This post was guest-written by Matt Hawkins, Senior Marketing Analyst at Bazaarvoice.

When it comes to leveraging customer content in innovative and revenue generative ways, no one out-performs PETCO.com.  With the sleek branding of the Answer Den thoroughly engaging their pet-loving online community, PETCO has received over 5,000 answers after being live with Ask & Answer for only a few months.

To fuel community participation, PETCO recently launched the “Answer This!” contest to gather even more answer volume and further increase the sales benefits they were already seeing from The Answer Den.

On top of the existing results from The Answer Den, after their "Answer This!" contest ended, PETCO saw an additional…

• 69% increase in its conversion rate
• 172% more views per visit (on top of already-elevated page views due to The Answer Den)
• 150% more orders per session

…as a result of the additional content.

Ask & Answer has proven to be yet another great addition to the suite of social commerce products PETCO currently has deployed. PETCO adopted Ratings & Reviews in 2006 which has produced lower return rates and higher conversion rates. By adding Ask & Answer, PETCO has further made customer centricity a #1 priority with Bazaarvoice’s social commerce technologies. PETCO has truly demonstrated Metcalfe’s Law of Social Commerce which says: the more (in number) and more varied the uses of your customer-generated content, the greater the return for your business.

Even prior to launching The Answer Den it was no surprise to PETCO that more questions and answers would result in an increase in sales (see: Shoes.com case study). PETCO was already seeing phenomenal results from the Answer Den and the contest only magnified its effect on boosting sales.

Before PETCO ran the contest aimed at driving volume and boosting sales, they saw that those who visited the Answer Den had…

• 100% more orders per session
• 90% more page views per session
• 72% higher conversion rate
• 28% more items/order
• 9% higher average order value
• -6% item abandonment rate
• -6% shopping cart abandonment rate

…compared to shoppers who visited a category page (which is where the Answer Den is implemented).

You can read all the details in our latest Ask & Answer case study. Excellent work, PETCO!

E-consultancy is the UK's leading online publisher of best practice internet marketing reports, research and how-to guides.  We recently did a study together on Social Commerce in the UK, which he references below (ask us for a copy). If there's anyone who knows UK retailing, and has enough context between UK and US best practices, it's Ashley.

He was kind enough to lend his time to a few questions that are useful for us and all of our readers…

How did E-consultancy start?

The name really came about because I owned the domain name so it was the easiest thing to do at the time – back in 1998. Like many people I bought a load of domain names which I thought would make me rich. Then came the dot com crash and I let them lapse. Now I wish I’d held on to them!

The idea was to provide a community, supported by content, that helped those professionally involved with digital marketing and e-commerce. Essentially, to help people find out ‘what works, what doesn’t, and why’. In the early days most of this help came from others in our community rather than from us direct. We were doing what is now called ‘social media’ in the last millennium.  

Matthew O’Riordan, my co-founder, and I launched E-consultancy.com in 1999 as a hobby. In 2002 I wrote the business plan, and secured the funding, to relaunch it as a proper publishing business. We started with selling subscriptions to our guides and research and have since added events and training.

Where is it headed?

In many ways I’m glad we launched the business during the dot com crash. It meant the business had to be built profitably; it meant we had little competition at the time; it means we had time to build a brand and we still have a very loyal core user base who have ‘been with us from the start’ when things were tough for everyone.

Now we have over 70,000 registered users, over 30 employees and should do around $2m in profit this year. This gives us the stability, and resources, to invest and grow.

Apart from continued strong organic growth (particularly in training, both online and offline), we’re currently completely rebuilding our web platform to allow for three main areas of possible expansion:

1. Completely customisable ‘white label’ versions of E-consultancy.com which we can offer to our enterprise training customers who increasingly want ‘their own E-consultancy’.
2. International expansion – currently more than 50% of our subscribers are non-UK already. However, we see a lot of interesting opportunities globally, particularly in the area of e-learning.
3. Sector expansion – perhaps we can take our platform and our business model and apply it to a completely different sector…?Currently I’m most excited about the challenge of creating a world-class online presence which shows that we are really practising what we preach when it comes to digital marketing best practice.

Do you find conversion rates for UK ecommerce site going up, down, or staying the same…and why?

I’m not a huge fan of “conversion rates” when talked about in broad terms to be honest. As a ratio, rather than an absolute metric, it can mask all the important detail. Conversion rates differ by so many different things: seasonality, what your competition is up to, the source of the customer, whether the customer is repeat or not, how fast the site is that day, the product category etc. etc.

Conversion rates often go down just when sales values are going up. Think of the long queues in shops around Christmas. Conversion rates might well be lower (customers can’t be bothered to queue, products out of stock etc.) , the customer experience can be painful at best, and yet sales are at their highest.
 
And do you include conversions that happen in other channels? Multi-channel marketing, and retailing, is an important and fascinating area. Obsessing over online conversion rates may risk obscuring what is really going on across all the channels.

But, if you’re pushing me, and all things being equal, on average I would say that online conversion rates are generally getting slightly better. Not much better, but slightly.

It is a no-brainer that retailers must continue to obsess about improving their online customer proposition and experience: best-in-class search and navigation, engaging and relevant content, high quality product information, clear stock availability and delivery details, flexible and fast fulfilment etc. The unfortunate truth is, however, that customers are demanding creatures – particularly online where they have a world of choice. So as fast as you improve your site, the customers’ expectations are rising even faster.

What aspects of UK e-commerce are evolving most rapidly and that are the next big steps in driving conversion?

In an increasingly competitive online marketplace, retailers are recognising that they need to provide the type of intuitive and interactive experience which consumers are familiar with from social network sites.  

Similarly, expectations have also been raised in terms of the content and information on Web sites. People shouldn’t need to struggle to justify a potential purchase decision, and this is why there is so much value in areas such as customer ratings and reviews, audio and video based product guides and information, multi-channel pick up and return options, improved customer service and so on.

I think there needs to be continued focus at both the macro level of customer proposition and brand as well as at the micro level of data-driven intelligence that can incrementally tweak conversion rates upwards.

I believe the internet is driving a polarisation, or crystallisation, of what any particular brand is ‘about’, which tends to favour either the very big and broad, or the niche. Being something in between, like some middle-tier department stores that used to be able to survive based on location alone, is a very challenging place to be online.

I’ve never believed that all customers online are only interested in price. However, you do need to know what value you are offering, and absolutely nail the delivery of that, to succeed and survive. As I heard one Amazon executive say you should ‘under-promise and over-deliver’. If you can, then the internet is a fantastic, and free, enabler of customer advocacy (which, happily, also tends to drive up your natural search rankings which are also critical).

On the micro-level – I still think we’re a way off figuring out much of the art and science of selling online. You know how supermarkets pump fresh bread, or coffee, smells through their shops to make you buy more? What is the equivalent online? What are the ‘scent trails’ of online buying psychology?

How would you contrast the differences between US and UK commerce companies. What are the first things that come to mind?

In terms of ecommerce the US is ahead of the UK. High levels of broadband penetration happened in the US before the UK.  Adoption of ‘new’ areas like more sophisticated online merchandising, personalisation, behavioural targeting, ratings and reviews, happens in the US first.

The UK, and Europe, appears to have a different design aesthetic. This is clear when you watch the TV ads in the US versus the UK. US ecommerce sites, to a UK audience, often appear to be very similar and quite ‘in your face’ – a cultural distinction often made. It’s still very early days to see many “mom and pop” businesses doing anything much online in the UK.

It seems that in the US it can often be the companies outside the top tier who have been the early adopters of cutting edge technology and Web 2.0-type features, with the biggest brands following suit at a later stage.

In the UK it is more usually the best known companies who have been the first to innovate with features such as ratings, reviews and online video.

Do you think customer participation / contribution (for user generated content) is much different in the UK than other countries? If so, how?

I think that user-generated content has a huge role to play in all markets though the extent of consumer participation will vary. There is not as much blogging in the UK as there is in the US but I see no obvious reason for any less participation in ratings and reviews this side of the pond.  

Do you think social commerce is a growing priority for UK commerce, and if so, why?

Social commerce is definitely getting on the radar for internet retailers although there isn’t as much UK adoption yet as there is in the United States.

According to the E-consultancy / Bazaarvoice Social Commerce Report published last year, 28% of companies who sell online are using ratings and reviews, with a further 52% considering this.

We believe that the percentage for adoption has gone up significantly since the research was carried out in 2007, but the proportion still isn’t as high in the US where around half of blue chips are said to have implemented ratings and reviews.

What are the biggest obstacles UK retailers have to overcome in order to embrace user generated content?

For some retailers, there is still a big challenge getting boardroom-level buy-in for user generated content. Some companies are still not convinced about the need to embrace UGC. These tend to be organisations which haven’t yet grasped the importance of a customer-centric approach.

For other companies, there are concerns about the time and effort required to ensure that something like ratings and reviews gets critical mass and makes a real difference to their traffic and conversion rates. E-commerce teams are typically under-staffed and they have to decide which areas to prioritise.

What are hot topics of interest for UK retailers – what research, events, speakers pique their interest right now?

Integrated multi-channel marketing is now a much more important area as companies realise the importance of joining up different touch points effectively.

The concept of customer engagement is something which is much more widely talked about, because companies understand that they will lose out to competitors if they don’t connect with consumers in a way which is intuitive, appropriate and seamless.

The great thing about the digital environment is that it allows companies to interact with customers repeatedly while also being able to measure that interaction.

The rise of social networks, blogs and user-generated content have brought into focus the tremendous opportunities available to those who listen and interact effectively, and also the dangers of not doing so.

Multivariate and A/B Web site testing is something which is gaining traction in the UK as companies look for ways of improving their conversion rates. A 1% percentage change in session conversion rates can make a huge difference for large e-tailers and it’s now often about making small adjustments and then measuring this.

There isn’t so much low-hanging fruit for online retailers. They are looking more at relatively subtle changes to areas such as search, navigation, and the shopping checkout.

Another key trend is the idea of atomization whereby content on Web sites is increasingly being broken down into smaller units and then distributed via feeds, links and widgets. Consumers are increasingly using personalized homepages and so retailers need to think about how they can bring their brands and products to the attention of consumers, for example on their Google homepage or on social networks. Retailers need to stop thinking about their digital presence as a destination Web site.

Let's do the math: .62 X .82 = 50% of all consumers will make a purchase based on reviews!

That means, for a retailer or manufacturer not to have re reviews on their product means that they are turning away 50% of the prospects looking at their products!

This matches the study by eVoc insights done a couple years ago that found 50% of consumers needed reviews when purchasing consumer electronics before purchasing.  

In addition, 69% of the respondents said they have shared online reviews with friends, family or colleagues, the report said. So, there’s a viral, word of mouth effect on the word of mouth itself! 

See other stats and studies related to reviews and social commerce here. 

• Placement for Visibility
  • Above the fold
  • Size
  • Stars or other graphic
  • Near point of attention or action

• Review Interaction
  • Ease of reading
  • Sorting
  • Rating Distribution
  • Use across the site

• Single Dimension versus Multi Dimension Reviews
  • What are the key attributes across different categories
  • Can review content influence purchase decision

• Credibility Factors
  • Negative and Positive reviews
  • Review Approval policy
  • Reviewer Characteristics

• What does a review mean
  • Number of Reviews
  • What questions are you asking
  • Qualitative versus quantitative

The Bazaarvoice implementation is very customizable, so while we are at the direction of our clients, our implementation team and community managers recommend many of these best practices to our clients to get the most out of the deployment of ratings and reviews. Further, he highlights several policy best practices that are already part of our solution. If you'd like a consultative meeting with our implementation team about ratings and reviews best practices, email info@bazaarvoice.com. Or, you can contact Bryan at www.futurenowinc.com

Deciding which projects were built before the holidays involved a strategic decision-making process that I went through each year for many years. Many of our retailers we talk to are going through these decisions right now, debating if they should add reviews before the holidays vs. other priorities. The case I would assert for adding reviews now — before the holidays — is on a simple premise of Net Present Value (NPV). The business case process I helped build at Dell was based on this simple financial principle.

Any feature you put on your site has a NPV, meaning the value to the P&L is the sum of the impact over some time period (say 2-3 years). Some projects may have an opportunity to drive immediate benefit, but the impact declines over time.  Other projects (such as reviews) have a growing impact, where the impact immediately is not as great, but the sum of the impact over time is much greater. With ratings and reviews, the value is in the content, which grows over time. The value is identifying and engaging your influencers, which grows over time. The value is in programs and marketing strategies leveraging this content and your influencers, which is a multiplicative effect as you leverage this in email, natural search, advertising, catalogs and other marketing vehicles.

I’ve launched over 100 projects / features on Dell.com on a $3.5B revenue site. It was high stakes. We came up with business cases for almost every one of those projects, and measured the impact of almost every one. There were projects ‘above the line’ and ‘below the line’ that didn’t make the cut. After 14 years of online experience, and Brett’s many years of measuring online impact through Coremetrics, we believe reviews is a priority for a very simple reason: it is the highest impact strategy, highest NPV project, to  any other project we’ve seen (unless your checkout functionality is broken!). Check out some of our case studies.

How long until you see benefit? In our experience with over 120 clients, not very long…

• Let’s say you launch reviews in late October (we can get you live in 2-4 weeks). You immediately email an invitation to customers of the last 6 months to come back and write a review.
• In come thousands of reviews (we’ve seen some clients get tens of thousands in one week!).
• By mid-November you can merchandise top rated products on your home page, in email, and start to benefit from natural search as people search for product reviews in search engines (We’ve seen 60% growth in week over week search visitors for many clients).
• Customers can share reviews and products with their friends and family, driving viral marketing.
• You and your merchants will have a new set of data through workbench reports and alerts to help decide what to merchandise over the holiday period.
• All this benefit takes you through January, which is also a healthy holiday sales month.
• After the holiday rush, you have the reviews platform in place to solicit these customers to come back and add more reviews to the system, which you can use to drive sales after the season and exceed your spring year over year sales goals.

We have case studies that prove more reviews equals higher conversions. The sooner you allow customers to review products on your site, the sooner you build an annuity that drives sales over time. This is what makes ratings and reviews (or any social commerce applications, such as Ask & Answer), a higher NPV project than most other projects. If you calculate the impact of reviews used multiple ways as they grow and the impact it has for you for the holidays and the rest of the year, this low effort project (20-30 hours of IT time with Bazaarvoice) also becomes the biggest ROI project. We have an ROI calculator to help you figure this out.

This is the holiday season that reviews will be used. Shoppers are expecting reviews now. Not have reviews on your site means you risk losing your customers to your competitors. Allurent did a study that shows that 67% of consumers who don’t find the information they are looking for on a site, will abandon that site in favor of another that has the information. According to Forrester, 77% of online shoppers seek reviews when purchasing, and over two years ago there was a study from eVoc Insights that suggested 50% of shoppers would not even buy unless they had reviews. Are you going to turn away half your visitors this holiday to other sites that have reviews?

The time to get reviews on your site is right now. This year the number of retailers with ratings and reviews has doubled, from 25% last year to 45% this year (according to shop.org and MarketingSherpa). Build a competitive advantage with how you use reviews over the year. Our Community Managers will help you with maximizing your social marketing potential through best practices on driving review volume and marketing strategies.

If you want to talk to me directly about prioritization, feel free to drop me an email (sam [at] bazaarvoice.com). You can see see this article I wrote on eBusiness prioritization for Dell’s magazine several years ago.

Bazaarvoice clients learn a lot from Jeff, and through the SyndicateVoice and SearchVoice program they have also gained a lot of revenue impact. Jeff will share key findings across many large multi-channel retailers as well as strategies (such as segmented content and avoiding duplicate content) that is critical to making user generated content effective for boosting natural search traffic. There will be time for questions at the end as well. Click on the link below to register — there is a limited number of 'seats'!

Boosting Natural Search Traffic Through Consumer-Generated Content

Join us for a live webinar on August 29th to hear Jeff Watts, a veteran search engine optimization strategist and product manager for Bazaarvoice, explain how you can employ consumer-generated content to help drive down your acquisition costs and improve the efficacy of your search engine marketing.

This webinar will cover:
* Why user-generated content indexes well with search engines
* Performance of review content in the long tail of search
* The Bazaarvoice approach to search engine optimization
* Sample case studies and best practices

Date:       
Wednesday, August 29, 2007
       
Time:       
1:00 PM – 2:00 PM CDT

System Requirements
PC-based attendees
Required: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista

Macintosh®-based attendees
Required: Mac OS® X 10.3.9 (Panther®) or newer

Space is limited.
Reserve your Webinar seat now at:
https://www.gotomeeting.com/register/513013753

Today we see NewEgg (not a Bazaarvoice client) posted a public poll (using iPerceptions) on what factors on the product detail page influenced their purchase decision the most. Like PETCO, Customer Reviews was #1 at NewEgg with 57% of votes, followed by detailed specifications at 32%.