Editor’s note: Thomas Fandrich is co-founder of insights platform quantilope and Koen Pauwels is distinguished professor of marketing at Northeastern University.
Product popularity can be measured in a number of ways including online search trends, Net Promoter Scores and product reviews. Each presents a unique view of not only your product’s performance but insights into who your consumers are, where they are located and their sentiment toward your brand. However, most marketers and insight managers can attest that the most important measurement, especially as it relates to the C-suite, is sales performance.
Of the multiple strategies brands and other organizations can use to track their popularity, reviews are particularly useful for enhancing a product’s sales performance on different platforms, retailers and across varying regions.
On a global scale, customer reviews are the leading force influencing whether or not a consumer will buy or abandon their online shopping cart. Seventy percent of global consumers trust online reviews more than advertising and product messaging, especially when it comes to products they haven’t purchased before. And the numbers don’t lie. The No. 1 best-selling product in Amazon’s Home & Kitchen department has over 60,000 reviews with an average 4.4-star rating (at time of writing). Comparatively, Sephora’s best-selling product (with a fraction of Amazon’s customer base) has over 14,000 reviews and an average four-star rating (at time of writing).
These are unique examples as the majority of products don’t get much beyond 50 reviews and have varying scores. However, our research measuring the impact of user ratings and reviews on mobile app purchases provides insight into how consumers across regions react differently to reviews and how managers can adjust their approach to managing their reviews to promote sales accordingly.*
The report tracks consumers across 60 countries and finds that rating valence (the average number of stars, etc.) is most important in countries with cultures that value the expressed opinions of others – Japan, Italy and the U.S. Conversely, rating valence has less of an effect on consumers in Brazil and Vietnam, where mass appeal is more important. A large quantity of reviews allows observational learning (What have other people bought and reviewed?) and has a higher impact in Europe than in North America. We tested and confirmed the hypothesis that countries with larger income inequality, such as those in Europe, take cues from the number of reviews as a signal for a product’s popularity. When it comes to the importance of star rating over quantity of reviews, the U.S. has the strongest focus on star rating, while Luxembourg has the strongest focus on the number of reviews.
What can managers learn?
Countries differ in whether consumers care more about star rating (quality) than the number of reviews (quantity). North American consumers care more about being reassured of the quality of what they are purchasing than its mass appeal. Therefore, managers should strive for higher star ratings over the quantity of reviews when promoting products in these markets.
Further, managers can influence the impact of reviews on a product’s sales rank by offering incentives for customers to leave a review. This is particularly effective in markets where the quantity of reviews impacts consumer purchasing behavior the most. Companies can accommodate additional incentive costs by increasing a product’s price with each additional review. We analyzed the consumers’ tradeoff between product price and the number of reviews and found that in Luxembourg, doubling the number of reviews allows a manager to maintain the same sales rank with double the price. In contrast, in the U.S., doubling the number of reviews is only worth a 25% price increase to maintain the same sales rank.*
It’s helpful to understand that product reviews impact the accuracy of sales forecasting across all analyzed countries. Consumer-to-consumer communication is not only a tool for customers to move down the purchase funnel but also provides immediate, cost-free, insights into the reaction to and sentiment toward your products, services and overall brand. This is especially useful for client-side researchers thinking about incorporating reviews for the first time.
For client-side researchers, our research shows that incorporating product reviews substantially increases the explanatory value of sales forecasting models across all analyzed countries. Moreover, it does not suffice to include the average star rating; the number of reviews is also valuable information. This is consistent with research showing that the volume, not just the sentiment, of word-of-mouth drives brand sales.
Gathering and managing reviews
The impact of reviews on product sales varies based on cultural and economic norms across countries. For product managers and researchers alike, it’s imperative to begin strategic conversations around your approach to gathering and managing reviews. Unless (and even if) your product has already cracked the best seller list on Amazon, figuring out how to segment a review strategy by region and adjusting to local consumer shopping behaviors will help to accurately forecast and improve sales.
*To learn more about the study, read “App Popularity: Where in the World Are Consumers Most Sensitive to Price and User Ratings?”