Tuesday, August 12, 2008

Product Reviews = Online WOM

There’s not much doubt that word of mouth in general and product ratings in particular affect online buyers/researchers. I’ve noticed two developments in this space in recent days—a product called Bazaarvoice Stories™ from the services firm Bazaarvoice and a notice that another ratings services provider, PowerReviews is testing review services for small retailers. Both seemed worth investigating.

Customer reviews are a powerful engine of ecommerce, and I’ve written about their impact several times (1,2). I checked out Marketing Charts for what's new on the subject, and this is what I found:

• The importance of online reviews to offline purchases
• The impact of online WOM
• Both UK and US consumers find product reviews helpful in their purchasing process.

At a micro level it’s worth asking what some firms are doing to encourage reviews and product stories and what impact are they having. This headline from the WSJ’s MarketWatch site caught my attention—for obvious reasons!

Leading Retailer Encourages Customers to Tell Other People About the L.L.Bean Products They Own; More Than 13,000 Reviews Submitted to www.llbean.com Within One Week

Wow!

You’ll find interesting case studies at both Bazaarvoice and PowerReviews. A study at PowerReviews led me to an in-depth academic study with food for thought. IT professors Alanah Davis and Deepak Khazanchi from the University of Nebraska Omaha analyzed purchase data in a study published in Electronic Markets and available online. They started out with a fairly complex concept of how online WOM affects purchasing behavior. They performed a causal analysis using number of reasonable variables like the volume of reviews and the degree to which they are positive on actual purchases in a number of product categories. A number of independent variables were not significant in influencing purchases, leaving them with a simpler and provocative concept.

It’s not surprising that the number of product ratings and the number of product views influenced product awareness. It’s also not surprising that visual cues (including ones that are user-submitted) influenced product expectations while the product category itself affected both awareness and expectations. What’s most challenging to marketers you cannot see in this graphic (see page 135 in the pdf). Marketer promotion dropped out of the model as it had no statistically significant impact on purchases. Ouch!
The paper is worth reading for a good literature review as well as the authors’ reasoning process and statistical analysis, which are accessible to the lay reader. Actually, it’s worth reading alone for Sebastian’s review (he looks like a wonderful Basset Hound) of his big doggie bed! Your customers have creativity—and a sense of humor—that ought to be tapped!

It’s always a bit dangerous to take a short quote from a complex academic study, but this one is worth it:

One of the most important implications for practice is the idea that e-commerce companies need to have a strategy of combining efforts to increase product views and the volume of comments on specific product pages. This research also points out the value in allowing reviewers to upload product images, probably boosting the cognitive consequence of expectations about a product. (page 140)

That’s pretty straightforward. We need to be bringing more visitors to our product pages and, once they are there, encourage them to write reviews and upload their own product images. Think Sebastian.

And think how much cheaper this strategy is than all the marketer promotion that had no significant impact on purchases in this study. Note, however, that I said that carefully (I hope). Something has to be done to bring visitors to your pages. Once they get there, however, don’t just talk to them; engage them in the process. At this stage of the purchase process, user content is more powerful than marketer content.

1 comment:

jay said...

Mary Lou

Many thanks for this comprehensive update on what's going in our world of reviews - especially the shout out about our new small retailer focused service!

I'd like to encourage all your smaller sized retail readers to sign up for the Beta Program for this new service, too! Just visit our corporate site PowerReviews.com to get started.

Thanks again!
Jay Shaffer
VP Worldwide Sales & Marketing
PowerReviews.com