Ratings, Reviews & ROI:
How Leading Retailers Use
Customer Word of Mouth in Marketing and Merchandising
Brant Barton
Business Development of Bazaarvoice
Introduction
Online
word of mouth takes many forms, from individual blog posts
to threaded message board conversations, but one particular
form is quickly emerging as the new consumer-generated media
of choice for leading online retailers and e-commerce sites
focused on extracting both immediate and long-term ROI from
their marketing efforts: customer ratings and reviews. Highly
successful retailers like CompUSA, PETCO, and Burpee are leveraging
customer ratings and reviews to enhance their existing online
marketing, merchandising, and brand building efforts, including
search marketing, email marketing, online display advertising,
data-driven merchandising, blogs, and RSS. These retailers
and others have discovered that customer ratings and reviews
are a highly desirable and effective form of word of mouth
for multiple reasons. Ratings and reviews are highly focused
on the objects of the purchase task, frequently sought out
by consumers, and highly measurable.
While e-commerce pioneers such as Amazon.com and eBay embraced
customer ratings of products, marketplace vendors, and auction
participants early in their history, the multi-channel brands
currently driving the mainstreaming of consumer e-commerce
have been slow to adopt ratings and reviews even as a consumer
research tool much less a marketing tactic. In a survey of
137 retailers conducted by Forrester Research and sponsored
by Shop.org, a division of the National Retail Federation,
just 26% of participating retailers offered customer ratings
and reviews on their web sites but 96% of those who did rated
the “merchandising tactic” as effective or very
effective at increasing online conversion rates. Recent research
on the reported benefits of customer ratings and reviews,
such as Shop.org’s annual State of Retail Online report
and eVOC Insights’ syndicated retail report, Ratings,
Reviews and the Customer Decision Process: Amazon vs. Best
Buy vs. Circuit City vs. Wal-Mart, as well as the regular
research findings of the Word of Mouth Marketing Association
(WOMMA) and its member organizations, have elevated the visibility
and status of customer ratings and reviews as a legitimate
consumer marketing tool.
This whitepaper presents case studies from three clients of
Bazaarvoice, a provider of online customer ratings and reviews
functionality and supporting services. All three companies
launched customer ratings and reviews on their web sites in
late 2005 and have observed measurable business impact from
the investment. Bazaarvoice worked with each company to measure
the online conversion impact of integrating and leveraging
product-specific word of mouth in existing marketing programs
and contexts. Using reporting and analysis tools provided
by each client, Bazaarvoice found that recipients of word
of mouth marketing messages converted at higher than average
rates and in two of three cases, spent considerably more per
online order or unique visitor than non-recipients. In all
cases, the retailers integrated customer word of mouth into
existing marketing programs that offered higher reach and
impact than more “manual” forms of marketing message
distribution, such as an individual consumer emailing a review
for a favorite product to a relatively small group of friends
or discussing a review at the water cooler. Allowing a customer
review to piggyback on existing marketing programs exponentially
increases the audience size for that review, thereby increasing
its marketing impact and ROI. For example, a customer rating
and review that is shared with millions of consumers via a
retailer’s monthly email newsletter has a much greater
audience than a rating and review that simply “lives”
on a product web page, usually buried deep with the multi-level
structure of a large e-commerce web site.
Case Study: CompUSA Finds ROI in Search Engine Indexing of Reviews
CompUSA
launched customer ratings and reviews on CompUSA.com just
in time for the 2005 holiday shopping season. Within weeks,
leading search engines indexed the web pages that contained
CompUSA’s rapidly growing number of customer reviews.
Although the algorithms that directly control the search
engine rankings of web sites and specific pages within those
sites remain a mystery even to many search marketing experts
and industry insiders, consumer-generated media is believed
to be search engine friendly for several reasons. First,
it is authentic in both structure and tone, making it a
more credible form of information in the eyes (or algorithms!)
of many search engines. Second, it is often highly linked
both to and from other web sites, elevating its importance
and relevance. Last, consumer-generated media changes frequently,
and each new post, comment, or thread scores points for
freshness. The release of blog-specific search capabilities
by Google, Yahoo, and other web search vendors is evidence
of the importance of consumer-generated media to the online
advertising and search marketing industry.
By late November, roughly six weeks after CompUSA’s
launch of ratings and reviews, thousands of new visitors
were arriving at CompUSA.com each week as a result of reviews-related
web searches. These consumers were not responding to CompUSA’s
paid search advertisements, which are displayed on search
engine results pages for a range of brand-, category-, and
product-specific search phrases and keywords numbering in
the thousands. Rather, these consumers were finding links
to CompUSA’s customer ratings and reviews –
and therefore products – embedded within the natural results
for search phrases such as “XBOX 360 reviews”
as a result of search engine indexing – a high velocity,
high reach “distribution” activity – and their
own explicit search queries.
Figure 1. Actual compUSA.com page in Google Search Results
Bazaarvoice worked with CompUSA to measure and compare the behavior of site visitors acquired by reviews-related searches to the average CompUSA.com visitor. The companies found that the test group outperformed the control group in virtually every measure. Specifically, they found that these visitors:
- Browsed
the CompUSA.com web site more actively than the average visitor
prior to making an online purchase (94% more site visits prior
to purchase), which supported the companies’ notion that
these visitors were actively researching products and/or planning
a product purchase.
- Converted
at a higher rate on a multi-session basis (60% higher buyer/visitor
multi-session conversion rate).
- Purchased
higher price items (43% higher average item price), such as
laptops, projectors, digital cameras, and other “high
consideration” products that often require detailed feature
research and price comparison.
- Spent more per order (50% higher average order value) as a result of purchasing higher price items.
In
addition, the companies conducted a second analysis for an
eight-week period and found that indexed customer ratings
and reviews, when viewed as a visitor acquisition source,
delivered greater sales per unique visitor than all four major
search engines (AOL, Yahoo, MSN and Google) on an aggregate
basis, although these same search engines were the primary
vehicles used by consumers to find CompUSA’s customer
ratings and reviews!
As a result of these findings, CompUSA has launched a series
of promotional contests and online incentives designed to
aggressively drive the growth of customer review submissions
on CompUSA.com, thereby increasing the volume of reviews available
for indexing on the major search engines. In this case, the
incredible distribution velocity and reach of leading search
engines created a word of mouth success story for CompUSA,
an established multi-channel retailer.
Case Study: PETCO Uses Aggregated Ratings to Drive Conversions and Shopping Convenience
Like
CompUSA, PETCO deployed customer ratings and reviews on
PETCO.com in mid-October 2005. Almost immediately, the retailer
began heavily promoting the feature on its home page, order
confirmation page, order and shipping confirmation emails,
and through the use of low-cost contests, such as a $100
gift card giveaway.
By mid-December, PETCO had accumulated a large enough volume
of ratings and reviews to begin using aggregated ratings
as a means of segmenting its online product catalog, which
consists of over ten thousand unique products. For example,
products with multiple reviews and a high average overall
rating (the threshold for “high” changes over
time as products accumulate more ratings and reviews) were
categorized as “Top Rated Products.” Segmenting
the product catalog in this manner allowed PETCO.com to
offer a “Top Rated Products” category within
each of its seven key departments. As a result, visitors
to PETCO.com are able to navigate the site by selecting
a department, such as “Dog”, and then selecting
“Top Rated Products” in addition to any of their
traditional Dog department categories, such as “Biscuits
& Treats.” The Top Rated Products navigation option
acts as a powerful distribution mechanism for customer ratings
and reviews, as it elevates the visibility and potential
impact of each customer rating and review unit related to
a highly rated product.
Figure 2 – PETCO.com Top Rated Products Sub-Category
Using
PETCO’s web analytics system, Bazaarvoice and PETCO
began analyzing the conversion behavior of PETCO.com visitors
that chose the Top Rated Products navigation path within
any pet department. The companies found that this visitor
group had a higher overall conversion rate than other browsers
(visitors that actively navigate the site to look at products).
More recently, Bazaarvoice repeated this same analysis for
a twelve week period and found that compared to average
browser performance, visitors that utilized Top Rated Products
to browse PETCO.com converted at considerably higher rates
on both a same-session and multi-session basis (10% and
49%, respectively).
In addition, the second analysis evaluated PETCO’s
use of average customer rating as an on-site search results
refinement option. When PETCO.com visitors use the site’s
search function to search for “dog treats,”
for example, they can filter search results to just include
the most highly rated products. In the second analysis,
Bazaarvoice found that the sort by rating refinement option
was the top performing sort method. Compared to the second
best method, sort by rating delivered higher sales per unique
visitor on both a same-session and multi-session basis (22%
and 41%, respectively).
Figure 3: PETCO.com Search Results-Sort by Customer Rating
Much like CompUSA, PETCO continues to invest in the development of its reviewer community and in creative uses of customer ratings and reviews content. The retailer has leveraged ratings and excerpts from actual customer reviews in email newsletters and in on-site advertising creative with great success. Most significantly, PETCO knows that its own web site and common functionality like site search can be leveraged to increase the reach and impact of customer ratings and reviews, resulting in greater ROI from their investment in word of mouth marketing.
Case Study: Burpee Boosts RSS Feed Response Rates Using Featured Product Reviews
Burpee’s
launch of customer ratings and reviews in early 2006 was
the company’s second investment in “social media”
and its enabling technologies. Several months earlier, the
retailer decided to re-purpose its email newsletter content
to provide an RSS feed to is more tech savvy customers.
The Burpee.com home page links to a web page that contains
detailed information about how to subscribe to the RSS feed
and information on RSS in general, including links to RSS
readers and other resources. Thanks to Burpee’s active
promotion of RSS and near daily updates, their feed’s
subscriber base continues to grow each month.
In early February 2006, just weeks after launching customer
ratings and reviews, Burpee decided to incorporate selected
customer reviews alongside products featured in the RSS
feed. Previously, the “Featured Product” edition
of the feed simply included a product image, short description,
and links to the product page on Burpee.com. Incorporating
just a single customer review provided subscribers with
more detailed information about the product as well as an
authentic customer opinion or personal account of using
the product. After seven weeks, Bazaarvoice and Burpee began
to analyze daily clickthroughs from the RSS feed. During
this same period, average daily clickthroughs steadily grew,
but the companies found that days that included a customer
review had a 43% higher number of clickthroughs, on average,
than days that did not include customer reviews. For Burpee,
this finding provided clear proof that online word of mouth
could drive its business growth in much the same way that
offline word of mouth fueled the success of its original
catalog business.
Figure 4: Burpee RSS Feed with Featured Product Review
Like PETCO, Burpee leveraged an existing marketing asset to increase the exposure of customer ratings and reviews of their products. While Burpee’s RSS feed, which is inherently permission-based, does not yet offer the reach or velocity advantages of a Google web search, it provided the perfect opportunity for measuring the impact of customer word of mouth on an existing marketing program. Since conducting the analysis above, Burpee has gone one step further by building out a company blog that features customer reviews in many of its regular posts.
About the Authors
Brant Barton is the co-founder and VP of Business Development of Bazaarvoice. He previously served as Bazaarvoice’s VP of Client Services and has worked directly with Bazaarvoice clients, including CompUSA, PETCO, Burpee, and others, to integrate customer ratings and reviews into their web sites and online marketing programs. Prior to Bazaarvoice, Brant was Director of Account Services at Coremetrics, where he advised leading retail and e-commerce brands on how to improve online conversion using applied web analytics. He has presented on customer ratings and reviews at a number of industry conferences, including Shop.org’s 2006 Online Marketing Workshop, the ad:tech 1MPACT conference series, and SXSW Interactive 2006.
About Bazaarvoice
Based in Austin, Texas, Bazaarvoice offers outsourced technology, community management services, analytics, and syndication to encourage and harness word of mouth marketing, and bring it closer to a company’s brand and customer experience. The company’s flagship hosted and fully managed customer ratings and review service allows businesses to enable, encourage, and analyze customer ratings and reviews on their website. With Bazaarvoice, companies can empower their customers to share honest opinions and influence each other to make more informed and rewarding purchase decisions. Clients like CompUSA, Overstock.com, and PETCO benefit from a credible and reliable customer-to-customer community, without having to delve into complex IT work or the laborious process of community management. Bazaarvoice is a winner of the “Red Herring 100 North America” award by Red Herring magazine. For more information, please visit the company’s website at www.bazaarvoice.com or email [email protected]
Publication History
This whitepaper was originally prepared for the member community of the Word of Mouth Marketing Association (WOMMA). A version of it will be included in WOMMA’s publication, “Measuring Word of Mouth, Volume 2.”
