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A Spiegel Research Center study reveals that having perfect 5-star reviews is causing you to lose business, how reviews influence buying behavior, but at what point does it influence and how much?
As products or services begin displaying reviews, conversion rates tend to escalate rapidly. The purchase likelihood for a product or service with five reviews is 270% greater than the purchase likelihood of a product or service with no reviews. On Product purchases having more reviews isn’t necessarily better, after a point. The marginal benefit of additional reviews begins diminishing rapidly after the first five reviews.
Reviews tend to have a greater impact on purchases for higher-priced items than for cheaper ones. The research found that when reviews they’re displayed for lower-priced products, the conversion rate increased 190%. However, for higher-priced products, the conversion rate increased 380%.
Are five stars “too good to be true”? According to the research, it is. Across many product categories, they found that purchase likelihood typically peaks at ratings in the 4.0 – 4.7 range, and then began to decrease as ratings approached 5.0.
Reviews from “verified buyers” are significantly more encouraging than reviews written by an anonymous source. They found that verified buyers are more likely to give 4 or 5 star ratings than anonymous ones. Conversely, anonymous buyers are significantly more likely to give 1 and 2-star reviews.
Based on Spiegel’s extensive research into how online reviews influences purchasing decisions, they recommend that you follow these six principles when creating an online review strategy:
1. Display reviews and ratings on your product website: Businesses that choose not to show ratings and reviews risk losing customers to a website that does.
2. Embrace negative reviews, nobody is perfect: While it may seem counterintuitive, negative reviews can have a positive impact because they establish credibility and authenticity.
3. Prioritize generating reviews for with a low volume of reviews: Businesses should focus their efforts on making sure all products have at least a handful of reviews.
4. Additionally, prioritize generating reviews for higher-priced products: Retailers can help consumers overcome the risk of buying expensive or unfamiliar items by sharing additional reviews for these products.
5. Overcome the selection bias to improve the value of reviews: A larger pool of reviewer is not always more representative, particularly if it includes a large number of anonymous reviews.
6. Identify reviews from “verified buyers:” Identifying purchasers with “verified buyer badges” enhances the credibility of a review and improves the odds of purchase by 15%.