How online consumer reviews impact offline sales

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By: Wise Marketer Staff |

Posted on December 5, 2007

Consumers were willing to pay at least 20% more for services receiving an 'excellent' or '5-star' rating from other consumers on the internet than they would pay for the same services receiving a 'good' or '4-star' rating, according to a study by comScore and The Kelsey Group.

The study examined the offline sales impact of online reviews for restaurants, hotels, travel, legal, medical, automotive and home services. Nearly one out of every four internet users (24%) reported making use of online reviews before paying for a service that is delivered offline.

Positive impact found
Of those who consulted an online review, 41% subsequently visited a restaurant, and 40% of hotel review users subsequently stayed at a hotel as a result. For travel, the positive impact stood at 27%, while automotive registered 24%, home services registered 19%, medical services registered 14%, and legal services registered 8%.

More than three-quarters of review users in nearly every category reported that these reviews had a significant influence on their purchases, with hotels ranking the highest (87%). Almost as many (84%) were influenced by travel reviews, while the figure stood at 79% for restaurants, 79% for legal services, 78% for automotive services, 76% for medical services, and 73% for home services.

Consumer reviews trusted most
Perhaps surprisingly, almost all (97%) of those who said they made a purchase based on an online review also said they found the review to have been accurate. Review users also generally noted that reviews created by fellow consumers had a greater influence on them than those generated by businesses.

The survey also asked participants how much they would be willing to pay for a particular service based on the quality of the service. The results showed that consumers were willing to pay between 20% and 99% more for an excellent (5 star) rating than for a good (4 star rating), depending on the product category.

Price uplift quantified
For restaurant meals averaging US$20, consumers said they would pay up to US$37.95 with a 5-star rating, or US$25.44 for a 4-star rating. The 5-star price represents a 49% uplift over 4-star. For a restaurant meal averaging US$50, the uplift was only 45% (at US$59.93).

For a hotel stay averaging US$100, a 38% uplift from 4-star to 5-star was noted, with consumers being willing to pay $137.36 for a 5-star experience. In the travel market (average value of US$350) the uplift was relatively small at 22% (US$366.72 for 5-star compared to US$299.81 for 4-star).

"These survey shows the importance of local service review sites in consumers' purchase process," said Steve Marshall, research director for The Kelsey Group. "With such a large percentage of review users subsequently purchasing, it's vital that local service providers have a positive presence on such sites."

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