From Reviews to Revenue: How Ratings and Reviews Influence Sales

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PowerReviews, Inc. 1 From Reviews to Revenue: How Ratings and Reviews Influence Sales

Transcript of From Reviews to Revenue: How Ratings and Reviews Influence Sales

Page 1: From Reviews to Revenue: How Ratings and Reviews Influence Sales

PowerReviews, Inc. 1

From Reviews to Revenue: How Ratings and Reviews Influence Sales

Page 2: From Reviews to Revenue: How Ratings and Reviews Influence Sales

PowerReviews, Inc.

Ask Questions• #PowerReviews

• Post them in the questions panel on the right

of your screen. We will answer at the end.

• You will receive a link to the recorded

webinar.

2

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Tom CollingerExecutive Director, Spiegel Digital & Database Research CenterSenior Director Medill Distance LearningNorthwestern [email protected] http://spiegel.medill.northwestern.edu/

Edward C MalthouseTheodore R and Annie Laurie Sills Professor of Integrated Marketing CommunicationsProfessor of Industrial Engineering and Management SciencesResearch Director, Spiegel Center on Digital and Database MarketingNorthwestern [email protected]

Introductions

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● Context for the Study

● Where Ratings Matter

● Mitigating Risk with Reviews

● Summary and Areas for Exploration

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Agenda

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Context for the Study

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15 Of The Absolute worst Marketing Campaigns From 2014 *Spokal

Ad Age’s #1 pick in 21st Century Ad Campaigns

Victoria’s Secret Perfect Body CampaignDove Campaign for Real Beauty

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Context: What Really Works?

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12 Best Facebook Marketing Campaigns, Adweek 10 Worst Social Media Fails of 2014, ClickZ

ALS Ice Bucket ChallengeEpicurious Post after Boston Marathon Bombing

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More Context: What Really Works?

“Boston, our hearts are with you. Here's a bowl of breakfast energy

we could all use to start today”

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Context Summary: It Depends and

It’s Complicated

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● Previous PowerReviews studies focused on higher priced categories (Electronics, Appliances)

● This study focused on lower priced categories (CPG)

● Answer the question: How Do Reviews Influence Purchase?

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About the Study

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Where Ratings Matter

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Where Reviews Live in a Consumer Decision Journey

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2

3

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Initial Consideration

Set

Trigger Post-purchase Experience

Moment of Purchase

Active Evaluation

Reviews

Loyalty Loop

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Product Price

Number of Reviews

Stars

Advertising

Word of Mouth

Promotion

Competition

Customer Involvement

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We Analyzed Some of the Variables that Influence Purchase

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OMITTEDUSED

Controlled

Influencer

Word of Mouth

Promotion

Competition

Customer Involvement

Influencer

Controlled

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We Analyzed Four Purchase Variables

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4.2-4.5 is the ideal average star rating for purchase probability

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Average Star1 2 3 4 5

4.5Most likely to purchase

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Example: Light Bulbs

Least likely to purchase

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4.2

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Example: Hair Care

Average Star1 2 3 4 5

Most likely to purchase

Least likely to purchase

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4.4

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Example: Salon Hair Care

Average Star1 2 3 4 5

Most likely to purchase

Least likely to purchase

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● Consumers seek out negative reviews

● Negative reviews establish trust and authenticity

● Increase buyer confidence

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There’s a Positive Impact of Negative Reviews

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● Star Ratings impact expensive items more than cheaper items

● Specifically, expensive items within high consideration categories

● Categories studied include: Salon Hair Care, Weight Loss and Baby Food

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Where Are Stars Most Impactful

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Cheap slope

Expensive slope

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Example: Salon Hair Care

Average Star1 2 3 4 5

Most likely to purchase

Least likely to purchase

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Cheap slope

Expensive slope

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Example: Weight Loss

Average Star1 2 3 4 5

Most likely to purchase

Least likely to purchase

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Cheap slope

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Example: Baby Food

Average Star1 2 3 4 5

Most likely to purchase

Least likely to purchase

Expensive slope

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● Consumer feedback is more important with expensive items, relative to category

● High consideration items (Baby Food) need to be ensured they are safe, the best

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Star Ratings Impact Expensive Items Within High Consideration Categories

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● New brands and new products in existing categories have low initial likelihood of purchase

● Categories with low initial likelihood of purchase are most impacted by reviews

● Categories studied include: Salon Hair Care and Dishwashing Detergent

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When Are Stars Most Impactful?

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Higher initial purchase likelihood Smaller Impact

Lower initial purchase likelihood Greater Impact

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Example: Dishwashing Detergents

Average Star1 2 3 4 5

Most likely to purchase

Least likely to purchase

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● Consider products that are new in a category or that are unfamiliar to customers (ex: niche products)

● Focus review capturing efforts on such products

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Reviews Can Impact New Product Launches

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Mitigating Risk with Reviews

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Where Ratings Mattered Most (Item)

High Consideration, Expensive Items

● Expense

● Safety

When Ratings Mattered Most (Purchase)

Low Initial Likelihood of Purchase

● Unknown product

● Unknown brand

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Key Finding: Reviews Can Mitigate Risk

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Summary and Areas for Exploration

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5 star ratings are not the most influential• Allow negative reviews on your site to build trust with shoppers

Consider item category and purchase type• Prioritize reviews for items in “lower likelihood” categories/products

Unknown brands and products are heavily influenced by reviews • Consider sampling for new brands or products

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Key Findings With Action Items

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Questions?

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Ask Questions• #PowerReviews

• Post them in the questions panel on the right

of your screen. We will answer at the end.

• You will receive a link to the recorded

webinar.

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For a Full Copy of the Report

powerreviews.com/NWU

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Thank you.

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