2/19/08

Customer reviews a must-have for online retailers

Customer reviews and other user-generated content are becoming a “must-have” for online retailers, with 50% of 30 merchants surveyed adopting the technology, according to a new report from The E-Tailing Group.

Don Davis , Editor in Chief

Customer reviews and other user-generated content are becoming a “must-have” for retailers to compete online, with 50% of 30 merchants surveyed adopting the technology, according to a new report from The E-Tailing Group Inc.

Of the merchants who adopted customer reviews, 58% said improving customer experience was the most important reason for adding reviews to their sites, followed by building customer loyalty (47%), driving sales (42%), and maintaining a competitive advantage (37%).

Customer reviews appeared to have the most impact on customer satisfaction and web site engagement, according to the study. 58% of merchants said customer reviews had “significant” impact on customer satisfaction and 37% said it had “somewhat of an impact.” 53% of merchants said it had a “significant” impact on web site engagement while 32% said it had “somewhat” of an impact.

“Independent merchants were unanimous in their belief that overall customer satisfaction was higher as a result of integrating reviews on web sites. They indisputably mentioned that site engagement reaped positive results given the time spent reading reviews on any site,” the study says.

In comparison, customer reviews had lower impact on other metrics, according to the study. Only 32% of retailers surveyed said reviews had a “significant” impact on sales and 58% said it had “somewhat” of an impact, while 58% said it had “somewhat” of an impact on average order value.

When asked how they measure the success of customer reviews, 37% said they compare the performance of products with or without reviews. Others metrics include increase in sales (cited by 26%), increase in conversions (26%) and reduced rate of returned items (26%).

In addition, 11% of retailers reported a 20% or more overall increase in conversions as a result of adding reviews to their sites, 21% reported an 11% to 20% increase and 5% reported a 1% to 10% increase. 63% said they didn’t know.

The study also found that 11% of retailers had more than 20% of customers complete a review while another 11% had between 15% and 20% of customers complete a review. 37% of merchants reported that between 6% and 10% of customers had posted reviews while 42% had 5% or fewer customers post reviews.

Topics:

Customer engagement, Customer experience management, Foresee Results, Loyalty business model, Online shopping

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