From Reviews to Revenue: How Ratings and Reviews Influence Sales
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Transcript of From Reviews to Revenue: How Ratings and Reviews Influence Sales
PowerReviews, Inc. 1
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
PowerReviews, Inc.
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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32
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.
PowerReviews, Inc. 33
For a Full Copy of the Report
powerreviews.com/NWU
PowerReviews, Inc.
Thank you.
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