Ratings rate highly
Editor’s note: Marshall Harrison is founder and CEO of RelevantView, a Westport, Conn., research firm.
Last year, my firm, RelevantView, joined with eVOC Insights, a San Francisco customer experience consulting firm, to measure and assess consumer responses as they interacted with the Web sites of four competitive retailers: Amazon, Best Buy, Circuit City and Wal-Mart. The research utilized RelevantView’s Web-based technology to evaluate target customers as they interacted with the sites and gather feedback on their attitudes, experiences and site preferences relative to the competition.
Specifically, we wanted to determine how big a role customer ratings and reviews play in the customer decision process. We also wanted to identify which retailers were using these key Internet marketing tools most effectively and which were not - and thus were chipping away the gold that encases their brands by ignoring the impact of powerful e-marketing tools.
Most importantly, we wanted to be sure we were measuring behavior as opposed to stated preferences. We have found that consumers’ actual behavior often varies widely from stated preferences. In order to make accurate brand marketing decisions, retailers need to know what consumers will actually do in given situations, not simply what they say they will do.
Serious mistakes
Wal-Mart is the biggest of big, the grandest of grand, the godfather of all retailers, with almost 2 million employees and close to $2 trillion in sales. If Wal-Mart were a state, it would rank 39th in population, right behind Nebraska. But even Wal-Mart - legendary brand that it is - can make serious mistakes in its approach to Internet marketing, mistakes that exact a high price in brand perception, customer loyalty and, inevitably, revenue. It’s critical for mere mortals (read: smaller companies of every size) to learn from the mistakes of the godfather. Why? Think of it as the Energizer Bunny Rule: A company almost the size of Nebraska can afford to make mistakes in its Internet marketing and still keep on going and going and going. Unfortunately, most other companies can’t.
We realized that, if we could use a combination of user behavior tracking technology and Web-based analytics to isolate and assign values to key site components, we’d be providing retailers with valuable information. To conduct the study, we utilized ActiveSandbox, our Web user tracking technology. We were able to track opinions as expressed through behavior on the four retail sites. As we all know, opinions are not always reliable, as users may have their own hidden agenda. Behavioral tracking allowed us to know each user’s intent and how it correlates with their behavior.
We applied a within-subject methodology to evaluate a sample of 200 consumers as they interacted with the four sites. The study targeted a critical industry topic: ratings, reviews and the customer decision process. The online survey engaged participants to complete a series of tasks while searching for a digital camera on each site. By assigning a task - which let us know visitor intent - and tracking subsequent behavior, we were able to understand how users navigate the site.
The first task was an open task where users were asked to find any camera of their liking and its cost on each site. After the users had performed the task on each site, they were asked follow-up questions on site preference. The second task was more targeted; users were asked to look for a very specific model of camera and its cost on each site. Similarly the users were asked follow-up questions on which site they preferred for a specific model. We were able to learn how well the sites delivered a positive customer experience based on usability metrics and overall satisfaction when searching for a specific product. The combination of these two tasks helped isolate conceptual feedback such as ratings and reviews from factual comparisons such as price. We then assessed the results of this data to provide statistically reliable benchmarks and best practices for online retailers.
First, we confirmed that the Web plays a significant role in the consumer decision process - not a big surprise. But it was enlightening to discover just how much of a role. Through preliminary questions posed as a lead-in to the tasks our sample group performed, we determined that more than 85 percent of the consumers in our sample access the Web to research and/or purchase big-ticket items, including electronics.
And, while the primary focus of this study was on behavior when purchasing electronics, our sample group told us that the Web is a critical part of the buying decision when purchasing a range of other big-ticket items, including travel and automobiles. For example, more than 80 percent of consumers in the sample purchase flights and hotels online. While few in our sample purchase automobiles online, 81 percent conduct research online before making a decision to test drive or purchase a vehicle offline. Clearly, for the vast majority of consumers, Web-based product research is now central to their decision-making processes.
Top issues
The goal of this research was to understand the complete view of the customer decision process relative to the competition and to provide a window into the minds of customers as they weighed the strengths and weaknesses of competitors while making a purchase decision.
Our study showed that the top issues on e-shoppers’ lists of product considerations were competitive prices, detailed product descriptions, ease of use, customer service, brand perception and broad product selections (Figure 1). But when all of the above are equal, product ratings and consumer reviews are among the key differentiators driving purchase preferences. In fact, 63 percent of the consumers in our sample indicated they are more likely to purchase from a site if it has product ratings and reviews.
So who in our pantheon of retail deities is using ratings and reviews most effectively? If you think it’s Wal-Mart, you’d be mistaken. It’s actually Amazon, which has online retailing in its DNA. It has always been an innovator, effectively employing such features as one-click checkout and consumer ratings and reviews. Circuit City also makes effective use of ratings and reviews, while Wal-Mart and Best Buy have chosen not to include them on their sites.
The result? Users are significantly more likely to remain loyal to Amazon and Circuit City after searching for the same digital cameras across the four competitive sites. Only 45 percent remain loyal to Wal-Mart and a mere 29 percent continue to see themselves as Best Buy loyalists. Clearly, this is a significant difference in brand loyalty, which, over time, will dramatically impact the retailers’ online revenue. And because consumers now buy so many big-ticket items online, failure to effectively use online tools like ratings and reviews will erode even the biggest of brands.
What they really do
Our research confirmed that Web-based product research has now become central to consumers’ decision-making processes and that ratings and reviews play a significant role in the purchase of a product. We also demonstrated that it’s possible to determine what consumers really do - how they behave - as compared with simply gauging what they claim they will do.
It’s clear that businesses need to leverage the Internet to educate consumers about their offerings and how the offerings are different from competitors. A behemoth like Wal-Mart may be able to absorb the negative effects of a lack of understanding of consumers’ online behavior - for a while - but most companies can’t. Unlike the Energizer Bunny, most online retail programs need the constant infusion of power that comes from successful use of customer response tools. That’s the best way to keep online revenue growing and growing and growing.
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