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The proliferation of consumer dialogue is still on the rise. Retailers who think about leveraging the interactive channel may come to find that it’s more than researching, shopping and self service. The social web is empowering consumers and creating new consumer behaviors of creating, sharing and influencing. As a result, consumers are increasingly turning to each other for product or service information before making a purchasing decision.
According to a global Nielsen survey of 26,486 Internet users in 47 markets, consumer recommendations are the most credible form of advertising among 78% of the study’s respondents.
Trust in “a person like me” far outranks any other institution, business, or spokesperson2. Consumers trust friends above experts when it comes to product recommendations (65% trust friends, 27% trust experts, 8% trust celebrities).
Retailers are beginning to understand how user-generated content (UGC) can be a critical component to their brand experience. The opportunity to provide a destination for the exchange of useful information which aids other consumers in their purchase decision is most readily demonstrated through ratings and reviews, but retailers are also branching out into other forms of USG such as testimonials, blogs, photos and video updates.
From our research, we understand that many retailers have been or will be embracing consumer opinions and encouraging open dialogues online through ratings and reviews. Return on investment has been demonstrated and these UGS tactics are less likely to be considered risky. Retailers are enjoying increased conversion, higher average order value, increased site traffic, lower return rates, and new opportunities for merchandising and marketing. Additionally, retailers are leveraging customer reviews and extending them into the offline realm through display in-store through kiosks and product signage or inclusion in print catalogs.
53% of online retailers currently utilize UGC on their site. Of these UGC adopters, 78% of have implemented ratings and reviews, 39% have implemented testimonials, and 39% have implemented discussion boards or forums.
Almost three-quarters of retailers said that UGC is currently important to their overall business. Respondents mostly expect their investment to impact conversation rate, customer satisfaction, and customer loyalty.
81% of retailers who do not currently utilize UGC say they are likely to implement UGC in the future. Ratings/reviews and testimonials were the two highest priorities for companies who have not yet but are planning to implement UGC on their sites. The percentages below represent the percent of retailers who plan to offer each type of UGC in the future.
Retailers identified increased conversion, increased customer satisfaction, and increased customer loyalty as the actual and anticipated business metrics most impacted by online UGC. The percentages presented below represent the percent of retailers indicating the two highest impact measures from a five-point impact scale.
The retailers who have paved the way with respect to user-generated content are demonstrating a level of success and case studies prove this is more than a trend. Retailers that span industries and levels of online proficiency are quickly tackling the most proven UGC tactic – ratings and reviews. We cannot promise that negative reviews will never happen; however, we can share stories about retailers who have taken those negative reviews and helped them to fuel product and service improvements. Retailers who are in the process of determining their content strategies can look to the early adopters and learn from their experiences. Ultimately, the community itself is the most effective tool for shaping and policing user-generated content. When empowered with reporting mechanisms, users freely report objectionable content to the proper authorities.
Web 2.0 has unleashed a new set of consumer motivations and behaviors. Their desire to share their thoughts and opinions will continue to evolve outside their social networks to all of their digital experiences. This creates new demand and retailers have to make a conscious and long term decision to support these web empowered consumers. An honest relationship with consumers will help garner the trust and transparency they require and will convert brand loyalists to brand stewards.
Retailers who create and support opportunities that allow their consumers to add their voice to the marketing mix will find themselves with a plethora of new content which can be used in a variety of ways. Retailers who have already embraced this new consumer behavior are finding success in weaving this user-generated content throughout the brand experience – both online and offline.
When executed properly, this type of integrated strategy can drive sales, guide consumer expectations and decisions, and generate more powerful marketing content. The incorporation of user-generated content creates benefits for consumers – they can rely on their peers and affinity groups for consultation and validation. The primary benefit for retailers is their ability to tap into a new source of content creation from their most valuable asset – their consumers.
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