The most effective way to pump up review volume is to ask for reviews; some retailers also periodically offer incen­tives to encourage review submission, positive or negative. Some e-commerce systems can be configured to automatically send purchasers an e-mail that asks for a review three weeks after a pur­chase. The response rate is about 20%. To jump-start the process, offered “discounts” redeemable on merchandise to customers who submitted a review.

Retailers are just now starting to unearth the deeper potential of online reviews. In a way, they’re nothing new, because marketers have always looked to customer advocacy to help them sell products.

But the Internet has taken advocacy to new levels, giving marketers access to a much bigger pool of feedback than ever before. And the rise of the consumer voice online demands marketers take it into account. This makes reviews a potential source of powerful information about customers that marketers can apply across channels and throughout their operations.

The market wants content that drives sales. But content is difficult to produce internally and people are tuning out traditional advertising content, so marketers are looking at customer reviews as something they can use in any channel If I am market­ing that laser printer, do I want to get marketing to write a bunch of content that tries to convert? Or do I want to leverage the content that already has been created by my customer evangelists?”