Award-winning Research Explains How Marketers Should Use Online Reviews
As consumers increasingly turn online to make purchases, online reviews from other shoppers are more important than ever when deciding what to buy. And for retailers, that makes Maryland Smith’s research that explains how consumers use online reviews – recently recognized with a top award from the American Marketing Association – more relevant than ever.
Michael Trusov, a Smith marketing professor, authored the research, published in the Journal of Marketing, along with Jared Watson, a Maryland Smith PhD ’18 now at New York University, and Anastasiya Pocheptsova Ghosh of the University of Arizona, formerly of Smith. They find that as consumers rely on the average product ratings and the number of reviews when they shop online, the contexts in which the product is presented makes these two variables more or less important in decision making. They also propose how retailers can make the most of this information in their marketing strategies.
Trusov and his co-authors find that consumers often choose lower-rated products with more reviews over higher-rated products with fewer reviews. Or they just don’t buy anything.
Consumers take into account average product ratings, important to 54% of consumers, according to the research, and the total number of reviews, important to 46% of consumers.
“Understanding how consumers process and weigh these two variables is critical to winning the retail ecommerce war,” write the researchers.
But just because a product has high ratings online, doesn’t always make it the best choice, say the researchers. Older products could have high reviews, but outdated features, or lower-rate products could have lots of reviews because they offered steep discounts. And brand-new products might have no or very few ratings and reviews, but be better than other items on the market.
Trusov and his co-authors studied what consumers choose when confronted with multiple similar products, but with various average ratings and reviews online. Online shoppers are used to getting product suggestions when browsing for products online, such as the results you get on Google Shopping’s pages, Amazon’s “customers also shopped for” suggestions, or all of the “recommended for you” lists on retailers’ websites. Retailers take note: With these automated suggestions, consumers “aggregate online review information for multiple choice options simultaneously rather than considering different products’ mertis one by one,” write the researchers.
They focused on a product’s overall review – the aggregate of all online reviews – because it’s more accessible than individual reviews so consumers are more likely to look at that when deciding what to buy. They thought consumers would be more reliant on the number of reviews when there were fewer choices in a product category. “While a low number of online reviews should signal a lack of definitive evidence to consumers, they are actually more influential in choice-making,” say the researchers.
The researchers conducted seven studies, including lab and eye-tracking experiments, simulations and secondary data, to analyze more than 2.5 million products across 24 product categories and their choice sets, using data from Amazon, the leading online retailer.
What they found: Average product ratings are more telling about product quality than the number of reviews. Consumers will choose a lower-rated product with more reviews over a higher-rated product with fewer reviews when there aren’t that many total reviews across all the products they are choosing among. They will choose the higher-rated product when there are lots of reviews for all the products they are choosing from. But consumers are more likely to throw up their hands and put off making a decision to buy anything when all the items they are choosing among don’t have very many reviews versus a lot of reviews. However, they are less likely to put off making a choice when the number of reviews is zero as opposed to just low.
Trusov says online retailers and product managers can use these research findings to position their products more effectively. He says the practice many retailers use of offering discounts or freebies to consumers in exchange for product reviews is especially critical for new products that have lower visibility in the marketplace. That strategy helps drive up the overall number of reviews, but might not result in better average ratings for a product. “Nonetheless, retailers who use this strategy would be trying to promote targeted product sales instead of motivating consumers to make suboptimal decisions by choosing older products with more reviews or deferring the purchase decision altogether.”
Read more: “Swayed by the Numbers: The Consequences of Displaying Product Review Attributes,” was featured in the Journal of Marketing. In February 2020, the research was recognized by the American Marketing Association’s Consumer Behavior Special Interest Group (CBSIG) with the 2020 Consumer Research in Practice. The award recognizes a scholarly research article that contributes significantly to marketing practice.