How Online Reviews Influence Sales

Evidence of the Power of Online Reviews to Shape Customer Behavior

In this digital age, online reviews shape consumer behaviour and have a strong influence on purchase decisions. Spiegel's research has led us to uncover the impact of customer online reviews on sales funnels.

Our results show that while online reviews significantly affect purchase decisions, several factors determine the extent of their impact on sales. These factors include star ratings, the content of reviews, the credibility of reviewers, the number of reviews, and the cost of the product.

Spiegel's discoveries shed light on consumer behavior, allowing retailers and suppliers to optimize their sales strategies by encouraging, engaging, and featuring online reviews.

Questions We Explore:

• Can online reviews improve or worsen sales? How?
• Are high ratings an accurate measure of sales success?
• Does prior experience with a product alter the impact of online reviews?
• Is there an ideal number of reviews? If so, what is it?
• Should brands encourage consumers to submit product reviews?
• Do verified buyer reviews significantly influence sales more than anonymous reviews?

The Influence of Online Reviews on Consumer Purchase Decisions

As products begin to feature online reviews, their conversion rates increase noticeably. When a product gets up to 5 reviews, its chances of conversion jump 270% higher than when it had none. However, more reviews do not mean that these chances continue to increase—Spiegel's research shows that the marginal benefit of online reviews reduces quickly after the first five.

Online reviews are more advantageous to high-priced items than moderate to low-cost ones. Our study found that while the introduction of product reviews raised conversion rates for higher-priced items by 380%, for lower-priced items, it only increased conversion rates by 190%. 

Do consumers view five-star reviews as "too good to be true"? Our research suggests they do. In our analysis of product categories, we discovered that the purchase probability tends to be highest for ratings ranging from 4.0 to 4.7.

Verified buyer reviews tend to be significantly more favorable than those from anonymous reviewers. We discovered that verified buyers are more inclined to give four or five-star ratings. Meanwhile, anonymous buyers are likely to provide one- and two-star reviews. 

Data-Driven Approaches to Harness the Impact of Online Reviews

According to Spiegel's in-depth research on the influence of online reviews on purchase decisions, we recommend that retailers apply these six principles when designing an online review strategy:

• Display reviews and ratings on product websites: Retailers who do not include customer ratings and reviews on their landing pages may lose customers to competitors who do.

• Acknowledge negative reviews: Respond to negative reviews graciously; they are a yardstick to establish credibility and transparency.

• Generate reviews for products with very few: Use incentives and other strategies to ensure consumers review the products they purchase.

• Prioritize higher-priced products while seeking reviews: By providing additional reviews, retailers can reduce customers' concerns about big purchases. 

• Overcome selection bias to improve the value of reviews: Having many reviewers does not automatically translate to good representation, especially when many are anonymous.

• Utilize reviews from verified buyers:  Highlighting reviews from customers with "verified buyer" badges boosts product authenticity and raises the chances of purchase by 15%.

Find more details on these strategies in our report, "How Online Reviews Influence Sales: Evidence of the Power of Online Reviews to Shape Customer Behavior."