July 12, 2013
Will Customer Reviews Become a Bigger Influencer for Retail Purchases?
Despite some hype, online customer reviews appear to be playing only a small role in consumer purchasing decisions when it comes to retailers. But in certain purchases such as hotels and restaurants, reviews are often the dominant influencer.
According to a recent study from SAS and The Pennsylvania State University, customer reviews had a far stronger influence on consumers’ perceptions of quality than price when it comes to hotels. That’s especially true with the arrival of Travelocity.com, Expedia.com and others leading to price transparency around such purchases.
When reviews are negative and ratings are low, hotel room buyers perceive no difference in value between low and high price, the study found. Also, when review sentiment conflicts with ratings, consumers count more on the actual reviews to determine the perceived quality and value of a hotel purchase.
SAS concluded that while customers prefer to pay less, the sentiment and content of reviews need to be monitored because they are increasingly "interacting with price to influence the purchase."
A recent survey from BrightLocal, a provider of local search engine optimization, similarly found that with more familiarity and comfort, more consumers are reading reviews as part of their pre-purchase research for all types of products and services. The survey at the start of the year revealed that 85 percent of respondents read online reviews for local businesses, up from 76 percent in a 2012 survey.
The survey also found that people are forming opinions faster with fewer reviews, and are also trusting customer reviews to an even greater degree.
Still, Restaurants/Cafés were the only area where purchases were majorly influenced by customer reviews, apparently driven by Yelp. Sixty-one percent of respondents read online reviews to decide where to dine, up from 46 percent from the 2012 survey.
The next two businesses were researching Doctors/Dentists, where customer reviews were used by 32 percent of respondents (up from 21 percent in 2012); and Hotels, 27 percent (up from 22 percent).
Traditional retail showed up in fourth place (vaguely named "General Shops") with 18 percent of respondents admitting to having researched customer reviews for those businesses, up from 9 percent in 2012. Other retail categories included Clothes Shops at 15 percent, the same as the prior year. Specialist Shops (e.g. Bicycle Shops) rated 11 percent, up from 8 percent the prior year.
Other businesses and services seeing modest use of customer reviews (around 10 percent) included hair/beauty salons, pubs/bars, tradesmen (e.g. plumbers), garages/car dealers, builders/roofers and gyms/sports clubs.
BrainTrust
Recent Discussions
Discussion Questions
Will online customer reviews eventually become a much bigger influencer of where to shop across many or just a few categories at retail? What can retailers do to make ratings and reviews more valuable to customers?
Poll
Unlike retailers, hotels and restaurants are the product. They have physical products like a room or the food, but more of the overall purchase is related to the experience.
With retailers you have the non-product elements, but you also have the product itself. The retailer could be sub-par, but the product being purchased could be exactly what the customer wanted.
One of the concerns I read more about is reviews that are being generated by someone who has a vested interest in promoting “X.” I believe the best thing retailers can do is have honest reviews written by real customers and address any issues as they occur.
It’s hard to ignore the impact of review sites (Yelp, TripAdvisor and others) on consumer preferences for hotels, restaurants and other service providers. And virtually every business that you can find on Google Maps has Zagat or other user ratings attached to it. This may be a relatively new phenomenon for traditional brick-and-mortar retail stores, but they had better be prepared for it because the growth and impact of these sites will be dramatic in the next few years.
Well, here’s my problem as a consumer. I used to treat customer reviews like the Bible. If they liked it, I bought it, and if they didn’t, I mostly didn’t.
Problem is, too many products that were rated highly turned out to be not so great. So I read them, but they don’t influence my purchases as much anymore. Same is true of books and movies. I’m relying on them less and less.
And then there’s the flip side. When I moved to Miami I did some research on interstate moving companies. No one had anything good to say about any of them. I think this was a squeaky wheel phenomenon, but it was daunting. I finally just picked one, and it all came out fine.
I’m not sure what retailers could do to fix the problem. Maybe creating forced ranking questions on feature-benefits, but I’m not sure that’s in the retailer’s best interest.
It’s a fact that peer-to-peer conversations are the biggest purchase influencer; this has been the case for eons and shows no signs of changing. What’s changing is the consumer’s accelerated and long lasting access to digitized versions of conversations. In my view, a posted review is the “mouth” side of peer-to-peer influence, while the review seekers are the “ear” side. In the middle is the holy grail—inherent consumer trust of like-minded humans.
It’s a simple conclusion that the digitized delivery of classic human-based purchase influence behavior will continue to accelerate—it provides significant value for all who engage. Retailers should participate in all forms of value creations for consumers, or beware the consequences.
Customer reviews impact not only what, but will continue to expand their influence on why, where, and how shoppers shop across a wide breadth of categories. Categories such as hotels and dining are already heavily influenced by customer reviews.
I believe customer (patient) reviews will dramatically influence the healthcare industry as healthcare consumer’s comment on physicians and facilities. There is a direct relationship between the degree of (digital) access to information and transparency. Transparency is a good thing for consumers of anything! Brands that will thrive in the end will be those that provide exceptional goods and services for a price that will ‘surprise and delight’ shoppers.
Online reviews are important and reinforce the need for retailers to focus on customer experience. Let the quality of the experience influence reviewers. When there are negative reviews, take the time to issue a thoughtful response and try to rectify the problem.
Customer reviews are a huge opportunity for retailers and consumers. Consumers are going to want to write reviews on service, cleanliness and assortment. Retailers can help influence these reviews by working hard to be their best and let employees know it matters.
I frequently use reviews to make purchase decisions.
I think it’s all but inevitable that peer-to-peer reviews will play a growing role in everything—including retail.
As to the second question my advice is—just be honest. Social media doesn’t tolerate a lot of overt manipulation.
I’d be interested to see exactly what retailers this survey is quoting. With online giants like Amazon.com, the customer reviews are king. Even yesterday, I was looking at an item on Walmart.com. I not only read the reviews, but watched their video demo as well. I’m a little surprised that the survey is showing only Restaurants/Cafes where purchases are majorly influenced by customer reviews. It’s the actual products and brands that drive the purchase, not necessarily the retailers, so it’s possible this survey is flawed.
Retailers know that customer reviews are particularly effective, and physical retailers are printing out customer reviews from their Web sites and taping them to appliances on the show floor. As retail companies seek to differentiate themselves, they’ll be smart to elicit testimonials that they can use to call out their value.
Restaurant reviews are possibly the most well read and adhered to of all the different types. But all this reminds me of the often read and often ignored movie reviews. One person’s taste is not necessarily yours or mine. More important are consistent positive or negative reviews. If they tend to be bunched to one side, then they should be treated with some seriousness.
Having good social proof is critical to selling. The good news is that we have more tools at our disposal than ever to deliver social proof to our shoppers. Reviews used to be the only game in town (and still are a useful tool), but they do have their challenges as other commenters have pointed out. Some well regarded e-commerce sites have found that reviews aren’t the right tool for their business (Etsy, Fab.com, etc…).
So it’s great that we no longer have to rely on reviews exclusively. Forums, Q&A, social sharing, user generated media, and much tighter integration with a specific users social graph all mean that reviews have shifted from the only tool we have available to one of many tactics in our social proof bag of tricks.
The first thing retailers and CPG brands must do is dive head-first into social media. Know what is being said about your business and respond…in real time…to both positive and negative sentiments.
Consumer reviews are just one aspect of social sentiment and the need to analyze them is growing. Ratings in our industries (retail and CPG manufacturing) are growing in influence. Whether the rated organization is a local or national brand, ratings influence the local shopper.
Online customer reviews will not “eventually” become a bigger influence—because they already are. Peer reviews are far more powerful than any other form of advertising. Word of mouth, social media and other customer voice channels are a retailer’s “gold.”
Retailers should take any steps necessary to control the message and perception of their brand and defend it vigorously.
Infomercials are effective as they focus on product demonstration and showcase experience. Retailers should adopt the same strategy of demonstration and showcase positive customer experience while showing quick resolution to issues and problems.
It is not good strategy to allow external sources such as customer reviews to become the dominant conversation about a retailer’s reputation.
They are already a huge influence. In terms of the second question, people who read a lot of reviews have found that everyone has some negative reviews so eliminating negative reviews just makes a company suspect. People want to find out what the majority or overpowering sentiment is, not what the outliers are saying.
I would just like to add a point to this discussion. I consider popularity another form of customer review. When popularity is based on actual purchases then it is hard to dispute its validity.
If we add popularity into this discussion then I really do see reviews, overall, having more and more influence.
For example, if I’m looking to make a big purchase, I will surely read the reviews, but let me see what is being bought most and that will seal the deal for me. I know, I know, there are other considerations that are needed, but you get the point.
Customer reviews, as in a customer sits down and writes what they think about a product they have purchased, are just the thin surface of the “reviews” that retailers largely ignore, and are FAR more reliable. Look at any shelf in the supermarket with its dozens of items offered, and other than priority placement and number of facings—which may have been purchased by the supplier—the retailer is MUTE in telling the shopper about what other people are thinking and buying here.
This is the single greatest untapped sales accelerator that any store has, and is obdurately ignored by bricks retailers. NOT Amazon. Whatever you click an interest on, Amazon is right there at your elbow telling you, people who looked at THIS, ultimately purchased THAT! But then, I have colleagues who can’t quite understand why I say Amazon is the premier SALESMAN in the world. The principle here is the Top Seller strategy that I have been touting for years. See: “Deciding What to SELL!“
After my customary presentation to senior retail executives in South America, a representative from one of the top three retailers in the world got up and asked, “Why would we do this, if no one is paying us to???” Apparently quarterly double digit sales increases across the store mean nothing, compared to the trade money coming in the back door. People think I am being radical when I point out that shoppers are NOT the retailers’ customers, it is the suppliers that are their REAL customers.
This is an industry that simply refuses to confront the reality of how they operate. After 100 years of engrained “warehouse-self-service-stock picker” practices, they are largely helpless sheep, waiting to be sheared by first, C-stores catering to the largest share of their shoppers (few item purchases,) then Walmart (Hah! What do THEY know about selling groceries?) And now Amazon, who is eating everyone’s lunch, at their leisure. (And you all know plenty of other examples of very nearly stark REFUSAL to address competitive challenges—the center-of-store is far gone!)
Let he that hath ears to hear, HEAR! 😉
I didn’t have to go far for my head nodding “uh-huh” moment today. I go with Steve, pretty much word-for-word. I would add, though, that his comment about “hotel/restaurant vs. retail” —i.e. about the experience vs. the experience plus product—could be said about the reviews themselves. In addition to the legitimate, objective comments one finds in reviews (the product), one often finds as well the eccentricities of the reviewers (the experience), and the latter often overwhelms the former. More thoughtful ways to deal with not just bias, but plain incompetence in amateur reviews is the key to them being more useful…in this case, the democracy of the Web ISN’T a good thing.
It’s the modern day equivalent of word-of-mouth, so yes, I see this type of feedback getting more and more important for the online merchant. Especially in my niche business, clothing for tall and athletic men, a good “discovery” will be shared with others who are experiencing the same level of frustration trying to find great fitting yet trendy tall clothes.
We pay very close attention to feedback and treat each one very seriously.
Online customer reviews will definitely become a bigger influencer across other retail verticals. As other commenters have mentioned: For hotels and restaurants, the place and experience are the product. For traditional retailers, on the other hand, reviews of the products they carry matter more than the store/place.
But crowdsourcing consumer product reviews doesn’t yet happen much. For consumer electronics, for example, people rely on third parties like CNET or Engadget, rather than reviews submitted by consumers themselves. Same with car reviews. What needs to happen is for social media like Facebook or the even more product-focused Pinterest to provide a better platform for connecting consumer reviews (starting with “likes” and “pins”) with online/mobile/omnichannel sales conversion. Then the consumer voice will matter more on the product purchasing level.
By the time a prospect reads reviews, he or she is far along the purchase path. Reviews exist at the product and service level, not category, so they are read when a customer is ready to buy.
Retailers and other B2C businesses need to be active participants, not passive victims. Here’s how:
1. Monitor the places where customers leave reviews. This goes beyond online directories to Facebook, Twitter.
2. Encourage positive reviews. This starts with the end of any customer experience; at checkout, when the appointment is over, when the check comes. This can be verbal or printed, overt or subtle. Under no circumstances should you pay or reward positive reviews
3. Respond to negative reviews. This is easy to do in most forums. The goal isn’t to please the critic or refute assertions. Rather, it’s to show responsiveness.
4. Use positive reviews in marketing. Five stars should be part of digital marketing, on email, display ads and websites. Positive review sound bites can be turned into testimonials.
Consumers already depend on peer reviews. This acceptance will accelerate; including in categories.
Retailers have to manage ratings and reviews. The web provides a voice to those who would otherwise be irrelevant.
People review products which will impact what they are buying. As Steve mentioned, this applies to hotels or restaurants, which themselves are products in a way.
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Unlike retailers, hotels and restaurants are the product. They have physical products like a room or the food, but more of the overall purchase is related to the experience.
With retailers you have the non-product elements, but you also have the product itself. The retailer could be sub-par, but the product being purchased could be exactly what the customer wanted.
One of the concerns I read more about is reviews that are being generated by someone who has a vested interest in promoting “X.” I believe the best thing retailers can do is have honest reviews written by real customers and address any issues as they occur.
It’s hard to ignore the impact of review sites (Yelp, TripAdvisor and others) on consumer preferences for hotels, restaurants and other service providers. And virtually every business that you can find on Google Maps has Zagat or other user ratings attached to it. This may be a relatively new phenomenon for traditional brick-and-mortar retail stores, but they had better be prepared for it because the growth and impact of these sites will be dramatic in the next few years.
Well, here’s my problem as a consumer. I used to treat customer reviews like the Bible. If they liked it, I bought it, and if they didn’t, I mostly didn’t.
Problem is, too many products that were rated highly turned out to be not so great. So I read them, but they don’t influence my purchases as much anymore. Same is true of books and movies. I’m relying on them less and less.
And then there’s the flip side. When I moved to Miami I did some research on interstate moving companies. No one had anything good to say about any of them. I think this was a squeaky wheel phenomenon, but it was daunting. I finally just picked one, and it all came out fine.
I’m not sure what retailers could do to fix the problem. Maybe creating forced ranking questions on feature-benefits, but I’m not sure that’s in the retailer’s best interest.
It’s a fact that peer-to-peer conversations are the biggest purchase influencer; this has been the case for eons and shows no signs of changing. What’s changing is the consumer’s accelerated and long lasting access to digitized versions of conversations. In my view, a posted review is the “mouth” side of peer-to-peer influence, while the review seekers are the “ear” side. In the middle is the holy grail—inherent consumer trust of like-minded humans.
It’s a simple conclusion that the digitized delivery of classic human-based purchase influence behavior will continue to accelerate—it provides significant value for all who engage. Retailers should participate in all forms of value creations for consumers, or beware the consequences.
Customer reviews impact not only what, but will continue to expand their influence on why, where, and how shoppers shop across a wide breadth of categories. Categories such as hotels and dining are already heavily influenced by customer reviews.
I believe customer (patient) reviews will dramatically influence the healthcare industry as healthcare consumer’s comment on physicians and facilities. There is a direct relationship between the degree of (digital) access to information and transparency. Transparency is a good thing for consumers of anything! Brands that will thrive in the end will be those that provide exceptional goods and services for a price that will ‘surprise and delight’ shoppers.
Online reviews are important and reinforce the need for retailers to focus on customer experience. Let the quality of the experience influence reviewers. When there are negative reviews, take the time to issue a thoughtful response and try to rectify the problem.
Customer reviews are a huge opportunity for retailers and consumers. Consumers are going to want to write reviews on service, cleanliness and assortment. Retailers can help influence these reviews by working hard to be their best and let employees know it matters.
I frequently use reviews to make purchase decisions.
I think it’s all but inevitable that peer-to-peer reviews will play a growing role in everything—including retail.
As to the second question my advice is—just be honest. Social media doesn’t tolerate a lot of overt manipulation.
I’d be interested to see exactly what retailers this survey is quoting. With online giants like Amazon.com, the customer reviews are king. Even yesterday, I was looking at an item on Walmart.com. I not only read the reviews, but watched their video demo as well. I’m a little surprised that the survey is showing only Restaurants/Cafes where purchases are majorly influenced by customer reviews. It’s the actual products and brands that drive the purchase, not necessarily the retailers, so it’s possible this survey is flawed.
Retailers know that customer reviews are particularly effective, and physical retailers are printing out customer reviews from their Web sites and taping them to appliances on the show floor. As retail companies seek to differentiate themselves, they’ll be smart to elicit testimonials that they can use to call out their value.
Restaurant reviews are possibly the most well read and adhered to of all the different types. But all this reminds me of the often read and often ignored movie reviews. One person’s taste is not necessarily yours or mine. More important are consistent positive or negative reviews. If they tend to be bunched to one side, then they should be treated with some seriousness.
Having good social proof is critical to selling. The good news is that we have more tools at our disposal than ever to deliver social proof to our shoppers. Reviews used to be the only game in town (and still are a useful tool), but they do have their challenges as other commenters have pointed out. Some well regarded e-commerce sites have found that reviews aren’t the right tool for their business (Etsy, Fab.com, etc…).
So it’s great that we no longer have to rely on reviews exclusively. Forums, Q&A, social sharing, user generated media, and much tighter integration with a specific users social graph all mean that reviews have shifted from the only tool we have available to one of many tactics in our social proof bag of tricks.
The first thing retailers and CPG brands must do is dive head-first into social media. Know what is being said about your business and respond…in real time…to both positive and negative sentiments.
Consumer reviews are just one aspect of social sentiment and the need to analyze them is growing. Ratings in our industries (retail and CPG manufacturing) are growing in influence. Whether the rated organization is a local or national brand, ratings influence the local shopper.
Online customer reviews will not “eventually” become a bigger influence—because they already are. Peer reviews are far more powerful than any other form of advertising. Word of mouth, social media and other customer voice channels are a retailer’s “gold.”
Retailers should take any steps necessary to control the message and perception of their brand and defend it vigorously.
Infomercials are effective as they focus on product demonstration and showcase experience. Retailers should adopt the same strategy of demonstration and showcase positive customer experience while showing quick resolution to issues and problems.
It is not good strategy to allow external sources such as customer reviews to become the dominant conversation about a retailer’s reputation.
They are already a huge influence. In terms of the second question, people who read a lot of reviews have found that everyone has some negative reviews so eliminating negative reviews just makes a company suspect. People want to find out what the majority or overpowering sentiment is, not what the outliers are saying.
I would just like to add a point to this discussion. I consider popularity another form of customer review. When popularity is based on actual purchases then it is hard to dispute its validity.
If we add popularity into this discussion then I really do see reviews, overall, having more and more influence.
For example, if I’m looking to make a big purchase, I will surely read the reviews, but let me see what is being bought most and that will seal the deal for me. I know, I know, there are other considerations that are needed, but you get the point.
Customer reviews, as in a customer sits down and writes what they think about a product they have purchased, are just the thin surface of the “reviews” that retailers largely ignore, and are FAR more reliable. Look at any shelf in the supermarket with its dozens of items offered, and other than priority placement and number of facings—which may have been purchased by the supplier—the retailer is MUTE in telling the shopper about what other people are thinking and buying here.
This is the single greatest untapped sales accelerator that any store has, and is obdurately ignored by bricks retailers. NOT Amazon. Whatever you click an interest on, Amazon is right there at your elbow telling you, people who looked at THIS, ultimately purchased THAT! But then, I have colleagues who can’t quite understand why I say Amazon is the premier SALESMAN in the world. The principle here is the Top Seller strategy that I have been touting for years. See: “Deciding What to SELL!“
After my customary presentation to senior retail executives in South America, a representative from one of the top three retailers in the world got up and asked, “Why would we do this, if no one is paying us to???” Apparently quarterly double digit sales increases across the store mean nothing, compared to the trade money coming in the back door. People think I am being radical when I point out that shoppers are NOT the retailers’ customers, it is the suppliers that are their REAL customers.
This is an industry that simply refuses to confront the reality of how they operate. After 100 years of engrained “warehouse-self-service-stock picker” practices, they are largely helpless sheep, waiting to be sheared by first, C-stores catering to the largest share of their shoppers (few item purchases,) then Walmart (Hah! What do THEY know about selling groceries?) And now Amazon, who is eating everyone’s lunch, at their leisure. (And you all know plenty of other examples of very nearly stark REFUSAL to address competitive challenges—the center-of-store is far gone!)
Let he that hath ears to hear, HEAR! 😉
I didn’t have to go far for my head nodding “uh-huh” moment today. I go with Steve, pretty much word-for-word. I would add, though, that his comment about “hotel/restaurant vs. retail” —i.e. about the experience vs. the experience plus product—could be said about the reviews themselves. In addition to the legitimate, objective comments one finds in reviews (the product), one often finds as well the eccentricities of the reviewers (the experience), and the latter often overwhelms the former. More thoughtful ways to deal with not just bias, but plain incompetence in amateur reviews is the key to them being more useful…in this case, the democracy of the Web ISN’T a good thing.
It’s the modern day equivalent of word-of-mouth, so yes, I see this type of feedback getting more and more important for the online merchant. Especially in my niche business, clothing for tall and athletic men, a good “discovery” will be shared with others who are experiencing the same level of frustration trying to find great fitting yet trendy tall clothes.
We pay very close attention to feedback and treat each one very seriously.
Online customer reviews will definitely become a bigger influencer across other retail verticals. As other commenters have mentioned: For hotels and restaurants, the place and experience are the product. For traditional retailers, on the other hand, reviews of the products they carry matter more than the store/place.
But crowdsourcing consumer product reviews doesn’t yet happen much. For consumer electronics, for example, people rely on third parties like CNET or Engadget, rather than reviews submitted by consumers themselves. Same with car reviews. What needs to happen is for social media like Facebook or the even more product-focused Pinterest to provide a better platform for connecting consumer reviews (starting with “likes” and “pins”) with online/mobile/omnichannel sales conversion. Then the consumer voice will matter more on the product purchasing level.
By the time a prospect reads reviews, he or she is far along the purchase path. Reviews exist at the product and service level, not category, so they are read when a customer is ready to buy.
Retailers and other B2C businesses need to be active participants, not passive victims. Here’s how:
1. Monitor the places where customers leave reviews. This goes beyond online directories to Facebook, Twitter.
2. Encourage positive reviews. This starts with the end of any customer experience; at checkout, when the appointment is over, when the check comes. This can be verbal or printed, overt or subtle. Under no circumstances should you pay or reward positive reviews
3. Respond to negative reviews. This is easy to do in most forums. The goal isn’t to please the critic or refute assertions. Rather, it’s to show responsiveness.
4. Use positive reviews in marketing. Five stars should be part of digital marketing, on email, display ads and websites. Positive review sound bites can be turned into testimonials.
Consumers already depend on peer reviews. This acceptance will accelerate; including in categories.
Retailers have to manage ratings and reviews. The web provides a voice to those who would otherwise be irrelevant.
People review products which will impact what they are buying. As Steve mentioned, this applies to hotels or restaurants, which themselves are products in a way.