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Will Customer Reviews Become a Bigger Influencer for Retail Purchases?

July 12, 2013

Despite some hype, online customer reviews appear to be playing only a small role in consumer purchasing decisions when it comes to retailers. But in certain purchases such as hotels and restaurants, reviews are often the dominant influencer.

According to a recent study from SAS and The Pennsylvania State University, customer reviews had a far stronger influence on consumers' perceptions of quality than price when it comes to hotels. That's especially true with the arrival of Travelocity.com, Expedia.com and others leading to price transparency around such purchases.

When reviews are negative and ratings are low, hotel room buyers perceive no difference in value between low and high price, the study found. Also, when review sentiment conflicts with ratings, consumers count more on the actual reviews to determine the perceived quality and value of a hotel purchase.

SAS concluded that while customers prefer to pay less, the sentiment and content of reviews need to be monitored because they are increasingly "interacting with price to influence the purchase."

A recent survey from BrightLocal, a provider of local search engine optimization, similarly found that with more familiarity and comfort, more consumers are reading reviews as part of their pre-purchase research for all types of products and services. The survey at the start of the year revealed that 85 percent of respondents read online reviews for local businesses, up from 76 percent in a 2012 survey.

The survey also found that people are forming opinions faster with fewer reviews, and are also trusting customer reviews to an even greater degree.

Still, Restaurants/Cafés were the only area where purchases were majorly influenced by customer reviews, apparently driven by Yelp. Sixty-one percent of respondents read online reviews to decide where to dine, up from 46 percent from the 2012 survey.

The next two businesses were researching Doctors/Dentists, where customer reviews were used by 32 percent of respondents (up from 21 percent in 2012); and Hotels, 27 percent (up from 22 percent).

Traditional retail showed up in fourth place (vaguely named "General Shops") with 18 percent of respondents admitting to having researched customer reviews for those businesses, up from 9 percent in 2012. Other retail categories included Clothes Shops at 15 percent, the same as the prior year. Specialist Shops (e.g. Bicycle Shops) rated 11 percent, up from 8 percent the prior year.

Other businesses and services seeing modest use of customer reviews (around 10 percent) included hair/beauty salons, pubs/bars, tradesmen (e.g. plumbers), garages/car dealers, builders/roofers and gyms/sports clubs.

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