FREEDyourMind

Holiday Post #4: Customer Reviews

Customer reviews. Are you doing them?

As part of our holiday research in 2006, we surveyed over 10,000 online visitors to one or more of the top 40 online retailers. We found that almost half of the online shoppers that recalled seeing customer product reviews cited them as the primary factor in their holiday purchase decision-making. 

A few key points:

• Customer product reviews drive satisfaction and loyalty and provide a competitive advantage for sites that offer them;

• Customer product reviews are a powerful influencer of the purchase decision for the critical group of first-time buyers;

• Internet pure plays lead adoption of customer product reviews, providing a competitive advantage online over multi-channel merchants;

• Shoppers on sites with customer product reviews were 5% more likely to buy online, 5% more likely to buy from the retailer the next holiday season, and 4% more likely to purchase from the retailer the next time they are in the  market for similar merchandise.

It can be a tough decision for those of you who are afraid that consumers will be brutally honest and slam a product. This is more of a risk for manufacturer sites than it is for retailers that offer many manufacturers of the same product. But in my opinion, it’s gotten to the point where companies that want to sell online have to offer customer product reviews to be competitive because if you don’t have them, your customers will just go somewhere else to see them.

Just remember, customer reviews are not a product development or a product management tool, they’re a marketing tool. Understand their value to your customers, don’t overestimate their value to you, and they can and should be a great addition to any retail website.

Is Anyone Really Surprised?

The latest mini-corporate scandal-in-the-making is CEO’s who participate anonymously in online message boards, lauding their own companies and disparaging competitors, all while pretending to be someone else with no vested interest in the company’s fortunes. The Whole Foods CEO started the trend (of getting caught, at least).

It’s fun to wag our fingers and chastise leaders who should know better, and we ALL agree this wasn’t smart, especially the bits about trying to influence investment in your own company vs. in a competitor.

But what it really points out is a lack of transparency in word of mouth (WOM) marketing–a tool that more and more companies are relying on and looking at as scientific. At the end of the day, people will take advantage of any open system no matter how much hand-wringing the WOM community does about ethics and best practices. WOM is valuable, and for now it still works. As long as that’s true, there will be people manipulating it for their own means, just like everything else in human history.

Most savvy internet users know that when they’re reading reviews on Amazon.com, a decent proportion of them come from BzzzAgent, a company that pays readers to review certain books that want to create a word of mouth buzz. When you read reviews on iTunes, how many of them came from the marketing department of the band’s record label? And when you read a Yahoo! investment message board lauding one stock over another, did it really come from your average Joe investor (as seems to be the case) or from an anonymous board member, CEO, or shareholding employee pretending to have no unusual interest in the subject at hand?

The point is that you don’t know and you can’t know. Reading opinions on a message board isn’t like chatting with your neighbors at a cookout, where you can see who is saying what and have at least some vague sense of any ulterior motives when they pick or pan some book or restaurant or cell phone or stock.

Internet users need to take all anonymous WOM recommendations they read with a huge grain of salt, and marketers need to prepare for the day when these kinds of tactics won’t work anymore because people are on to the fact that they’re essentially being gamed.

More on Customer Reviews

Walmart.com recently announced that they’re jumping on the bandwagon to offer customer reviews themselves, both on the product page itself and via email after they’ve gotten the product mailed to them. The Walmart.com CMO said that in the future, Walmart.com could interact with people who posted reviews and use the reviews to decide what Wal-Mart sells.

 

One word of caution: understand the real value and role of customer reviews and do not overestimate their abilities. I just did a post about our research into customer reviews, and how we found them to be beneficial to customer loyalty, customer satisfaction and future sales. There’s no doubt that customer reviews are a great thing, and I’m a big proponent of any retailer adding reviews to their site. But the reason they’re good is because they will give customers valuable information, not because they will necessarily give retailers valuable information.

 

 

Customer reviews are a great tool for customers, but they are not necessarily a valuable metric for companies or a great tool for measuring the quality of a product. So 1% of your customers say they love something. Is it the 1% that own stock in your company? Is it the 1% that spends the most money with you? Is it the 1% who works for the manufacturer of the product in question, trying to artificially inflate reviews for the product?

 

Also, customer reviews tend to draw out the extremes—those that either really love or hate something. Walmart.com’s own research showed that in a testing phase, most reviews were positive: 4 or 5 stars (out of a possible 5). That’s not surprising: you tend to see a lot of 1’s and a lot of 5’s but very few 3’s.

 

If you want to measure customer reaction to a product, you need to use a satisfaction-based model and it needs to be random, not opt-in like customer reviews.

Customer reviews are not a product development or a product management tool, they’re a marketing tool. Understand their value to your customers, don’t overestimate their value to you, and they can and should be a great addition to any retail website.

Did You Know?

Visitors to retail sites are 10% more likely to purchase from the retailer’s website if the site has customer generated product reviews. What would increasing purchase intent by 10% do to your bottom line?

A new study released by ForeSee Results finds that the availability of online customer reviews on a retail website boosts overall satisfaction with the website, loyalty, and likelihood to buy online.

In a closer look into research done with the top 100 grossing retail websites, we found that websites that offered customer reviews enjoyed better loyalty and conversion rates.

• Customer reviews significantly improve the online shopping experience: Satisfaction is 11% higher for people who said they had seen customer reviews on the site than for those who said that reviews weren’t on the site they visited.
• Customer reviews increase conversion and loyalty: Shoppers on sites with reviews are 10% more likely to purchase from the retailer’s website than those on sites without reviews. This group is 7% more likely to purchase from the retailer for their next purchase of similar merchandise, which is a strong loyalty metric.
• Customer reviews support acquisition: Customer reviews are a form of recommendation (whether they’re positive or negative) and recommendation is a powerful influence in online retailing. Online shoppers that remembered seeing customer reviews are 13% more likely to recommend the site than are shoppers who didn’t see reviews.

Making User Reviews Work For You, Not Against You

I had the opportunity to be at the Shop.org conference in Orlando last week and listen in on an interesting presentation on User Reviews moderated by Patti Freeman Evans and presentations by Lorna Borenstein of Yahoo, Jacob Hawkins of Overstock.com, Brett Hurt of Bazzarvoice and Sarah Fay of Isobar.

The point was made by Lorna about the strong impact of advocates. She used a great analogy, a drop of water and how it creates a wave much larger than the original drop. The question was posed, “How do you get advocates to promote you?”

Now, user reviews, community sites, blogs, etc., are great ways to enable that advocate promotion. But, word of mouth, while a potentially powerful accelerant, is only an accelerant when it is positive. So, while it is great to enable your advocates, don’t lose focus on the prize.

The prize is satisfied customers. Our research consistently shows that customer satisfaction drives positive word of mouth. Also make sure that when you are measuring word of mouth, you not only measure positive word of mouth, but also negative word of mouth. Simply looking to see if people will recommend doesn’t not measure negative word of mouth. You cannot assume because someone doesn’t recommend that they are a negative. There are many reasons (the product, the person, etc.) why people won’t recommend, but will still be great, loyal customers.

So, enable your advocates, but also make sure you make your visitors and customers word of mouth a positive influence on your business, not a negative influence. It all starts with satisfying your visitors and customers.