Article

Will customer reviews become a bigger influencer for retail purchases?

Despite the hype, online customer reviews appear to play only a small role in consumer purchasing decisions.

August 2, 2013

The following is an excerpt from a recent conversation on RetailWire, reproduced here with kind permission.

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 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.

RetailWire BrainTrust comments:

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. — Dick Seesel, Principal, Retailing In Focus LLC

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. — Paula Rosenblum, Managing Partner, RSR Research

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. — Zel Bianco, President, founder and CEO, Interactive Edge

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 user's 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. — Jason Goldberg, VP Strategy, Multi-Channel Commerce & Content, Razorfish