Litmus: User Generated Content

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User Generated Content Research Brief
Retailers are beginning to understand how user-generated content (UGC) can
be a critical component to their brand experience.

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Litmus: User Generated Content

  1. 1. LITMUS User Generated Content Research Brief A Look at Retailers’ Perceptions of the Importance of User-Generated Content The proliferation of consumer dialogue is still on the rise. Retailers who think about leveraging the interactive channel may come to find that it’s more than researching, shopping and self service. The social web is empowering consumers and creating new consumer behaviors of creating, sharing and influencing. As a result, consumers are increasingly turning to each other for product or service information before making a purchasing decision. O According to a global Nielsen survey of 26,486 Internet users in 47 markets, consumer recommendations are the most credible form of advertising among 78% of the study’s respondents.1 O Trust in “a person like me” far outranks any other institution, business, or spokesperson.2 O Consumers trust friends above experts when it comes to product recommendations (65% trust friends, 27% trust experts, 8% trust celebrities).3 Retailers are beginning to understand how user-generated content (UGC) can be a critical component to their brand experience. The opportunity to provide a destination for the exchange of useful information which aids other consumers in their purchase decision is most readily demonstrated through ratings and reviews, but retailers are also branching out into other forms of UGC such as, testimonial, blog, picture and video updates. From our research, we understand that many retailers have been or will be embracing consumer opinions and encouraging open dialogues online through ratings and reviews. Return on investment has been demonstrated and this UGC tactic is less likely to be considered risky. Retailers are enjoying increased 1 Nielsen, “Word-of-Mouth the conversion, higher average order value, increased site traffic, lower return rates Most Powerful Selling Tool” and new opportunities for merchandising and marketing. Additionally, retailers are 2 January 2008 Edelman’s leveraging customer reviews and extending them into the offline—display in-store Trust Barometer study, an through kiosks and product signage or inclusion in print catalogs. international study tracking the attitudes of nearly 2,000 opinion leaders, 3 Yankelovich www.resource.com ©2009 Resource Interactive. All rights reserved.
  2. 2. Key Findings Importance and Current Use of UGC 53% of online retailers currently utilize UGC on their site. Of these UGC adopters, 78% of have implemented ratings and reviews, 39% have implemented testimonials, and 39% have implemented discussion boards or forums. Almost three-quarters of retailers said that UGC is currently important to their overall business. Respondents mostly expect their investment to impact conversation rate, customer satisfaction, and customer loyalty. 38% 36% IMPORTANCE OF UGC TO BUSINESS 21% 5% Extremely or Somewhat Not very Not at all very important important important important 78% CURRENT USE OF UGC 39% 39% 34% 29% 10% Ratings & Testimonials Discussion Image Blogs Video Reviews boards/forums uploading uploading Future Use of UGC 81% of retailers who do not currently utilize UGC say they are likely to implement UGC in the future. Ratings/reviews and testimonials were the two highest priorities for companies who have not yet but are planning to implement UGC on their sites. www.resource.com ©2009 Resource Interactive. All rights reserved.
  3. 3. The percentages below represent the percent of retailers who plan to offer each type of UGC in the future. 70% 57% FUTURE USE OF UGC 46% 30% 24% 14% 8% Ratings & Testimonials Blogs Discussion Image No form of Video Reviews boards/forums uploading UGC is on uploading our radar for the future Impact of UGC Retailers identified increased conversion, increased customer satisfaction, and increased customer loyalty as the actual and anticipated business metrics most impacted by online UGC. The percentages presented below represent the percent of retailers indicating the two highest impact measures from a five-point impact scale. 57% Increased conversion rate 42% 53% Increased customer satisfaction 39% 57% Increased customer loyalty 34% 33% Increased site traffic 32% 23% IMPACT OF UGC Increased average order value 16% 23% ANTICIPATED (NO UGC) Decreased returned items rate 3% ACTUAL (NO UGC) www.resource.com ©2009 Resource Interactive. All rights reserved.
  4. 4. Retailer Concerns Retailers who are hesitant about deploying UGC tactics on their websites expressed various reasons which include but are not limited to: O Receiving negative postings about a product or service O Fear of the unknown and loss of control of the experience O Determine which UGC tactic is best to implement O Prioritizing in current project pipelines O Legal concerns O Lack of resources to manage ongoing O Cost to implement Business Impact The retailers who have paved the way with respect to user-generated content are demonstrating a level of success and case studies that prove this is more than a trend. Retailers that span industries and levels of online proficiency are quickly tackling the most proven UGC tactic—ratings and reviews. We cannot promise that negative reviews will never happen, however, we can share stories about retailers who have taken those negative reviews and helped them to fuel product and service improvements. Retailers who are in the process of determining their content strategies can look to the early adopters and learn from their experiences. Ultimately, the community itself is the most effective tool for shaping and policing user-generated content. When empowered with reporting mechanisms, users freely report objectionable content to the proper authorities. Web 2.0 has unleashed a new set of consumer motivations and behaviors. Their desire to share their thoughts and opinions will continue to evolve outside their social networks to all of their digital experiences. This creates new demand and retailers have to make a conscious and long term decision to support these web empowered consumers. An honest relationship with consumers will help garner the trust and transparency they require and will convert brand loyalists to brand stewards. Retailers who create and support opportunities that allow their consumers to add their voice to the marketing mix will find themselves with a plethora of new content which can be used in a variety of ways. Retailers who have already embraced this new consumer behavior are finding success in weaving this user-generated content throughout the brand experience—both online and offline. When executed properly, this type of integrated strategy can drive sales, guide consumer expectations and decisions, and generate more powerful marketing content. The incorporation of user-generated content creates benefits for consumers—they can rely on their peers and affinity groups for consultation and www.resource.com ©2009 Resource Interactive. All rights reserved.
  5. 5. validation. The primary benefit for retailers is their ability to tap into a new source of content creation from their most valuable asset—their consumers. Methodology In January 2008, 100+ respondents in the eTail database completed an online survey. 78% of respondents represented U.S.-based multichannel retailers, 28% online-only. 79% of respondents had ecommerce functionality on their web sites. Respondents’ titles were broadly varied, with the majority of respondents classifying themselves as vice president (20%), director (28%), or manager (25%.) The majority of respondents also had complete, extensive, or some authority over the decision to implement user-generated content (UGC) on their site. A working definition of UGC was used to minimize confusion. User-generated content was defined as: “various kinds of media content that is produced by consumers and made publicly available on websites or other channels (e.g. specifically ratings and reviews, testimonials, image and/or video uploading, blogs and discussion boards/forums.)” About Bazaarvoice Bazaarvoice brings the power of social commerce to the world’s best brands. Social commerce happens when businesses connect customers to one another in ways that drive measurable results to the business. Our mission is to help your customers build your business. Through outsourced technology, community management services, analytics, and syndication, Bazaarvoice is the best-of-breed solution for using consumer-generated content to drive customer loyalty and multi-channel sales. Ratings & Reviews, Ask & Answer,™ and Stories™ enable customers to rate and ™ review products, ask and answer questions, and share personal experiences to build an online community, establish brand loyalty, and increase buyer confidence. SyndicateVoice™ publishes product reviews to the largest and most diverse customer review syndication network in the world, driving qualified site traffic. BrandVoice™ allows manufacturers to capture reviews, questions and answers and syndicate all of that information to its retailer network. All products and programs are backed with industry-leading services. Bazaarvoice was named to the 2007 Red Herring Global 100 and 2006 Red Herring Top 100 lists and received the 2006 ClickZ Marketing Innovation of the Year award. Bazaarvoice currently serves over 160 eCommerce leaders including Bass Pro Shops, www.resource.com ©2009 Resource Interactive. All rights reserved.
  6. 6. Dell, Macy’s, Office Depot, Inc., Overstock.com, PETCO, QVC, Sears, and ZipRealty. The company has headquarters in Austin, TX and offices in London, UK. Learn more at www.bazaarvoice.com. About Resource Interactive Resource Interactive is one of the nation’s preeminent digital marketing agencies, helping Fortune 500 companies thrive in the evolving internet economy with award-winning digital strategy, creative and technology solutions. Known for its revolutionizing consumer insights, leading edge interactive design and technological innovation, Resource Interactive is ranked among the top ten independent interactive agencies in the nation. Unique in the industry as female-founded, owned and operated, Resource Interactive has grown over its 28-year history from its first marketing relationship with Apple to ongoing partnerships with clients such as Procter & Gamble, Hewlett- Packard, The Coca-Cola Company, Victoria’s Secret, Sherwin-Williams and L.L. Bean, among others. For more information, visit www.resource.com. 343 North Front Street, Columbus, Ohio 43215 ph 614 621 2888 ph 800 550 5815 fx 614 621 2873 www.resource.com FOR MORE INFORMATION, EMAIL: inquiry@resource.com www.resource.com ©2009 Resource Interactive. All rights reserved.

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