360i Report on Social Commerce: Ratings & Reviews

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  • 1. Integrated Solutions. Measurable Results. August 2011 360i Point of View on Social Commerce: Ratings & ReviewsOverviewThis is the fifth installment in 360i’s Social Commerce Series. Visit 360i.com/insights to read theagency’s prior reports on Facebook Commerce, Social Shopping, Social Commerce for CPGs andDaily Deals.While ‘social commerce’ is fast becoming a 2011 buzz word, one of the earliest forms of socialcommerce has actually been around for the better part of a decade: Ratings & Reviews. Frommovies (Rotten Tomatoes) to food (All Recipes) to the service sector (Angie’s List) to localbusiness (Yelp) to travel (Trip Advisor), consumer-generated ratings and reviews power thedecision-making process within nearly every vertical. Integrating ratings and reviews is anespecially important tactic in the retail sector due to their tangible effect on ecommerce sales. Inthis POV, we’ll explore the psychology behind ratings and reviews, the effects they can have onSEO, conversion rates and order values and the recent changes to the ecosystem with theemergence of Facebook, Google+ and other social networking sites. Understanding Consumer Behavior Word of mouth recommendations have long driven consumer brand perception and purchase decisions, even as far back as 1912 with the founding of the Better Business Bureau. With the proliferation of user-generated content online beginning in the early 2000s, consumer dependence on the opinions of their peers has become even more apparent. A June 2010 Nielsen study revealed that while more than 60 percent of North American consumers trust reviews by family and friends and more than 40 percent trust online product reviews, only about 15 percent trust product websites themselves. What drives consumers to review products or services they have tried? The adage that you’re more likely to tell someone about a bad experience than a good one may not be that true after all. In fact, studies have shown that most reviews are quite positive in nature. Bazaarvoice, one of the leading technology providers for ratings and reviews in the world, has found that amongst its US clients, a full 80 percent of product ratings are 4 or 5 stars out of 5. Why are consumers drawn to reading (and trusting) reviews? So what do consumers get out of reading reviews, if most of them are positive in nature? In NEW YORK | ATLANTA | CHICAGO | DETROIT | SAN FRANCISCO | LONDON | info@360i.com | 888.360.9630 © 2011 360i LLC. All Rights Reserved
  • 2. Integrated Solutions. Measurable Results. August 2011 360i Point of View on Social Commerce: Ratings & Reviewsshort, the reassurance that the product or service they are thinking of purchasing is actually theright fit for them. A consumer who is searching for a digital camera might read the reviews of adozen products before choosing which one to purchase; with no reviews available, he might notpurchase any camera at all. As Josh Himwich, Vice President of e-Commerce Solutions for Quidsinotes, “When presented with the tyranny of choice, reviews are like a beacon of light that cutthrough the options and clarify what the customer should click on.”And while positive or neutral reviews are the norm, consumers are strongly affected by negativereviews. According to a March 2011 survey by Lightspeed Research, 21 percent of respondentssaid two bad reviews about a product or brand can lead them to change their minds about apotential purchase, with 37 percent saying their threshold is three bad reviews.The ROI of Ratings & ReviewsCustomers are relying more and more heavilyon product reviews before making theirpurchasing decisions. In fact, an August 2010study by ChannelAdvisor found that a full 97percent of consumers read and are influencedby product reviews.Because they are dynamic and constantlyupdated, usually including many relevantkeywords, consumer reviews on websites are a boon to SEO, helping to get customers to yoursite to begin with. And with that many people depending on product reviews during the decisionmaking process, it’s not surprising that retailers with rating and review functionality integratedinto their websites are seeing increased conversion and higher order value. Case studies ofincreased traffic, time spent on site, conversion rates and order value abound. In July 2010,Epson compared site visitors who had interacted with reviews on store pages vs. those who didnot. Those who read reviews werefound to be 67 percent more likely toconvert to purchase, with a 25 percenthigher average order value, leading torevenue per visitor of 98 percent higherfor those who interacted with reviews(Bazaarvoice 2010).While the ROI for non-ecommerce brands is less straightforward to measure, it is no lessimportant. Third party retailers are some of the biggest review-generators out there, includingsites like Amazon, Soap.com, Best Buy and countless others. Reviews are even becomingincreasingly important for CPG products as well, including a recent addition to the space,Consmr.com, whose sole purpose is to generate reviews of CPG products online. NEW YORK | ATLANTA | CHICAGO | DETROIT | SAN FRANCISCO | LONDON | info@360i.com | 888.360.9630 © 2011 360i LLC. All Rights Reserved
  • 3. Integrated Solutions. Measurable Results. August 2011 360i Point of View on Social Commerce: Ratings & ReviewsThe Changing Face of Ratings & ReviewsConsumer-generated reviews were one of the first forms ofsocial media, but the landscape is changing considerably nowthat the Internet is evolving into a social web.With the rise of social networking (within Facebook inparticular) and its spread throughout third-party sites throughsocial plugins and API’s, ratings and reviews are rapidly takingon a new face. Now, when a user goes on to TripAdvisor, shenot only sees reviews that other, random people have left, butshe’s able to easily identify reviews that her own friends haveleft, making the opinions she’s reading exponentially morevaluable. Now instead of or in addition to the classic starvalue, products, places and services can also get Facebooklikes and Google +1’s. There’s little data at this timepointing to an increase in sales or brand perception with theintegration of these buttons, but what’s already clear istheir positive impact on traffic. According to Facebook’s owndata, Levi’s saw a 400 percent increase in referral trafficfrom Facebook after implementing the Like button in April2010 and has maintained those levels since, while American Eagle found after implementing theLike button on product pages that visitors referred by Facebook spent an average of 57 percentmore than non-Facebook referred visitors. Google’s new +1 button is the latest addition to thespace, and can be expected to have a significant impact on search results down the line.Social conversations online can even actas informal, real-time reviews forproducts, TV shows, events, services andnearly anything else. Brands who keeptheir ear to the ground about what people are saying on Twitter and in the blogosphere havethe opportunity to capture and react to sentiment even when consumers may not be consciously“writing a review.” This type of listening can lead to even more genuine product feedback thanone might find on typical review sites.Additional Opportunities & Watch-OutsThe Opportunity to EngageWhile most reviews may be positive in nature, consumers who have a bad experience are nowmore likely than ever to go to the web to share it with others. Some manufacturers are findingthat keeping track of reviews, either on their own site or on third party e-commerce sites, is agreat way for them to address customer service issues as they arise, potentially turningunhappy customers into satisfied ones and even stopping a potential wave of negative buzz in NEW YORK | ATLANTA | CHICAGO | DETROIT | SAN FRANCISCO | LONDON | info@360i.com | 888.360.9630 © 2011 360i LLC. All Rights Reserved
  • 4. Integrated Solutions. Measurable Results. August 2011 360i Point of View on Social Commerce: Ratings & Reviewsits tracks.Online listening tools such as Radian6 can help to aggregate mentions of your brand online, butwith natural language processing still unreliable, it takes a human eye to identify negativereviews out of all the brand conversation out there. Dedicating the right amount of resources tothe task, however, can be extremely effective.A January 2011 study commissioned by RightNow found that of those consumers who received aresponse from the retailer after posting a bad review about a negative holiday shoppingexperience, • 18% turned into loyal customers and bought more, • 33% turned around and posted a positive review, and • 34% deleted their original negative review.Using Reviews in Paid, Owned & Earned MediaSome internet retailers such as Amazon and EXPO TV offer programs wherein marketers canseed product pages with consumer generated text or video reviews in order to jump startengagement with their products. Amazon’s Vineprogram, wherein a select group of extremely activeand peer-trusted Amazon users are invited to reviewnew and pre-release items, is one example. Somemarketers are also leveraging high ratings andauthentic customer reviews in their paid displaymedia. Amazon reports that ad units with reviewsand ratings integrated have seen 40 percent higherclick-throughs than those without. Domino’s Pizzahas taken this concept one step further by placingcustomer reviews from their website, unfiltered, ontoa digital billboard in New York’s Times Square (see image at right). While risky (the reviewscould be good, bad or ugly), this represents a sea change in the importance both consumersand marketers are placing on customer-fueled commentary.What to Watch Out ForFake reviews, both positive and negative, are more prevalent than one would like to believe.Authors and PR companies have long been known to post positive reviews for their books onAmazon, and a recent article in the UK’s Daily Mail pointed out that “30 properties around theworld have been blacklisted for suspicious reviews - and there is a thriving black market inhotels willing to pay people to write positive reviews,” bribing them with discounts, free staysand other benefits. While this is a concern more for users than for brands, marketers shouldrefrain from creating or compensating others for creating reviews of their products or services.Back in 2009, Belkin was exposed as paying consumers to write positive reviews on Amazon; a NEW YORK | ATLANTA | CHICAGO | DETROIT | SAN FRANCISCO | LONDON | info@360i.com | 888.360.9630 © 2011 360i LLC. All Rights Reserved
  • 5. Integrated Solutions. Measurable Results. August 2011 360i Point of View on Social Commerce: Ratings & Reviewswave of negative buzz about the brand ensued. Besides being against the Terms and Conditionsof most websites, facilitating fake reviews is against most ethical and legal standards that mostmarketers support.Cornell University has recently developed software it says is 90 percent accurate in detectingfake reviews from real ones, relying on similar technology to that which can detect plagiarism.As technology such as this becomes more readily available, we can expect websites to crackdown even harder on inauthentic commentary.Implications for MarketersAny marketer with a website that promotes products, services or places, and certainly any e-commerce retailer, should consider adding ratings and reviews functionality to their site. Withthe benefits ratings and reviews can provide to SEO, conversion, and basket size, there are fewreasons not to implement this functionality into your website.There are several technology providers which offer turnkey solutions to implementing this typeof functionality, including Bazaarvoice and Power Reviews, among others. These partners havealso begun to integrate their platforms with existing social networking sites such as Facebook.In order to spark consumer reviews or to promote productsthat have acquired positive ones, paid media options abound.Retailers who do not manage e-commerce websites, andeven those that do but also sell or promote their products onthird party websites, may also want to consider setting uplistening campaigns or entering into partnership with largeonline retailers such as Amazon, Best Buy, Consmr.com andothers in order to keep track of consumer reviews of theirproducts. This is a crucial piece given that, according to anApril 2011 study by Power Reviews, retailers’ websites areused only 45 percent of the time by consumers seeking outreviews.Contact your 360i strategic advisor in order to further explore these and other ratings andreviews opportunities.About 360i360i is an award-winning digital marketing agency that drives results for Fortune 500 marketers through insights,ideas and technologies. 360i helps its clients think differently about their online presence and evolve their strategiesto take advantage of the new world of marketing communications – one where brands and consumers engage ininteractive and multi-directional conversations. In 2010, Ad Age named 360i to its prestigious Agency A-List. Currentclients include Oreo, jcpenney, Coca-Cola, Bravo and Diageo, among others. For more information, please visitblog.360i.com or follow us on Twitter @360i. NEW YORK | ATLANTA | CHICAGO | DETROIT | SAN FRANCISCO | LONDON | info@360i.com | 888.360.9630 © 2011 360i LLC. All Rights Reserved