merchant and customer perspectives oncustomer reviews and user-generated content

lauren reedman | president, the e-tailing group, inc.ebruary 2008

table ocontents

i.introduction 01ii.the consumer perspective 03 iii.the merchant perspective 08iv.execution - start with building a review network 14 v.measurement techniques 17 vi.uture initiatives 23vii.loyalty - the last horizon 24

i. introduction

Today’s online consumer has embraced user-generated content in an unprecedented ashion. The merchant community alsowisely recognizes how important reviews are, not just rom an ROI perspective but or the many

“hidden truths”

that reviewshave exposed relative to their cross-channel eorts. The speed at which these tools are being widely adopted by all types oretailers has made peer reviews very accessible to nearly all online shoppers.

As Mountain Gear’s Internet Marketing Manager, Whitney Parsons, noted, “Reviewsare truly at the oreront o all these community eorts.” They are likely to be just thefrst wave o user-generated content but their importance is signifcant in buildingcommunity and delivering a more robust customer experience.

Beyond reviews, there has been a lot o discussion in the media and the merchant community about Web 2.0, but its hypeseems to be greater than its power to deliver shoppers and customers. Customer reviews, compared to other “social” tactics,provide a protable, customer-centric entry into social shopping. During my extensive merchant interview process they werecontinually cited or their ability to convert customers.

the customer’s passion

Ater a review o existing research it became clear that there is preliminary evidence o the customer perspective regardingreviews, while merchant insights and perormance metrics are more dicult to both quantiy and qualiy. We undertook a two-pronged approach to learn about customer reviews beginning with a consumer research study. The study (and this white paper),commissioned by PowerReviews, surveyed 1,200 consumers who shop online at least our times per year, and spend $500 ormore annually. I knew there was signicant interest in customer reviews but I was startled at the passion, intensity o interest,and the integral nature that reviews play in online and cross-channel shopping.The introduction o a

“social researcher”

was another one o the key ndings rom this study. The mindset o this individualand their “research-orientation” coupled with their social approach changed the dynamic. This infuence turns the tables on thecustomer/merchant relationship and signals that reviews are only the beginning o a new shopping paradigm.

the merchant embraces social shopping

I understood that it was imperative that we also talk to the merchant community. For the second component o the paper, Iwill highlight the hidden truths my interviews uncovered and the extraordinary reception reviews are receiving throughoutthe merchant world. Merchant discussions included a broad cross-section o players, supported by platorms which rangedrom PowerReviews and BazaarVoice to those maintained on proprietary systems. Interview discussions covered the state ouser-generated content, exploring implementation and execution along with ROI. Issues and challenges that resulted rom thecustomer review experience were also detailed.Merchants embraced adding reviews to their site while proving ROI, the typical benchmark to assess adding a site eature, wasonly touched upon. Ironically, merchants have done little traditional measurement o these reviews other than to understandtheir customer’s passion or the tool and their subsequent adoption.