Retailers shift their ad spending from TV, radio and print ads to digital ads.
Customer reviews are supporting multiple forms of marketing as well as boosting sales.
When Pete Skete posted a photo on Evogear.com of himself wakeboarding in Florida’s Tampa Bay, he created the kind of splash that’s helping to put retailers like Evogear on solid ground with a growing base of customers. Customer-generated product reviews-good or bad, text-only or, more and more, photos and even videos-are creating a new level of buzz resonating among retailers and consumers. “It’s a way for consumers to get more attached to our brand, when their own personality and image is on our web site,” says Bryce Phillips, founder of Evogear.com, where customer-generated product reviews are a key part of the retailer’s growth to about $6 million in sales in its current fiscal year.
Skete’s photo, which shows him skipping over a boat’s wake while maneuvering the Hyperlite Murray wakeboard he purchased on Evogear, is one of about 200 photos included among the customer-generated product reviews that have been posted on Evogear since it launched its PowerReviews customer reviews feature in the fall. The combination of the image and the text of Skete’s message makes the review not only a lively endorsement of Hyperlite Murray but also more likely to be viewed by Evogear visitors and e-mailed by Skete to his friends, Phillips says, noting that some photo-posting customers have said they’ve e-mailed their reviews to hundreds of friends.
“This board is freaking sweet,” Skete writes. “Never had a complaint. Launches off the wake amazingly and lands smoothly. I would recommend to anyone, beginner or expert.”
What retailer or manufacturer could resist that kind of endorsement-particularly with industry research showing visitor-to-sales conversion rates sharply higher among shoppers who read reviews?
Not manufacturer and retailer Hewlett-Packard Co., which received thousands of customer-generated reviews posted on HPShopping.com within the first week that it deployed a customer reviews application from Bazaarvoice Inc. in November, says Sam Taylor, senior vice president of HP Direct, the company’s online and catalog division.
HP’s customer reviews, so far limited to the dozens of products in the company’s line of printers, already are proving to be a powerful way to connect with customers, Taylor says. “We’ve seen that when consumers are considering a major purchase, they value unbiased and unedited consumer reviews,” he says.
Although HP is not ready to provide figures showing how well reviews are helping convert shoppers into buyers, some retailers are showing double-digit percentage increases in conversion rates. “On products with a broad set of reviews, we’re averaging conversion rates that are 20% higher than products without reviews,” says Jacob Hawkins, senior vice president of online marketing for Bazaarvoice client Overstock.com Inc. And CompUSA Inc., another Bazaarvoice user, has reported a 50% spike in conversion rates from shoppers who landed on review pages from major Internet search engines.
At CompactAppliance.com, which specializes in selling small appliances for tight living and office spaces, reviews posted through the PowerReviews application are helping boost conversion rates but also consumer confidence for products that are outside the mainstream for many shoppers, says senior vice president Jason Roussos.
Further, customer-generated reviews present powerful new opportunities in marketing and product development, industry experts say.
“This is one of the most exciting things that we’ve had come down the pike in a long time,” says David Seifert, director of operations and direct marketing at Bass Pro Shops, where reviews are driving conversion rates up 20% to 30%. “Customers really have an affinity for this, because they would rather believe other customers than the retailer any day of the week. There are very few things like this that we can implement this easily and quickly, get this kind of response from customers, and make this kind of money off of it.”
The power of persuasion
Customer-generated reviews, however, pose challenges for retailers, the first of which is persuading shoppers to write them-and with usable content. Although HP reports a fast response from review contributors, many retailers resort to incentives. To kick-start their programs Bass Pro Shops enticed contributors with chances to win e-mailed gift certificates in values of $100 and $200, a tactic that has helped the retailer amass some 14,000 reviews so far, Seifert says.
Reviews also have been the source of internal battles among retail staffs, eliciting objections from merchandise managers and others who fear the impact of any negative reviews. “Retailers are used to being in control of the marketing message, but the minute you start putting up honest customer comments, you’re fundamentally giving up control of the process,” says Bill Bass, a former Sears and Lands’ End executive who is founder and CEO of Fair Indigo, a start-up apparel retailer.
And another factor to factor into the mix: While 77% of online consumers consult user-generated reviews, only 48% consider them useful, according to a recent JupiterResearch study.
Still, the advantages of consumer reviews appear to be more than compensating for the challenges, according to several research reports and interviews with numerous retailers. eVOC Insights LLC reports in a study released last year that 63% of online shoppers are more likely to purchase from a retail site with consumer-generated reviews, and 54% consider customer reviews among the most important features of retail sites. And retail consultants J.C. Williams Group found in a survey that 60% of online shoppers considered user-generated reviews to be “very or extremely helpful.”
To put negative reviews into perspective, JupiterResearch discovered that 9% of shoppers said they had written an online review of a product they liked but only 4% posted a review about a product they didn’t like. And even negative reviews can provide shoppers with needed context, some experts say. “I never heard a good argument on why letting customers see other customers’ reviews is anything but good for the shopper,” says Bass, who adds that the impact of reviews on customer activity on FairIndigo.com has won over support among his apparel designers.