While customers are writing product reviews that lift sales, retailers are finding ways to leverage reviews’ content off site
By Mary Wagner
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 companywide initiatives on merchandising, marketing, inventory planning and vendor relationships.
Looking for more from its online customer reviews, multi-channel retailer Petco Animal Supplies Inc. recently conducted an experiment. Petco since 2005 has used technology from vendor Bazaarvoice Inc. to support online customer reviews. It discovered that shoppers who navigate to pages with top-rated products convert at a 50% higher rate than others. Petco also found the influence of online customer reviews wasn’t limited to shopping the site. When the retailer conducted its 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,” says John Lazarchic, Petco vice president of e-commerce.
A powerful feature
Petco is not alone. Online customer reviews are proliferating in e-commerce. The functionality can be created by a retailer in house or purchased from a vendor; Bazaarvoice and PowerReviews Inc. dominate the vendor market. Today, retailers that are reaping benefits of online customer reviews are looking for ways to leverage reviews content. Results of broader and multi-channel use of customer reviews are beginning to trickle in.
But so are the challenges of looking to reviews to reliably carry the ball on bigger jobs—let alone their primary task of helping boost conversion—as retailers grapple with issues such as the volume of reviews. Volume is undeniably affected by the nature of the product.
“Amazon.com has been doing reviews for years. But at Amazon.com, a book that has been on the site from the first day may still be there,” meaning it will probably have a large number of reviews, says Forrester Research Inc. principal analyst Sucharita Mulpuru. “Most retailers can’t say the merchandise on their site 10 years ago is still on their site today.”
As a result, merchandise without long lives requires more effort to generate and manage reviews. “This is a big difference, and it makes it challenging for companies like apparel retailers to justify the investment,” Mulpuru contends.
For retailers looking for an outsourced solution, that investment can range from around $2,000 per month to hundreds of thousands of dollars a year at Bazaarvoice, depending on page views, expected review volume and whether a retailer buys optional add-on services such as photo or video review functionality.
Vendor PowerReviews uses a cost-per-order model similar to an affiliate model. It provides review functionality free to retailers in exchange for permission to put any reviews up on its shopping and review property Buzzillions.com, which launched in April. It collects a share when shoppers click through to a retailer from Buzzillions.com to make a purchase.
Just how effective are online customer reviews at getting online shoppers to purchase? As Mulpuru notes, they’ve been integral to Amazon.com’s model, starting with books and media products. And with the recent advent of technology that lets online merchants tap into packaged solutions to get reviews functionality up and running quickly—typically a rating system accompanied by the opportunity to submit comments in text—more retailers are getting a chance to find out for themselves.
Lifts in sales
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.
NetShops, which uses PowerReviews services, operates multiple online stores and collected nearly 20,000 customer reviews across all its sites between November 2006 and May 2007. Adjusting the calculation of the effect on sales for variables such as increased marketing spend and site enhancements, the study determined that reviewed products experienced a 26% lift in sales.
Brett Hurt, co-founder and CEO of Bazaarvoice, says he didn’t know for certain the extent of reviews’ effect on conversion when he co-founded the company, though he had a fair idea based on what he’d seen earlier as the founder of web analytics company Coremetrics Inc.
“We just theorized it would be there; Amazon.com had done reviews for years,” he says. “I was also thinking about how it would inform merchants where, with analytics, they would be able to tap into customer dialogues. What I didn’t envision, which is happening now, is retailers using reviews as a digital asset, content they can leverage in other channels to drive sales.”
E-mail was the first place off-site that many retailers put online customer reviews to work. It was a short hop given that executives within a company responsible for site content often are also responsible for e-mail marketing.
Bazaarvoice user 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.
A good drive
Golfsmith International Inc., another Bazaarvoice client, found that in an A/B split test, marketing e-mail that featured products that received top ratings on its web site produced 42.44% more revenue than did e-mail without ratings content. Further, the click-through rate was 13.94% higher and the open rate 15.23% higher.
Retailer Cabela’s Inc. has realized a sales lift in the area of 5% to 10% from marketing e-mail featuring top-rated products as reviewed by customers on its web site. Director of e-commerce Mark Thompson says the company, which still is gathering data on exactly how online reviews are affecting key metrics, also has seen returns on reviewed products drop by as much as 3/10 of a percentage point in the first nine months of implementation. He did not disclose what Cabela’s return rate is.
But Cabela’s, which uses Bazaarvoice technology, hasn’t stopped at e-mail in exploring how customer reviews gathered online might affect the performance of other channels. Thompson says the retailer has a long tradition of customer testimonials because customers buying outdoor sports and adventure gear have a strong sense of identity with the brand; for instance, sending snapshots of how they’ve used equipment purchased at Cabela’s on vacation. As a result, Cabela’s in June started flagging in its catalog some top-rated products as reviewed by customers on its web site.
“We’ve always used testimonials in our catalogs, so we decided to incorporate more of that type of content into the catalogs with our ratings and reviews,” Thompson says.
Selection of products displayed with comments lifted from online reviews depends in part on how well a review’s language is crafted. “If it’s a comment like, ‘Great product, thanks,’ we probably would not use it. It would have to be more descriptive. Some people can elaborate better than others,” he says. Cabela’s is equally selective in implementing reviews in signage in its 26 stores, a venue for review content it is just starting to test.
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 be 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.
In addition to altering product lineups, retailers are incorporating what they learn through reviews into site search and navigation. Such “social navigation” functionality enables shoppers to search and refine results according to product attributes deemed important by those who’ve reviewed products, which can differ from attributes singled out as important by product manufacturers or retailers.
PowerReviews offers such functionality, and Onlineshoes.com, which first rolled out customer reviews from the vendor in July, extended reviews to navigation in October. PowerReviews performed integration with Mercado Software Inc.’s site search technology to enable social navigation on the site.
Jimmy Healy, Onlineshoes.com content marketing specialist, says PowerReviews provides a template allowing customers to review products in a tag-based system, submitting feedback in the categories of pros, cons, best uses, star rating and fit. PowerReviews’ system stores the gathered information in tables, which then are fed into Mercado’s site search software. The different categories of information then become searchable attributes. “Basically the software takes any kind of data and turns it into a search refinement,” Healy explains.
These searchable attributes provide an added alternative to standard navigation features, including such categories as price. The format also allows reviewers to enter text comments, and if enough reviewers call out a product attribute not listed—for instance, that a pair of shoes is “good for my aching back”—that attribute may become one of the regularly-occurring attributes in the PowerReviews template for the site.
Reviewed products sell
Healy’s still gathering data on how social navigation based on customer product reviews is affecting metrics such as conversion. One outcome he already is seeing is that products that sell are typically attached to reviews. Another trend is a dip in navigation off generic search attributes such as brand name or price versus the newer attributes. “Instead of clicking them, visitors are clicking on the five main PowerReviews navigation features. They’re starting first by looking at what other customers are saying,” Healy says.
The rate of conversion off those standard navigation features, however, has not dropped. With the rate of conversion off the new attributes competitive with the rate of conversion off the standard attributes, the net effect is an overall increase in conversion.
Healy already is thinking about how else he can leverage customer review content on the site. One build-out under consideration is a tool that would enable shoppers to compare side by side several products by attribute.
“What customers are inputting when they write a review could be very helpful in comparing products. If you had asked me a year ago about developing a comparison tool for the site, it would not have included any of that information. But now it looks like it might be some of the strongest information we will have for that tool,” he says.
Healy notes one other finding so far: When it comes to driving conversion, it matters less how many stars a reviewed product receives than how many reviews it’s racked up. In fact, he believes 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,” says Jay Shaffer, vice president of marketing at PowerReviews. Shaffer adds that a minimum of 20% of products on a site need to be covered with at least three to five reviews each to support social navigation; otherwise the pool of reviewed products from which social navigation draws isn’t broad or deep enough.
When the University of Nebraska study reported a 26% lift at NetShops in conversion on reviewed products over those that weren’t reviewed, it was based on nearly 20,000 reviews gathered across NetShops’ multiple online properties. Market-leader Amazon.com’s review volume easily supports conclusions about customer behavior, especially in categories such as books and DVDs where products don’t change, which allows them to accumulate many reviews over time.
By contrast, the lifespan of products in other categories is considerably shorter. For example, seasonal product turnover is something retailer Evogear.com, a PowerReviews client, deals with every year as ski manufacturers launch new models. “So there is always this issue where at the end of the season all of the products have reviews, and then they start the new season and none have reviews,” Shaffer explains. So for now, Evogear has bypassed using its customer reviews for social navigation.
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. Cabela’s, for instance, has since 2006 collected almost 180,000 unique reviews covering about 85,000 products. Cabela’s e-commerce systems automatically send purchasers an e-mail that asks for a review three weeks after a purchase. Thompson says the response rate is about 20%. To jump-start the process, Cabela’s in the first 45 days of the program offered “Cabela’s bucks” redeemable on merchandise to customers who submitted a review.
Shenanigans
Where any asset is valuable, the potential for abuse exists, and that includes the manipulation of reviews. Reviews vendors and retailers monitor for reviews that aren’t authentic. As Forrester Research analyst Mulpuru points out, “Those sorts of shenanigans would ultimately be the downfall of consumer-generated content.”
One thing PowerReviews does to ensure review authenticity is identify reviews from shoppers who’ve actually purchased online from a retailer with the badge “verified buyer.” Such reviews account for the majority of its reviews, the company says.
Bazaarvoice also integrates with its retailer clients’ authentication systems to monitor for fraud and now is working on technology to further refine its abilities in this area. Hurt says fraudulent or manipulated reviews aren’t at this point a significant issue for the company, but he points out that merchants interested in getting the most out of customer reviews must walk a fine line between patrolling against fraud and clamping down too hard.
“We’ve told multi-channel merchants that we can verify that online reviewers are online purchasers,” Hurt says, “but some have said not to do that, because 20% to 30% of those writing reviews are people who have purchased in a store, and the merchants don’t want to shut them out.”
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,” says Sam Decker, chief marketing officer at Bazaarvoice. “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?”
mary@verticalwebmedia.com
