How User Generated Reviews Affect Conversion Rates

How User Generated Reviews Affect Conversion Rates

Almost all business owners hate Yelp, but they understand its power.

User generated reviews in general are tremendously influential in persuading people to buy.

One study found that 88% of consumers trust online reviews as much as personal recommendations and 72% of consumers say positive reviews make them trust businesses more. Millennials, in particular, trust user-generated content 50% more than other media.

Problem is, customers are more likely to share bad experiences than good ones. Business owners are well acquainted with what I call the “vocal minority,” those loud and influential voices that represent the extremes of your brand experience (a study found over 75% of customers almost never write reviews).

It’s important, then, to get the right kind of reviews and really understand how they can affect your sales and reputation.

How Do People Consume Product Reviews?

Reviews are a form of social proof.

Both the quantity and quality matter. When you’re looking at buying a book on Amazon, you want to know how many people bought the book and also how many thought the book was excellent (as well as why those who rated it poorly did so). This information removes a little bit of the uncertainty of online shopping.

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Reviews, as a Harvard Business School article put it, “fill in the gaps by providing a tremendous amount of information on which to base decisions.”

There are primarily two ways customer reviews are executed online:

  • Internal word of mouth (WOM): Reviews located on the retailer’s website.
  • External WOM: Reviews located on a third party website (think Yelp reviews).

Amazon is an example of the first category. The reviews are right there on the same page you can purchase the product. Yelp is an example of the second. If I’m looking for tacos in Austin, I can be pretty sure Tacodeli is going to serve me a good one:

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Both types of user generated reviews are important. While on-page reviews have the benefit of not having to click to another tab to purchase, one study from Nielsen found that 82% of Yelp users visit the site when preparing to spend money on a product or service.

The quality, of course, matters too. A Harvard Business School study found that each ratings star added on a Yelp review translated to anywhere from a 5 percent to 9 percent effect on revenues – quite a substantial amount (note: this study centered only on restaurants).

While it’s easy to lambast sites like Yelp for their ability to (seemingly) only attract the most extreme voices, you have to admit it’s nice to see a large amount of (quality) reviews when picking a place to stay on Airbnb. Without a good amount of authentic reviews, there’s an imbalance of information and the consumer’s experience is a bit more opaque.

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There’s a certain credibility to a large number of product reviews from your peers. It takes away some of the doubt and hesitation you’d normally experience in purchasing a product or service – especially one that varies in value like apartments or food.

Both On-Site and Off-Site Reviews Matter

Because of the prevalence of user review websites, you may think it’s unnecessary to implement reviews on your own site. However, there is a lot of research to support the power of on-site reviews, too:

  • Reevoo found that 50 or more reviews per product can mean a 4.6% increase in conversion rates.
  • According to a 2011 study from iPerceptions, 63% of customers are more likely to make a purchase from a site which has user reviews.
  • Bazaarvoice found site visitors who interact with both reviews and customer questions and answers are 105% more likely to purchase while visiting, and spend 11% more than visitors who don’t interact with user generated content.
  • eMarketer found consumer reviews are significantly more trusted (nearly 12 times more) than descriptions that come from manufacturers.
  • According to Reevoo, reviews produce an average 18% uplift in sales.

But of course, off-site (third-party) reviews matter, too. At ConversionXL Institute we recently published an Academic Insight that summed up third-party review sites and their effects on sales as such:

  • Third-party websites influence customer reviews & word-of-mouth, which in turn influences sales on retail websites.
  • Third-party user reviews strengthen the impact of sales on retailer-hosted reviews.

On-site and off-site user generated reviews both matter, and they both influence each other when it comes to conversions.

Third party reviews are, by and large, a good thing for consumers as well as for your business. At least in theory, it promotes meritocracy. If your service is good, you get good reviews. If it’s bad, you get bad reviews. Customers are granted greater transparency, and good businesses get more trust (and therefore more business).

On-site reviews are awesome, too – both for the company and the shopper. Who doesn’t love seeing that their Uber driver is rated a 4.9/5? Similarly, I’m sure Uber drivers that pick me up are happy to note I’ve got a shining 4.93 passenger rating:

uber-rating

Reviews bring about a sort of crowdsourced meritocracy, especially when the reviews reach higher quantities. The ebbs and flows even out, and you get a pretty good average to base your opinion off of.

Oh, and one more thing, fellow growth marketers: user generated reviews help your SEO.

What Makes a Good User Generated Review?

A good review will bring clarity to your offer, authenticity to your brand, and trust to your product. What’s that look like in practice, though?

We published another Academic Insight that answered that. Here’s what a good review profile usually looks like:

  • A balance of positive and negative comments
  • Actual descriptions of product usage
  • Comparing a product to competing brands
  • Shoppers prefer positive reviews over negative reviews (of course).
  • Conflicting reviews deter shoppers from their ultimate goal of making a purchase decision. In other words, if a consumer reads conflicting reviews about a product they’re considering buying (some love it, some hate it), it’s likely that they’ll just move on to a different product instead of trying to uncover the truth in the conflicting reviews.

However, that last bullet point doesn’t lend credence to you deleting negative reviews. Actually, they can help breed authenticity and trust (more on that in a bit).

Quantity Counts, Too

In fact, Reevo found that the quantity of reviews alone correlates strongly with conversion rates:

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So, how do you maximize the effectiveness of your reviews? It’s more of an art than a science usually. Of course, it has to do with the quality and quantity of reviews. But it largely has to do with how you display the reviews, as well.

How To Display Reviews

The most common way to display reviews is chronologically. This has some benefits (mainly SEO), but also suffers drawback (it’s up to chance which customer review a user sees first). Most eCommerce sites still order reviews by ‘most recent’:

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This screenshot is from Guitar Center. While they list by date, they also provide a ‘review snapshot’ with the most helpful (ranked by user ratings) positive and negative review:

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Pratik Dholakiya wrote on the Unbounce blog that we should give more thought to how we display reviews, instead of just arbitrarily placing them in the order of ‘most recent.’ Here’s how he put it:

Pratik Dholakiya:

“Don’t sort by most positive rating. First off, remember that the star rating itself doesn’t actually influence sales; only the content of the review matters. Second, remember that a wider range of star values actually increases conversions, despite the fact that this means more negative reviews are visible.

Instead, you should consider testing these and other alternatives:

Join the Conversation Add Your Comment

  1. The chart on the “number of reviews” makes perfect sense considering it hits on both the heard mentality and also strongly shows that the item or service is tried and true.

    I personally would like to see a product or service that is highly reviewed but mixed bag of reviews with the company responding to each and every negative one than no or very few reviews and feel most others do as well…. push for reviews and don’t be afraid of the negative ones that come from that.

    1. Alex Birkett

      Yep, totally agree. When I see a book on Amazon with like 7 reviews (all five star) I assume its the author’s friends reviewing. When it’s 500+ reviews, not only is social proof embedded (lots of people have bought the product), but also it’s harder to fake that many reviews.

    1. Alex Birkett

      Thanks! Glad you liked the article.

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