Digital Report: Social Commerce - Sound of the crowd

In today's recommendation environment, consumers are becoming brand ambassadors, but should brands trust the wisdom of the masses, asks Trevor Clawson.

Where once most consumers would simply breeze in and book their holiday on the advice of their local travel agent, they can now browse millions of reviews online before making a decision.

Booking accommodation in an unfamiliar city is always something of a leap of faith. However long the visitor plans to stay, the quality and location of the hotel inevitably play a major part in determining whether or not they have a good time. The problem is, of course, that until they check in, they will not know whether they made the right choice.

A decade ago, consumers could go some way toward minimising the risks by shortlisting the recommendations in a Berlitz or Lonely Planet guide. Today, they are more likely to log onto a travel website and read reviews posted by fellow travellers.

Martin Verdon-Roe, vice-president of display sales at travel site TripAdvisor, says: 'Once you had to rely on the opinions of one or two people; now you can tap into the wisdom of the crowd.'

The 'wisdom of the crowd' is in evidence across the web. Whether one plans to book a hotel, eat at a restaurant or take in a movie, sites such as TripAdvisor and Qype are on hand to offer independent reviews and recommendations.

Retailers are also busy corralling the vox populi. From iTunes to Marks & Spencer and Argos, the world's shopkeepers have embraced the concept of user-generated content on their websites.

David Tarbuck, multichannel programmes and operations manager at Argos, regards it as playing a crucial role in the online marketing mix. 'Ratings and reviews have performed a fundamental role in our customer journey since they were introduced in May 2008,' he says.

Sales impact

Richard Anson, chief executive of recommendations site Revoo, argues that reviews help shape consumer behaviour and have a significant impact on sales.

Revoo specialises in facilitating reviews for major online retailers, and its research suggests that sites featuring user-generated content can benefit from an 18% rise in sales. 'Of this rise, 11% comes from conversions as a direct result of the customer reading reviews,' he claims. 'A further 5% comes from an increase in order value and 2% from a rise in customer loyalty, leading to increased repeat business.'

Tarbuck agrees that the results are tangible. 'People who interact with customer-generated content purchase far more frequently than those who overlook community feedback,' he says.

Arguably, none of this should come as any great surprise. Word of mouth has always been influential in keeping the wheels of commerce turning, but in the online world, the power of recommendation and endorsement extends far beyond tightly knit groups of family, friends and colleagues.

As directed through reviews, blogs and social networks, personal recommendation is a mass-marketing tool and, as such, should feature high on brands' agendas.

Jonathan Wolf, a strategist at social-commerce platform Bazaarvoice, argues that adding a social overlay of reviews or recommendations, in which one customer can ask a question of another, has a benefit that stretches beyond direct sales.

'Reviews create content that drives up search-engine traffic,' he claims. 'In addition, if you allow customers who are about to make purchase to ask questions of those who have already bought the product, you can reduce call-centre costs.'

However, Wolf stresses that social commerce will be effective only if it provides benefits to the consumer. 'Consumers derive benefits from opinion, knowledge and experience,' he says.

According to Wolf, a consumer's 'opinion' boils down to whether or not they like a certain product. Knowledge goes a little deeper.

If, for example, a reviewer has expertise in a particular product field, their knowledge can prove invaluable to those who would not otherwise have the facts at their disposal. Wolf contends that sharing experience is subtly different. 'That's really about brand evangelism,' he says. 'Someone who has a lot of experience of a particular product or brand may like it and they want to share that experience with others.'

Converting the voice of the crowd into a marketing opportunity is by no means straightforward, however. For one thing, there is the thorny issue of credibility. To be effective, reviews must be genuine and provide a fair representation of consumer opinion - and that isn't always easy to guarantee.

Brand evangelists can be relied upon to write five-star accounts of their favourite products, while unhappy customers are keen to share their displeasure. The danger is that reviews are skewed to represent these extremes.

Independent review sites are dogged by concerns about unrepresentative content, as exemplified by the fracas that broke out in January between TripAdvisor and Duncan Bannatyne.

Following a review that likened one of his hotels to Fawlty Towers, Bannatyne condemned the site's practice of publishing negative reviews without first checking facts, a practice that, he argued, potentially endangers jobs and reputations.

Reviews cynicism

Liana Dinghile, client director at brand consultancy Dragon Rouge, agrees that unsubstantiated negative reviews are potentially very damaging. 'There is a growing cynicism that reviews can be created by anyone and aren't always legitimate - for example, created by competitors of brands to sabotage image and sales,' she says.

'There is also a cynicism that reviews on a company's own website are carefully edited and rose-tinted ones.'

It is hardly surprising, then, that the various agencies that facilitate social commerce stress the importance of maintaining credibility within a commercial context. Wolf says reviews should be authenticated before they are posted on a site. 'You can be proactive about this,' he adds. 'For instance, you can email customers who have made a purchase and ask for reviews.'

Such a tactic provides a twofold advantage. First, by emailing a customer to suggest contributing a review or rating once a transaction has taken place, you have a reasonably solid (if not foolproof) guarantee that any user-generated content that comes back will have been written by a genuine customer, as opposed to a rival company.

The second benefit is that proactive contact by a company makes it more likely that the customer reviews received for any single product will be balanced across a span of customer opinion and not simply clustered at the 'very bad' or 'very good' ends of the spectrum. In other words, the email breaks through the inertia and encourages all customers to take part.

According to Adam Dougall, head of key accounts at email marketing company eCircle, no further incentive is really necessary. 'We find that people like to see their opinions online,' he says.

Dealing with the negative

In the case of third-party review sites such as TripAdvisor, that kind of email authentication is not possible, but Verdon-Roe argues that it is the enthusiasm of travellers and their willingness to share experience that keeps the site grounded in reality.

Given that the avowed purpose of TripAdvisor is to give consumers the information they need to have the 'best possible' travel experience, he says most reviews on the site tend to be positive rather than negative because contributors like to pass on information about their favourite establishments.

Nevertheless, the fact that bad reviews can damage brands presents something of a dilemma for third-party review sites. Moderate the reviews and they run the risk of their credibility being undermined.

Allow all reviews to appear unchallenged and they open themselves up to accusations that they are allowing a few disgruntled customers or even rivals to post damaging and unrepresentative comments about perfectly decent businesses.

For its part, TripAdvisor provides hoteliers and restaurateurs with a feedback mechanism that enables them to respond to specific points made in reviews.

'What it allows them to do is address a problem that has been raised in a review and then let the community know that action has been taken,' says Verdon-Roe. 'Our research indicates that 79% of our users are reassured when a hotelier or restaurateur responds in this way.'

In addition, the tools provided by TripAdvisor allow businesses to benchmark their own performances - good and bad reviews, and complaints - against their competitors, thus arming them with business intelligence that can be used to improve services.

For retailers hosting comments, negative reviews are arguably less damaging, if only because a bad review of a single product may simply drive the consumer to a similar - and, perhaps, better-reviewed - item on the same site.

'Many people are concerned about bad reviews,' says Anson. 'But you have to remember that the point of having reviews on the site is not to drive sales of a single product, but to give people the information they need to find the product that is right for them.'

Wolf agrees and warns against the temptation to moderate reviews to expunge any negative comment, as this would damage the site's reputation. 'However, what you can do is ensure that the reviews focus on the product,' he advises. 'For instance, you should remove any negative comment that isn't related to the product.'

The advantage of doing this is that customers will not use the review forum to compare, for example, the host site's offering with that of a rival.

Wolf shares Verdon-Roe's opinion that negative reviews can be a goldmine of actionable intelligence. 'Say you get a review from a customer who bought a product thinking it was grey, yet when it arrived, it had a blue sheen.

That's not a problem with the product. It's a problem with the photography or description, which, in turn, is a problem of customer expectation. The review allows you to identify and address that problem.'

This is a philosophy that Argos has been putting into action. As Tarbuck explains, feedback from customers is used not only by marketers, but also by customer-service teams and buyers.

'Through constant analysis into ratings, highlighted keywords and product-description feedback filtered by product and category, our content team is able to maintain accurate product information and respond to both positive and negative customer feedback,' he says.

THE FACEBOOK FACTOR - THE RISE OF SOCIAL COMMERCE

As social commerce becomes more important, there is a growing realisation that customers do not attach equal weight to all reviews. A recommendation from a friend - on Facebook, say - is potentially worth a lot more than a review from faceless strangers on a website.

As Suzie Radcliffe, a strategist at brand consultancy Wolff Olins, puts it: 'If you don't know who people are, you don't know whether they are aligned to your needs.'

Radcliffe argues, therefore, that the future for really effective recommendation marketing lies in systems that allow the reviews of friends to be mapped out against more general contributors and acknowledged experts.

This is a work in progress for marketers, but in addition to the increasing use of stores within Facebook, the site is also being integrated in recommendation strategies. ASOS.com and Levi's are among the brands to use Facebook plugins to allow friend groups within the social network to shop socially by 'liking' certain products.

Meanwhile, TripAdvisor has taken advantage of Facebook's 'Cities that I've been to' app to enable its users to home in on reviews and comments from within their friends' groups. This augments an existing filtration system based on contributor profiles.

Nonetheless, the recommendation economy remains a fragmented landscape. In the UK, for example, Chilango, a burgeoning Mexican restaurant chain, tracks feedback across a range of channels, including Facebook, online review sites such as Qype, blogs and e-mail.

According to Shannon McKenzie, marketing manager at Chilango, each of these plays a part in the marketing mix. 'Facebook is a great way of communicating with existing customers,' she says. 'Review sites such as Qype help us find new customers, and for the same reason, we also encourage bloggers.' Meanwhile, email provides direct feedback that can help the company improve its services.

Chilango is a small company, but the fact that it recognises each channel presents different opportunities and challenges illustrates that taking full advantage of the recommendation culture is not simply a case of posting reviews or hosting a Facebook page with a brand logo on it.

There is a big conversation going on online and to take part, marketers require a full understanding of the touchpoints.

SHOPPING - THE NEXT STEP FOR SOCIAL MEDIA

Amazon was the first e-commerce site to truly embrace recommendations. Now, however, a fresh wave of companies is attempting to bring transactions even closer to consumers' peer groups.

Take Blippy. Launched last year, the company has put credit-card transactions at the heart of social interaction. The system allows its users to assign one of their credit cards as a so-called 'social card'.

Once that has been done, whenever a purchase is made on that card, the user's friends on the network can see what they are buying. One of the key aims of the service is to allow users to take advantage of collated purchase data by making price comparisons within their elected friendship groups.

Stickybits, meanwhile, has a different take on social shopping. Based on mobile handsets, the service allows its users to tap into reviews and recommendations simply by scanning product bar codes. As an incentive, bar-code scans also provide access to content created by brands, including special offers. Ben & Jerry's, Doritos and Campbell's Soup were among the first brands to sign up.

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