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Independent verdicts: Customer ratings increase profits

Reviews from other customers are the strongest buying criterion for online shoppers. This was identified by a survey of the digital association Bitkom in December 2016. Nearly two-thirds (65 percent) of the 1,114 online buyers surveyed rely on the experiences of others for deciding. Customer reviews thus play a heftier role than price comparison portals (51 percent). But also the experiences of friends and relatives (50 percent), as well as reviews in the print and online spheres (42 percent), lose out to independent evaluations.

For retailers, a barrier-free evaluation system provides opportunities to gain long-term customer confidence. If retailers sit at one end of the negotiating table and customers at the other, then the reviewers communicate with customers here in the role of allies. The reviewers’ motivation to buy is similar to that of the customer, and their judgment is free and impartial. With the increasingly wide selection of products and online shops in eCommerce, customer evaluations provide important orientation for buyers.

“Customers are increasingly using the Internet as a source of information before clicking the purchase button. Independent reviews can be a good guide through the expansive range available on the web. With transparent reviews on their homepage, online shops can offer their customers important buying aids, while at the same time gaining the trust of potential new customers and setting themselves apart positively from other online retailers”. – Dr. Bernhard Rohleder, CEO Bitkom

The use of customer reviews can only be traced back over a brief history, since its beginning was made by the eBay auction house. The challenge for eBay was to convince customers to transfer money to a vendor before receiving the goods, even though they did not know the vendor. To identify a provider as credible, buyers were able to share their experiences publicly by means of a star rating and comment. This made it difficult for fraudsters to abuse the marketplace for their purposes, whilst helping trustworthy sellers to increase sales and profits. The now omnipresent review system first saw the light of day at this point. Amazon was one of the first to adopt the star-rating system and enabled customers to write detailed reviews.

Because of customer ratings, sales can increase by up to 44 percent

On average, sales of a product increase by 30 percent if it is reviewed positively, as a statistic from the eKomi concern determined at the end of 2015. The service provider relied here upon several studies, e.g., from the market research company Ipsos, the online portal for statistics Statista and a survey by the Federal Statistics Department. These statistics show that the conversion rate is already 10% higher after only the first rating. After 100 ratings, a rise of 37 percent is reported, and by 200 ratings the product achieves an increase of up to 44 percent. The survey also showed that 63 percent of buyers prefer an online store with a transparent rating system. Some 58 percent of respondents said they believe business with open customer ratings are considered trustworthy. Furthermore, when a retailer reacts promptly to negative reviews and writes an individual response, the purchase probability in that shop increases by as much as 186 per cent.

Customer feedback can create a stronger buying incentive than even the best advertising slogan. For this reason, it should be usefully integrated for marketing purposes. With the help of intelligent IT solutions, customer evaluations can be recorded, collected and then subsequently analysed. Aided by the insights gained, it becomes easy for the company to use criticisms, but also praise, as an impetus to optimise its shop. In addition, the retailer is handed the chance to create a representative ‘seal of approval’ from those customer evaluations. This seal can then be integrated into the website or on social channels, thus drawing the attention of new customers. Quotes from customer reviews can also serve as a testimonial for website visitors.

Besides dynamic price management, customer ratings represent the best sales argument

Positive reviews, in addition to the confidence gained by new customers, also reduce the return rate among existing customers. The satisfaction of buyers increases because the online retailer shows attention to them and their needs. Furthermore, review texts for products and shops create new content for search engines. This has a positive effect on search engine optimisation, which in turn increases the conversion rate of the online shop. Customer reviews create a powerful starting point for marketing.

A rating system serves retailers not only in inexpensive advertising, but also aids them as a tool for constantly improving their shops. The customer feels glad that their criticism is referenced and thus feels a closer affinity to the shop. In addition, customer evaluations can easily be integrated into your own marketing in order to gain new customers. A functional and transparent review system, along with active price management, has the inherent prospect of becoming the strongest driving force of an online shop.

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