Consumer – or User - generated content (CGC / UGC) is becoming more and more important to the success of online retailers, and to businesses who rely on their website to drive brand exposure and generate contacts.
What is Consumer Generated Content?
It is content that users (or consumers) write and submit online and can be:
· Product reviews (e.g. Amazon.com)
· Service reviews (e.g. Google Local)
· Seller reviews (e.g. ebay)
· Blog comments
· News comments
· Forum posts or comments
· Video/Audio and Photo sharing sites (e.g. YouTube and Flickr)
· Social networking sites comments or posts (e.g. Twitter, SecondLife, Facebook, MySpace)
· Composite review sites (e.g. ConsumerReport.org)
Is Consumer Generated Content (CGC) Really Such A Big Deal?
The data is two-sided; and both sides of the coin – Consumers and Marketers – answer with a resounding ‘Yes!’:
1. Consumers are relying more and more on UGC:
· According to Rubicon, ‘online comments and reviews posted by the enthusiasts are second only to word of mouth as a purchase driver for all web users. Those personal reviews are far more influential than official reviews posted by a website or magazine, or information posted online by a manufacturer.’
· The Rubicon data also indicates that around 80% of all UGC is contributed by around 9% of the US online population. This 9% is in the majority impartial, honest and equally likely to post both negative and positive comments or opinions. In some cases, such as on Amazon, the reviews themselves are open to voting:
· As of October 2008, almost half of US online adults read ratings and reviews at least once a month, and 19% post them. Nearly twice as many read reviews compared with 2007. (The Growth Of Social Technology Adoption, Forrester, 2008)*
· Satisfaction for those who recalled customer reviews on the retailers’ site is 10% higher than those who said there were no reviews offered. (30 UK Online Retail Satisfaction Index, January 2008, ForeSee Results)*
· 83% of shoppers said online product evaluations and reviews had at least some level of influence on their purchasing decisions. (Opinion Research Corporation, an infoGROUP company, July 2008)*
· 74% agree—including 14% who strongly agree—that they choose companies and brands based on what others say online about their customer service experiences, the survey shows. (Society for New Communications Research, May 2008)*
· 70% of online consumers said they use the Internet to research everyday grocery products. (Prospectiv, 2008)*
· 91% of millionaires say they always or often look at reviews before buying luxury goods; 68% of ultra-affluent shoppers use consumer reviews. (Unity Marketing/Google study, reported in AdAge October 2008)*
2. Marketers are relying more and more on UGC:
· The Shop.org State of Retailing Online study, conducted by Forrester Research, found only 26% of the 137 top retailers surveyed offered customer ratings and reviews, but 96% of them ranked customer ratings and reviews as an effective or very effective tactic at driving conversion. (Forrester)*
· 68% of online marketers believe “media is in big trouble and will lose dollars to user-generated content.” (iMedia Connection, February 2008)*
· By 2020, 84% of marketers agree that building customer trust will become marketing’s primary objective, and 82% agree that collaboration with customers will prevail over marketing. (1to1 Media survey of the 1to1 Xchange panel, April, 2008)*
· 11% of retailers reported a 20% or more overall increase in conversions as a result of adding reviews to their sites, 21% reported an 11% to 20% increase and 5% reported a 1% to 10% increase. (eTailing Group, 2008)*
· Consumers were willing to pay between 20 to 99% more for a 5-star rated product than for a 4-star rated product, depending on the product category. (comScore/Kelsey, October 2007)*
· Reviews usage drives higher spending: 27% of users report an increase of 5-10%; almost 7% report an increase of 20%+. (Avenue A/Razorfish “Digital Consumer Behavior Study,” October 2007) *
· In a study of a major electronics retailer site of 30,000 search visitors landing on user review pages converted 60% more often, spent 50% more, and viewed 82% more pages than search visitors to other pages. (Bazaarvoice case study with major electronics retailer)*
Case Study: PETCO (2007)*:
- Shoppers who browsed the site’s “Top Rated Products” page, which features products rated most highly by customers, had a 49% higher conversion rate than the site average.
- Giving shoppers the ability to sort products within a category by customer rating led to a sales increase of 41% per unique visitor.
- After their order, PETCO asked customers, “What online tool most influenced your purchase decision?“ The Number 1 answer was product ratings and reviews, with site search coming in a distant second.
- PETCO realized a 5X increase in email click-through rates by including relevant ratings and reviews content in the campaign promotion.
- Products with reviews have a 17% lower return rate than those without reviews.
…But, the impact of UGC doesn’t stop there…
UGC Influences Offline Commerce
· For every $1 in online sales, the Internet influenced $3.45 of store sales. (eMarketer, 2007)
· 24% of internet users reported using online reviews prior to paying for a service delivered offline. (comScore/The Kelsey Group, October 2007)
· More than 75% of review users in nearly every category reported that the review had a significant influence on their purchase, with hotels ranking the highest (87%). (comScore/The Kelsey Group, October 2007)
· 97% of those surveyed who said they made a purchase based on an online review said they found the review to have been accurate. (comScore/The Kelsey Group, October 2007)
· Consumers who shop online for digital cameras and TVs spend 10% more on in-store purchases than consumers who do not search online. (ChannelForce for Yahoo Search Marketing)
· 90% of those surveyed say they have a better overall shopping experience when they research products online before shopping in-store. (Harris Interactive, October 2007)
“But What About Negative UGC?”
If people are researching a product online, they are looking for what might be wrong with it. If you can be transparent on your own site about your product or service by offering reviews, then you can be sure that both positive and negative feedback (if warranted) will be included.**
1. Negative Reviews are actually of interest:
Based on the fact that folks are likely to continue searching if there is nothing negative about a product, just to make sure, especially with electronics or high-end purchases, if you don’t offer a transparent insight into your offering on your own site, by people who have actually bought from you, these researchers are very likely to go elsewhere to keep researching.**
· “As for the product(s) with negative reviews … my experience is that negative reviews do not hurt a product as long as there are also positive reviews associated with it.” - Don Zeidler, Director, Burpee.com**
2. Negative reviews provide helpful feedback to consumers and R&D:
· “For example, what’s one of the best selling products so far this decade? The Apple iPod. It gets a ton of positive reviews, but one negative comment you’ll see over and over again is that the surface of the iPod scratches easily. Customers say things that the retailer and Apple can’t say: “When you buy this, get a case”. Obviously this is not stopping customers from buying the iPod, but this constructive advice is getting them to buy a case.” – Sam Decker, VP Marketing, BazaarVoice
3. Negative Reviews provide authenticity:
Why would a well known, enormously powerful and successful online retailer continue selling a product that had far more negative reviews than positive? Should they? Yes!
· Case Study**:
· Product: Hot Wheels Slimecano
· Reseller: Amazon.com
· Some Review Titles:
o “Junk, not worth any price”
o “I wish I could give it zero stars”
o “If you want your son to cry, buy this toy!”
o “If you want your husband to cry, buy this toy!”
· Reseller Objective:
If the retailer’s mission is to be a trusted editor of its assortment, then products with overwhelmingly negative reviews will prune the assortment quickly for the best products. But the reseller needs to continue selling the product as an ‘objective provider’ and let the market forces, or in this case, parental voices, have their impact. After a year and half, Amazon stopped selling the toy, but kept the reviews, the image and the page… Good Job!
4. Positive Reviews Outweigh Negatives:
· 62 percent of brand-related talk features products in a positive light, while less than 10% of conversations feature products negatively. (KellerFay Group)
· 60 percent of online shoppers provide feedback about shopping experiences, and they are more likely to give feedback about a positive experience than a negative one. (Jupiter)
If you sell products and services, and if you have a web site, make sure you allow for reviews. If your products are great to mediocre, you should get far more positive than negative feedback, and a resultant positive impact on sales and revenue.
If you sell a crappy product – in the words of Sam Decker:
1. Without reviews, you keep selling the product and risk costly returns and low customer satisfaction
2. With reviews, you can use the leading indicator of negative reviews and quickly remove this product from inventory to reduce returns and improve satisfaction
3. Or, just allow the negative reviews to steer customers to a more satisfying purchase within the category. Let the best products win, and you will win.
Therefore, make sure you enable and allow feedback, optimize your review pages, and get traction for them in the search results by supporting brand evangelists, and answering detractor issues promptly and diplomatically.
Happy UGC integration!!!
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