Adding to the mounting evidence that online reviews are now critical for both consumers and businesses, comScore and the Kelsey Group released online survey data (n=2,090) last week showing that 24% of consumer-respondents used online reviews in the context of looking for a local service business (during the preceding three-months). Of that group (n=508):
- More than 3/4 of review users believe reviews were very influential in their purchase decision
- Consumers generally valued other consumers’ reviews more than professional reviews
- Purchasers reported a willingness to pay at least 20% more for a service rated “Exceptional – 5 star” vs. a “4 star” rating
- 30% to 40% of review driven purchasers said they would NOT purchase from a service business with a 1 star rating
- 62% of consumers said they write reviews to help other consumers
- 24% said that they wrote reviews to “get back” at a provider after a poor experience
- 30% wrote reviews because they were asked to do so
- 19% wrote reviews because of some financial incentive (money, coffee cards, other)
PQ Media issued a new report that estimated “word-of-mouth marketing” has become a $981 billion business. In addition, the report says that among consumers surveyed, 80% rely on friends and family for recommendations. This phenomenon is now moving quickly online.
In contrast to the 24% figure in the comScore survey (those consulting online reviews), earlier online survey data from WebVisible and Nielsen found that just over 75% of respondents (n=1,971) consulted product and service reviews. (The comScore data speaks only about service-business reviews.)
The comScore research found that just over 11% of users wrote online reviews. In response to the question “Have you ever posted a review of a local business on the Internet?,” the WebVisible-Nielsen survey found that about twice as many (22.7%) had done so. The term “ever” may be a key distinction in comparing the results of the two surveys.
In terms of the motivations of the review writers in the WebVisible survey, the following were respondents’ motivations for writing online reviews:
- Had a negative experience: 45%
- Had a positive experience: 39.5%
- Mixed experience: 15.5%
According to the comScore survey the most referenced reviews categories were:
- Automotive services
- Home services
- Legal services
This is generally similar to top usage categories for online yellow pages, according to 2005 survey data from Knowledge Networks/SRI:
- Automobile Dealers
- Automobile Repairing-Service
- Automobile Parts-Supplies
In 2006 at SES Local, Hitwise argued that review sites were growing faster than traffic to conventional IYPs. Since that time, most IYP sites have beefed up their online reviews organically or through syndication from third parties. And the comScore data confirms that local review sites and communities, which now include the major IYPs, are growing four-times faster than the overall Internet:
Source: comScore/TKG (2007)
This is clearly because consumers value the information and are seeking it out.
In the recent Opus-AllBusiness small business online survey, roughly 58% of SMB respondents said that at least half their business was being generated from word-of-mouth. And approximately 30% said that “more than 75%” of their business comes to them through referrals. Thus, it makes sense that this is transferring online.
Most SMBs seem to be highly receptive to the growing phenomenon of online reviews. According to the Opus data, among SMBs aware of review sites (64% of the total surveyed), a striking 59% said online reviews “are a good thing and are helping us improve our business.”
Taken together, these data all show how significant online reviews are becoming – as an extension of traditional “word of mouth” – for both consumers and local businesses. As the stakes get higher, which all these data suggest they will, the risk is that there’s more gaming and manipulation of reviews. Note that 30% (of the 24%) in the comScore data wrote reviews because they were asked to do so. (And see my recap of the SMX panel on user review content.)