Getting a Handle on Customer Reviews

SAN FRANCISCO These days, what the customer thinks is hardly a secret. Consumer reviews and ratings are popping up on a growing number of Web sites, sites on which users treat brands like contestants on American Idol. Products are routinely rated on review-heavy e-commerce destinations such as, as well as on those that exist entirely for customer reviews and ratings, including (restaurants), TripAdvisor (travel) and (which covers 250 product categories). Now, some brands are offering such reviews on their own sites as well.

The risk is obvious: unruly customers badmouthing products with a brand’s blessing. But if giving the public the power to pan a profitable gizmo might seem like a bad idea, some online marketing experts say not giving today’s empowered consumers the chance to speak their minds could be an even worse one. And with people interested in what their peers have to say, these experts add, brands may have no choice but to open up the reviewer floodgates.

At the moment, mostly apparel and electronics companies—industries that traditionally use catalogs—are the first to offer them. In May, Toshiba joined Dell and Hewlett-Packard in offering reviews on its e-commerce site “to enhance the buying experience,” according to Jeff Barney, marketing vp for Toshiba Digital Products. Levi’s e-commerce site will be offering customer ratings and reviews by the end of 2007, following in the shoes of niche players Fair Indigo apparel and Eastern Mountain Sports. Petco was one of the earliest mainstream retailers to present the opinions of its base—passionate pet owners.

A Person Like Me

Research suggests that avid shoppers are turning to everyday people for product advice. The 2007 Edelman Trust Barometer, which surveys nearly 2,000 opinion leaders in 11 countries, indicated that for the second year in a row just over half the people in the U.S. said they trusted their peers or “a person like me” for information about a company or product more than they trusted experts such as doctors and academics. In 2003, only a fifth of the respondents picked their peers as their most-trusted source.

David Brain, CEO of Edelman, says that companies need to move away from relying on “top-down communications delivered to an elite audience and move to peer-to-peer dialogue”

This interest in peer opinions has an immediate impact on sales and brand loyalty, according to other studies. Data from the Top 40 Online Retail from ForeSee Results and the University of Michigan showed that among holiday shoppers in 2006, online product reviews increased customer loyalty and provided a competitive advantage for sites that offer them. The January 2007 index showed that of shoppers who bought from sites with reviews, 40 percent said the reviews were the main reason they made the purchase. That group of product review users was also 21 percent more satisfied with its purchases than other buyers and was 18 percent more likely than other buyers to buy from that site the next time it needed similar products.

In the 2007 annual e-commerce study by Marketing Sherpa, published in May, 58 percent of respondents said they “strongly” prefer sites that have customer reviews.

Marketers see clear-cut results that match the research findings. “Adding customer ratings increased our sales and decreased our costs,” says John Lazarchic, Petco vp of e-commerce. The Petco Web site sells the Petco private-label Pet Gold as well as other brands, and launched customer reviews and ratings of all its products in October 2005. The site gets about 200-500 reviews per week, and the company has discovered that when people review products on the site, says Lazarchic, it entices other customers to try that product.

“People seem to think, ‘I want what everyone else wants,'” he says. Users commonly sort through products by rating, he adds, even more than by category or price. And people who seek out the top-rated products buy more, spend more time shopping and end up returning fewer products, according to Lazarchic. “The savings in returns alone pays for all the technology involved in the review and ratings features,” he says.

Reviews can also build camaraderie and community. “We’re introducing the notion of fair-trade clothing to the apparel market, and ratings and reviews are extremely important to building our community,” says Fair Indigo CEO Bill Bass, who formerly led online divisions at Lands’ End and Sears. “Our shoppers educate each other through our reviews.”

There also seems to be a tech advantage to customer reviews, according to analysts; they can boost a site’s ratings on search sites, since the words that search engines scan for can appear in content of the reviews.

Negatives a Positive

And while it’s believed that negative online reviews can harm a product, this appears to be an urban myth. Sam Decker, vp of marketing at Bazaarvoice, which helps marketers set up online customer reviews, says negative reviews are valuable in establishing authenticity and helping customers find what they want, often resulting in less returns. “Consumers are looking for what could be wrong with a product,” he says. “If they can’t find it on your site, they’re going to find it elsewhere.”

Negative reviews also help customers affirm they’ve vetted all concerns before making a decision. As long as the reviews are not overwhelmingly negative, they can help customers pass through purchase paralysis, Decker notes. Regardless, he adds, positive reviews seem to outweigh the negatives: Across all of Bazaarvoice clients, four- and five-star reviews outnumber one- and two-star ratings seven to one, he says. Petco and Fair Indigo executives say they see similar results.

Petco’s Lazarchic also says it helps to look at the big picture, noting that one- to three-star ratings hurt the sales of products, but often prompt shoppers to buy higher-rated, more expensive merchandise from the site. Any negative reviews also can provide valuable feedback. For instance, critical comments about Petco’s private-label products are shared with the staff. Three or four bad reviews are enough to instigate changes in the product, he says.

Fair Indigo’s Bass adds that negative reviews are essential. “If all reviews are good, customers question if the ratings are legitimate,” he says. “Not only will people ignore the reviews, but it will hurt their trust in the brand. It would be better to have no reviews at all.”

At EMS, customer-service staffers read the reviews and respond directly to those who write negative ones. “The critical reviews help us understand how our products could perform better,” and the design group sometimes makes adjustments based on the reviews, says chief marketing officer Scott Barrett.

The risk is not with negative reviews, say those brands offering customer reviews online, but with too few. When customers know a brand is offering reviews and no one is responding, it looks like it has few customers and those they have don’t care, say marketers. Petco had that problem. At first the company offered a small link that users could click to write a review, says Lazarchic, but the silence was deafening. So the marketer offered anyone who wrote a review in the first month a chance to participate in a drawing to win $100, put promotional banners on its site and where there were no ratings, showed the outline of paws (used on the site instead of stars; rated products show blue paws.) In two weeks 1,000 products were rated with four or five reviews each, for a total of about 4,500 reviews, he says.

Like Petco, EMS owns stores and sells private-label products as well as other brands on its Web site. It started customer reviews a year ago and had 8,000 reviews by the end of May, with about 1,000 new reviews coming in each month—a healthy response rate.

EMS and Fair Indigo drum up reviews by sending e-mail to customers 21-30 days after the product shipped, asking about the product and encouraging people to write reviews. In short, in order to start and sustain reviews, marketers often have to reach out to customers and offer encouragement.

Handle With Care

Marketers, pleased with customer reviews’ impact on sales, are experimenting with using them as marketing tools in the offline world. Decker at Bazaarvoice says ratings and reviews “can be used in print catalogs, offline ads and in point-of-purchase displays.

Fair Indigo, which started offering reviews in September 2006, is perhaps the most advanced. Its special bar code on the hangtags of its clothes in its retail store in Madison, Wis., allows customers to scan the code on a kiosk and see the online customer ratings for that product. Petco is branching offline with the five-paw ratings of its top products in its June print circulars.

But insiders say authenticity and credibility should never be sacrificed. For example, marketers should keep the editing or screening of the reviews to a minimum. EMS only filters for obscenities and offensive content. Fair Indigo also rejects reviews that mention rival brands, either negatively or positively. Petco filters out reviews with the names of rival brands as well as URLs to other Web sites. (Web sites can be named without their URLs.) Petco reviews that contain phone numbers and e-mail addresses are also cut for liability reasons. In all, less than 10 percent of Petco’s reviews are rejected.

Online marketers with customer reviews contend the evolution of such audience feedback is inevitable. Says Lazarchic, “In two years customer reviews on branded sites will be more common. A few years after that if shoppers don’t find reviews on a site, they’ll just go shop somewhere else.”

Who Writes Those Reviews?

Empty nesters aged 55-64 and “young transitionals” under 35, with no kids, are more likely than the rest of the population to submit online reviews, blog posts and other user content, according to the Nielsen BuzzMetrics study, “Influential Consumers—Where CPG and Internet Buzz Collide” released in mid-May.

Officials at Fair Indigo apparel and Eastern Mountain Sports report 4-5 percent of their online customers write reviews, and the demographic of reviewers fits their general customer profile. For Petco’s e-commerce site, customer reviewers tend to be females with a high education and high income who are emotional about their pets. “It’s the type of person who wants to be the center of attention and to give her opinion. She wants to be helpful and feel like she is important,” says John Lazarchic, vp of e-commerce.

EMS’s CMO Scott Barrett says, “We’ve learned how passionate some people are about the brand and the store. As time starved as they are I never expected so many to take the time to write a few graphs about sports gear.”