How to use Customer Reviews to Massively Increase Online Sales

by Ivan on April 15, 2014

How can you use customer generated ratings to lower costs, increase brand awareness, and increase sales? Every business blog needs to make money, right?

Selling online involves determining the most effective ways to generate leads, get referrals, and encourage prospects to buy your products or services. Unless you have a clear path on how you plan to monetize your blog, it won’t happen.

Research shows that offering your customers the ability to rate your products – and review them – increases sales.

Even if the reviews are negative.

What are User Generated Reviews?

Definition from UXBooth: Systems that allow peers to share their personal experiences, likes and dislikes over particular products and services. These user created reviews are unbiased, uncensored, and build a new layer of trust and transparency that couldn’t exist if it weren’t for the user. See: http://www.uxbooth.com

Influencing Customers Online: Ratings and Reviews

To turn a profit on your business blog, you need to create different ways where you can influence your customers (and leads) and nudge them closer to the Buy button.

Ratings are one of the most effective ways to encourage others to:

  • Engage
  • Re-visit your site
  • Build trust and
  • Recommend it to others

So, why do ratings influence others online and what tactics can you implement to make this work?

Why do customer ratings increase sales?

It’s partly to do with trust. We all like ratings. They give us a sense of comfort as others have helped us make the right decision. Think of all the movie review websites you’ve looked at? Or the ratings section in your local newspaper for the best TV programs?

We learn to trust these reviews, especially if they are transparent, from people we recognize, and also from people like us, i.e. same demographics, background and age groups.

  1. Andy Hanselman highlights that ‘trust’ can drive up to 44 percent of customer loyalty in a brand.
  2. David Horsager says “Trust is a quantifiable competency that brings dramatic results.”
  3. Kevin Stirtz defines Trust in a company equals confidence in your expectations about that company.

We rely on ratings to fast-track the decision-making process.

‘If everyone gives Inception a 5 star rating, then it must be a great movie. They can’t be all wrong.’

That’s the thinking. If an expert gives a movie a positive review, others accept this as an endorsement and are likely to watch (or avoid) it.

Who uses customer generated ratings as a marketing tactic?

Rotten Tomatoes use this very effectively. Instead of having a single expert, you the reader, are the expert. You add your vote and see how it influences the ratings. Notice that Rotten Tomatoes also includes ratings from established sites to give its scores more gravity.

Using Customer Ratings & Reviews to Build Trust & Increase Sales Online

CNET use this tactic though the rating is based on the expert (Rich Brown in this review) or the editor’s choice. It’s not as convincing to me as:

  • I’m not sure who the reviewer is
  • I’m not sure how transparent CNET is
  • I’m not sure what other factors determined the ratings

online-influence-ratings

Trip Advisor, which helps travelers find and review hotels, does an excellent job.

For each review, you can see:

  • Who viewed it, including a picture of the reviewer
  • Link to the person’s account (you can send them a message from Trip Advisor)
  • The number of reviews
  • The number of helpful votes
  • Date of review
  • Problems with the review (which gives you the opportunity to share an alternative opinion)
  • Social Media integration (e.g. add a Facebook like)

How customer reviews work in the Hotel industry

Josiah Mackenzie , in an interview wth Micheal Rosney discovered how the Killeen House Hotel consistently receives excellent reviews from their guests online…and how they received the TripAdvisor Travelers’ Choice 2009 award.

“We became hyper conscious – to the extent of being almost paranoid -  of it! When we first became aware of TripAdvisor a couple of years back, we immediately identified it as a tool that had tremendous potential for us to get the message and the ethos of our property out into a Marketplace that we otherwise had no hope of reaching.”

He adds that they made “all of the great people working with us aware if it, and explained to them that this was an opportunity that we felt would have very tangible and positive long term benefits for the Killeen House.”

The results were impressive as anyone glancing through the reviews on TripAdvisor will be clearly struck by the number that specifically mentions the PEOPLE rather than the PLACE.

The takeaway is that if you can increase awareness in your staff – and highlight the benefits of great reviews – your workforce becomes your first line of sales.

Remember, customers remarked on the wonderful staff more than the place itself!

FYI – Josh has a great book on how hotels should respond to online reviews here. It’s free.

Local Reviews Gain In Importance

Greg Sterling identifies other research data from UK based BrightLocal who conducted an survey of 2,000 consumers in the US and UK to determine local search usage patterns and attitudes.

Among other findings it reinforces the importance of reviews for online consumers.

Key findings:

  • 79% said they used the internet to find a local business in the past year
  • 71% consulted local business reviews at least occasionally
  • 22% do so regularly
  • 35-54 age range consulted reviews more than other groups
  • 55% trust a local business more after reading positive online reviews
  • 67% say they trust online reviews as much as word of mouth recommendations

How Zappos Used Crowdsourcing to Fix Reviews and Increase Sales

Let’s look at how Zappos (owned by Amazon) improved its review systems and how this lead to more sales.

BehindCompanies.com highlights how Zippos used Amazon’s Mechanical Turk as a “scalable workforce.” Think of it as an online version of low paid assembly lines and you’re there. You pay a small fee for others to do repetitive tasks, such as software testing, reviewing, surveys or other such activities.

Zappos examined a study that showed that ‘better review quality resulted in better sales. Customers trusted what they were buying when they felt reassured by the reviews.’

Panos Ipeirotis, a professor at NYU Stern discovered that Zappos used Mechanical Turk to find, fix, and verify good reviews on Zappos.

‘…products with high-quality reviews are selling well. So, they decided to take action. The retailer used Amazon Mechanical Turk to improve the quality of the reviews posted on its own website. Using the Find-Fix-Verify pattern, the retailed used Mechanical Turk to examine millions of product reviews…For the reviews with mistakes, they fixed the spelling and grammar errors! Thus they effectively improved the quality of the reviews on their website. And, correspondingly, they improved the demand for their products.’

He added that as Zappos spent at least 10 cents per review, and that they examined approximately 5 million reviews; the cost was a hundred thousand dollars. The expected revenue improvement should have been at least a few million dollars for this exercise to make sense.

What Zappos did was:

  • Gather as many reviews as possible
  • Examine the results
  • Improve the products and services
  • Analyze the results
  • Refine the process

The continuous improvement meant that there were fewer negative reviews, more positive recommendations, leading to more sales.

The Benefit of User Reviews

Seth Greenberg, VP of Digital Marketing, Intuit on eMarketer, adds that ‘people are four times more likely to click on a link in a friends news feed vs. seeing a banner ad for the product. And there is no advertising cost for Intuit as the marketing message is being written and delivered by its users.’

Customer Ratings & Reviews

He also emphasizes that it wanted to make sure, ‘that we shared them transparently so that people can look at the worst and the best reviews.’

The Problem with Overly Positive Reviews

Wall Street Journal discovered consumers who review products seem to keep it positive – perhaps a little too positive.

Two points stand out:

  • Reviews become more positive when brands take action on customer opinion.
  • Brands should seek to have mostly positive reviews, because they remove low-rated products from the mix.

WSJ looked across an aggregate of clients for products added to a site within the past year.

The results showed:

  • For products rated two stars (out of five) or below, 70% of the products have been pulled from the site, compared to a site average of 47%.
  • For products rated three out of five stars or below, 60% of the products have been pulled from the site, compared to a site average of 47%.
  • Note that these same products were pulled 14 days faster than the site average, for a 6% decrease in time on site.

User Reviews Statistics

Recommendations by personal acquaintances and opinions posted by consumers online are the most trusted forms of advertising globally, according to Nielsen.

The Nielsen survey showed that:

  • Nine in 10 Internet consumers worldwide (90%) trust recommendations from people they know
  • Seven in every 10 (70 percent) trust consumer opinions posted online.
  • Recommendations from people I know also emerged top, agreed by 93 percent of respondents as a source they trust.

Consumer opinions posted online tend to be trusted most by Vietnamese Internet consumers (81 percent) and their Italian (80 percent), Chinese and French (both 77 percent) counterparts. However, online opinions tend to be trusted the least in Argentina (46 percent) and Finland (50 percent).

Why Negative Reviews Increase Sales

After Jim Hobart, Co-Founder of AlpacaDirect.com, hired PowerReviews to handle user reviews, it saw a 23% increase in sales for items with customer reviews (even items with lower ratings).

Users tend to be much quicker in trusting other users over brands. Once trust has been established between a brand and a user, the situation changes, but prior to that a user review is a stepping stone that many people have come to expect in new purchases.

“Reviews help build that initial trust … They are key to the long-term success of our company.”

Mistakes to avoid in User Generated Reviews

Allow visitors to rate and review products/services on your website

  • Make ratings and reviews clearly displayed on product pages
  • Allow users to include information about themselves such as name, location and hobbies.

This makes the reviews more authentic.

Why do ratings and reviews work?

Social validation. People look to others when deciding what to do, especially when they are not sure of what action to take. This is part of the mid brain’s unconscious urge to fit in and belong.

When ratings and reviews are clearly displayed, they help to unconsciously trigger people’s need for social validation while allowing their new brain to rationalize that they are making a smart choice. They work on both the conscious and unconscious: to the rational thinking mind, user ratings and reviews are also more credible than profit-seeking ad copy.

Conclusion: Risks v Rewards

Market research from Keller Fay Group estimates that 87% of consumers tend to write reviews when they have something positive to say. What does this mean for your business blog?

Adding the option for reviews and ratings, encourages us to engage with you.

We (customers and potential customers) feel that you want to hear our opinions and, when you respond it demonstrates that you are willing to

  • take the criticism and
  • acknowledge the effort we’ve made to share our opinions.

Finally, what happens if you don’t offer this option? Customers will vent their anger, frustration, and customer service horror stories elsewhere, usually on Twitter and Facebook.

And once they do that, you’re on the defensive trying to pacify the disgruntled customers. Wouldn’t it be better to do this on your site where you can follow up with them immediately and win back their trust?

Related Articles:

Ivan Walsh, Internet Business ExpertAbout Ivan Walsh Got a question about running an online business? Contact me on Google Plus, @IvanWalsh, and Facebook

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{ 6 comments }

Extreme John June 23, 2011 at 4:38 pm

Excellent write up Ivan. I totally agree with the importance of ratings and customer reviews to build credits to business. I also believe that ratings equal trusts and more trusts equals more ratings and so on until we build credibility and validity. There’s no shortcut to this process but accomplishing it is really rewarding. 

Ivan Walsh June 24, 2011 at 9:12 am

Thanks John, 

There is an element of risk, which is why I think most are cautious but the rewards are there for those who listen, engage, and improve their product offerings. 

Which creates more sales :)

Ivan

Innes Donaldson July 6, 2011 at 11:36 pm

I like the level of detail you have gone into here. Everything is bang correct and it has to be said, in buisness it is all about having good reviews. You can never beat being recommended!

Ivan Walsh July 14, 2011 at 2:14 pm

Thanks Innes.

We looked at the reviews in TimeOut before heading to London last week and they were very helpful and… influenced where we went and stayed, which is the whole point I guess!

Ivan

SEO melbourne July 18, 2011 at 10:02 am

This is the Awesome post, I agree, Selling online involves determining the most effective ways to generate
leads, get referrals, and encourage prospects to buy your products or
services. And i   like the level of detail you have gone into here. We learn to trust these reviews, especially if they are transparent,
from people we recognize, and also from people like us, i.e. same
demographics, background and age groups.
SEO melbourne

SEO melbourne July 18, 2011 at 10:02 am

This is the Awesome post, I agree, Selling online involves determining the most effective ways to generate
leads, get referrals, and encourage prospects to buy your products or
services. And i   like the level of detail you have gone into here. We learn to trust these reviews, especially if they are transparent,
from people we recognize, and also from people like us, i.e. same
demographics, background and age groups.
SEO melbourne

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