Even though shop and product descriptions provide customers with important information during online shopping, consumers today buy primarily on the basis of customer ratings and reviews. Ratings and reviews help other consumers to form an impression of the product, to obtain information about the quality and the service and to create trust. That’s why authentic and good customer reviews are worth their weight in gold, especially in e-commerce, where the product cannot be tested by the consumer. In this blog post, we explain what exactly is meant by ratings and reviews, why these types of customer evaluations are so important, what opportunities and risks they entail and how your company can use customer evaluations to its advantage.
Ratings and reviews as a form of customer evaluation
Ratings and reviews are forms of customer evaluations. However, there are different ways in which users can rate. To briefly explain the terms and differentiate between them, ratings and reviews differ as follows:
- Ratings are often presented as star ratings of mostly 1 to 5 stars. In most cases, they rate sites, platforms, products or companies, often also on rating portals such as Trustpilot. A prime example of ratings are the star ratings of companies such as Douglas on Google or in Google search.
- Reviews contain a star rating and a text comment, which of course makes them more meaningful in general. They are usually integrated on the pages of retailers and service providers, but also on rating portals. For example, the reviewer gives his or her opinion on a company or a product and then rates it with the corresponding number of stars.
Reviews and ratings are therefore used in e-commerce to evaluate products or services of companies. But why are customer ratings and especially reviews so important for companies and e-commerce as a whole?
Why are customer evaluations as ratings or reviews particularly important?
The Trend Radar Study 2019 has already proven it: Product reviews from customers are becoming increasingly important, as almost half of those surveyed said they usually read customer reviews before making a purchase online. In addition, the study proves that ratings and reviews have a lasting influence on brand loyalty and purchasing behaviour. According to the 2019 Trend Radar study “The Rating Economy” by the strategy and marketing consultancy Simon-Kucher & Partners, ratings are the third most important criterion for a customer’s purchase decision after product features and price. Ratings are thus even more important than the brand itself. But why is that? There are several reasons.
- Customer ratings create transparency and authenticity: Through the ratings of other consumers who show the same interest in buying, customers can better judge the characteristics of the corresponding product or service. The reviews open up a new perspective and the customer does not have to rely exclusively on the promises of the seller.
- Customer reviews create trust: The most important and biggest potential that reviews offer results from the fact that ratings & reviews are considered User Generated Content (UGC). UGC generates trust and thus ratings also generate trust. This creates the phenomenon of social proof in people, where people adopt the actions of others, in this case trust and satisfaction with the brand. Customer ratings make products and the companies behind them seem more authentic and trustworthy, because the consumer has received the goods and, in the best case, given them a good rating. Here, attention should be paid above all to the authenticity of the reviews, because fake reviews cause exactly the opposite.
- Customer reviews create a perceived higher quality: The effort that results for a person to rate a product after receiving and using it suggests that an extraordinary level of satisfaction accompanies it, which additionally suggests a higher quality of the product. But companies are also rated by consumers. Here, too, the same principle applies. Satisfied customers take the trouble to rate the company on the internet. This in turn suggests a high level of satisfaction with the company and the quality of the company, and through social proof, the company also gains trust from other consumers.
- Customer reviews are crucial for brand building and image: The companies surveyed in the Trend Radar study mostly agree that reviews also have a direct influence on the company’s image building. And they are right about that, because every third respondent would switch to a product of another brand if it received better ratings.
- Customer reviews have an impact on ranking: Customer reviews also have an impact on the ranking in search engines, such as Google. They appear in the results lists. Through review signals, user reviews are included in the creation of SERPs – Google’s results pages – by the Google bot.
- Customer reviews increase the conversion rate: In addition to trust and social proof, customer reviews also promote the conversion rate. Basically, the following applies here: The higher the ratings and the more positive reviews a company receives, the more sales and customers are also generated. In addition, more visitors come to the website in general.
- Customer ratings can determine pricing and sales: The 2019 Trend Radar study also found that customer reviews are a key driver of sales volume and pricing. Thus, consistently positive reviews can also lead to higher prices. However, the reverse is also true in the case of poor ratings.
Opportunities and risks of customer ratings on the web and on product detail pages
Customer reviews shift the balance of power: Customers now play a decisive role in determining which companies are successful by publicly sharing their opinions on products or services. Of course, this also entails risks, because most providers are afraid of negative customer feedback, complaints, criticism and the repercussions they bring. However, complaints and criticism should be perceived as an opportunity. Within the framework of complaints, traders can learn as well as receive unfiltered criticism from consumers and make improvements to the products on this basis.
As far as handling is concerned, the online shop should always show a positive reaction to negative customer feedback on its own platform and get in touch with the dissatisfied customer in order to even convert him into a satisfied customer in the best case. If customer reviews are honestly acquired and if they are also optimally positive, they offer an attractive opportunity to gain the trust of new customers, to retain customers already acquired and to gain an advantage over the competition.
The principle of a rating platform
To illustrate the principle of rating platforms, we have chosen the rating platform Trustpilot as an example. This is one of the largest portals where consumers can express their opinions. There are three different types of Trustpilot ratings. On the one hand, Trustpilot offers service ratings in which consumers describe concrete experiences they have had with companies.
Trustpilot also offers site ratings. Here, consumers can describe and rate their experiences at a specific location, at a specific branch. These ratings help the company, for instance, to better analyse customer satisfaction at the different locations. Each location has its own TrustScore and its own profile page. If consumers enter a rating for a specific location on Trustpilot, it is displayed on the main profile page of the company but also on the profile page of the corresponding location. These reviews are then also included in the company’s TrustScore.
The third form of reviews are product reviews. Trustpilot also offers companies the opportunity to present their customers’ product reviews on their own website or in their online shop. This helps the customer to get an idea of the product and, in the best case, to decide in its favour.
How companies can use customer reviews for their own benefit
Using reviews for products is definitely worthwhile for companies, because the Trend Radar study “The Rating Economy” from 2019 shows that every fifth consumer buys more because of good product reviews. 19 % of respondents said that they would be willing to pay more if the product is well rated. This not only means greater transparency for customers, but also enormous potential for companies.
Reviews can also be used in multiple marketing activities. They can be used offline on advertising posters, on television or posters in your own stores. But there are also various ways to use your own good reviews online, for example in Google search results, in your own navigation and landing page, in marketing emails or in the app store.
So it is also worth thinking about how your own company can generate authentic and honest customer reviews for its own products. Douglas Marketing Solutions offers many companies and retailers, beauty brands and other brands a concept called Douglas Beauty Tester.
Here, products are sent to real customers from Douglas’ unique available data pool, who test the products and then write their reviews on the respective product detail page. In this way, the customer collects real and authentic product reviews from people who are interested in beauty anyway and, incidentally, may even become new customers.