The study finds that consumers are planning to spend less this year. Accordingly, we know that retailers are feeling the consumer's pain and don't have budgets to purchase and utilize all of the tools they would like, so they must choose right the first time. The study results confirm what many retailers have already discovered, Ratings & Reviews have been and continue to be consumers' most used and most trusted peer-generated content tool outside of the standard site information provided by retailers and manufacturers.

Key findings from the study:

• 48% of consumers plan to spend less, primarily in the automotive sector (50%), travel (46%), and CE (43%).
• This group plans to do more due diligence, looking for more information in more areas than the other groups (42% will visit 3 sites or more)
• Many of those reluctant to spend can still be positively influenced – 61% report that their confidence can be increased via online shopping resources
• 77% cite reviews as being useful in making a recent purchase
• Ratings & Reviews are the top ranked Content Discovery Tool for driving consumer trust and loyalty
  800 consumers were surveyed on their changing propensity to spend this year and on what tools they plan to use to help them feel more confident about their buying decisions.

The results showed that many consumers are planning to spend less (49%), more consumers are now going online to research their online AND offline purchases, and that very few of them have made up their mind on price (33%), brand (23%), and store/retailer (16%) associated with their purchase. 61% of those who said they were more reluctant to spend said their confidence could be increased if presented with the right information online.

This information should be empowering to retailers and manufacturers.
They have a clear opportunity to influence and win new customers, even in this challenging economy. The reality is that consumers know the data they need exists online, and they will find the content whether on your site or somewhere else. Check out how Amazon's heavy adoption of social commerce content and tools has helped them gain market share during the past couple quarters.

Customer Ratings & Reviews Are Top Ranked Content Tool
77% of all those surveyed cite reviews as being useful in making a recent purchase, making it the most used peer-generated content (ranking even higher than the actual Manufacturers website). 81% of this of those who said they plan to reduce their spend said they used ratings and reviews to make past purchases and that they are the top ranked tool that would make this group more confident when considering a purchase. 

As JupiterResearch states in the study, "Retailers must consider user generated content as a base line component of their overall offering and use it not only to enhance product descriptions, but to augment search and navigation experiences, enliven marketing messages and improve organic search results. In fact, some forward thinking retailers are beginning to incorporate the content consumers write about products in the original product descriptions to make them more accessible or consumer-focused. Furthermore, multichannel retailers can use this valued content in their stores, catalogs and other channels to bring the voice of the customer to all aspects of their customer interactions."

Learn more at upcoming Bazaarvoice events
Patti Freeman-Evans, vice president and research director at Forrester Research, will join Bazaarvoice and richrelevance in a series of retailer events to share consumer intelligence and online marketing strategies based on this research. For more information or to register for the New York event on March 3, 2009 or the San Francisco event on March 26, 2009, visit https://www.bmmreg.com/Engaged/.

We also learn a little bit about Brits and their online habits. Over 45 percent now read online reviews or recommendations. Interestingly, 32 percent are willing to publish an online product review, while only 19 percent would be willing to mail a letter to a retailer.

And it isn’t just the young folks who are jumping into the online social commerce world. Internet Retailing found that 70 percent of those over 55 research companies and products online before making purchases.

Oliver Maus, CEO of 1&1 Internet, concludes that Britons are learning to “do their homework before they buy online.” This is great news for social commerce, and the idea that customers are just as eager to “contribute as they are to consume market intelligence” means we can only expect things to get bigger from here on.

Important Stats:

65 percent of consumers check into an Internet retailer's reputation before making a purchase. Most are now happy to receive the same level of service online as they do in-store.

46 percent of Britons now read online reviews or recommendations on a specific product before purchasing.

32 percent are willing and able to publish a review online — but only 19 percent would be prepared to write a letter to a retailer.

Here, Scott Muhlig, Bazaarvoice Content Operations Manager, spoke about the value of negative reviews, and learning to love the ones who "hate" you.

There are two types of negative feedback – that which gets rejected, and that which is published. Both are critical to your business.

Approved/published negative reviews, as long as they are not profane or violate other rules of moderation, such as mentioning price, service, or litigation issues, among others, are valuable to the company and consumers. Negative reviews show credibility – if there are nothing but 5-star product reviews for your products, consumers get suspicious about the authenticity of the content. Negative reviews also give objective feedback and help retailers uncover blind spots. Perhaps there was a breakdown in a process, an unforeseen change in a vendor's product, or some misinformation in the product's description on the website. Direct feedback from your customers is the most transparent way to uncover these issues and get them solved quickly.

Rejected negative feedback is also incredibly valuable. When people are upset with a purchase, they sometimes get angry, which can cause them to violate the terms of reviews, use profanity, or go off on a tangent – all things that can lead to rejected content. It's important not to negate this information, because if you can communicate back to them, uncover and solve a legitimate problem, and complete the circle, it makes it less likely that they will spread their rancor to blogs, forums, and other places where you are unable to see, control or address their comments.

It's important to review all negative content to look for trends in the negative comments, so you can uncover product or system improvements to improve future customers' interactions. Here are just a few ways to use negative or rejected content.

1. Use rejected content to handle legal concerns proactively

Content that is rejected due to possible legal concerns constitutes less than 2% of the average 11% of all content that is rejected. Try to have a member of the management team review this content, and engage legal counsel early when appropriate. Major retailers create a liability team to review such issues. Rejected content guides this team right to potentially harmful products, which they then investigate proactively.

2. Use services complaints to save customer relationships

Very often, people just want to know a company hears them. E-mails and publicly posted responses are both inexpensive ways to let your community know you listen while potentially saving a customer relationship. Through trend analysis, retailers can pinpoint whether certain customer complaints surface from particular products, which they can then discuss with manufacturers.

3. Use negative reviews to hold vendors accountable, improve products

Through trend analysis, retailers can pinpoint whether certain customer complaints surface from particular products, which they can then discuss with manufacturers.

We all love good customer stories, especially ones that show how UGC changes the business from the inside out. It’s great hearing anecdotal stories from our clients, but getting to test, analyze, and actually prove value is even better. One of our premier UK clients is dominating both worlds – not only did Boden raise the bar on growing their online community (since launch, they’ve gathered over 70,000 reviews!), they also made sure that these results went towards helping prove ROI and bottom line benefits for the business.

Being a ‘big deal’ in the catalogue business means always making sure that your investments are making you the returns you expect – exactly the kind of thinking we admire in our clients. Working on a joint case study, both Boden and Bazaarvoice teams made sure to cover many different aspects of conversion and ROI.
In the end, the data speaks for itself. Using segmentation analysis, we compared users who read reviews (those who clicked on the ‘read all reviews’ link) and those that didn’t. Double digit increases in both sales conversion and average order value point out that the user-generated data on the site is helping drive solid numbers. Make sure to check out the full case study – fantastic results all around!

Being able to drive direct ROI for one of the most beloved, influential, and smartest apparel brands in the UK is a big deal – being able to tie direct stories to how this is changing the business from the inside out is even more powerful. To supplement the Case Study, Boden also asked their renowned design team and garment techs what they thought of product reviews on the site. Turns out close to 90% of the internal teams read reviews, either on the site or through an internal system, and over 85% say Ratings & Reviews will directly affect their work in the next season.

Here are some direct quotes for the designers themselves:

"I find this really really useful, and read the comments regularly. This is so that I can decide if we want to place more repeat orders, based on if we think the garment will return more highly than expected. Also, I like that you can filter the comments by rating, date etc."

"It does tend to confirm for me that there is no one opinion about a product, and not all product shapes suit all figures- It's nice to have lovely glowing reviews alongside those that are slightly more critical- good to have a balance. It's nice to know that our products are making some people happy and that they're taking time out to review them!"

Word of mouth full circle: letting the customer speak directly to the design department, then listening to that feedback and letting them help build a better product. Johnnie Boden must be so proud of his fantastic team!

• Avenue A | Razorfish reports in their "Digital Consumer Behavior Study" that 55% of surveyed Internet users check other people's opinions online when researching products, topping product comparison charts (22%), expert reviews (21%), and shared shopping lists (1%).  If you are currently evaluating site feature investments for 2008 and beyond, get your hands on this report and read more about why you should invest in ratings and reviews. 
• Internet Retailer reports in "Web Site Design, Content and Rich Media" that consumers that read product reviews are likely to spend more online.  The largest group of surveyed users, 27.1%, reported spending 5-10% more, while almost 7% reported spending 20%+ more!  Need a business case for reviews?  Do the back of the napkin math for your business.  For a $25MM online retailer, if 7% of buyers spent 20% more, a reviews solution would pay for itself multiple times and easily fund investments in other site features.  
• Deloitte & Touche USA reports on the influence of reviews on purchase decisions by category.  Every listed category shows significant influence, from electronics (45% of respondents influenced) down to motor vehicles (13%, the lowest, but still significant).

My favorite chartdata from the report is posted below: 

The #1 online activity of "heavy users" is researching a future purchase online, an activity that is heavily – no pun intended! -  facilitated by customer ratings and reviews and other forms of online word of mouth.  #2 is actually purchasing online.  Ditto.  And #6, at an impressive 68%, is reviewing a product on a shopping or review site!  So in addition to driving Web traffic and commerce, "heavy users" are an opinionated and communicative bunch as well.  What a combo for marketers to address. 

While devising campaigns to claim the attention and online spend of "heavy users", marketers must also address the group's substantial information, communication, and socialization needs as well.  For instance, it seems logical that "heavy users" would prefer to transact on sites that offer peer reviews and other relevant forms of user-generated content, since they spend so much of their own time sharing their opinions. 

Furthermore, the report states that 40% of respondents use price comparison sites, a finding that underscores the importance of a "beyond your site" strategy to customer ratings & reviews – something that Bazaarvoice is pioneering with our recent release of SyndicateVoice, which leverages two of the things that "heavy users" are most interested in – online reviews and shopping research.  

In summary, the "heavy users" are big in size, busy with online activity, and will soon become the "normal users" as general Web usage and usage of social technologies/media continues to grow.  As a rugged individualist, it's hard for me to say this, but marketers, you must follow the herd!  

Chris Anderson's book, "The Long Tail: Why the Future of Business Is Selling Less of More", is finally out.  Anderson, the editor-in-chief of Wired (my favorite magazine), maintains a popular blog about the journey of researching the book.  The article cited above is based on it, and it's brilliant.  As I like to think about emerging trends in a historical context, here is my favorite excerpt:

• "Before you shed too many tears for the declining hit, remember that the era of the blockbuster was an anomaly. Before the Industrial Revolution, culture was mostly local – niches were geographic. The economy was agrarian, which distributed populations as broadly as the land. Distance divided people, giving rise to such diversity as regional accents and folk music, and the lack of rapid transportation and communications limited the mixing of cultures and the propagation of ideas and trends."

When I came up with our company name, Bazaarvoice, I was inspired by The Cluetrain Manifesto and thinking about how word of mouth has always been the most powerful form of marketing.  Human nature hasn't changed; it isn't like we all woke up last year thinking, "We need to communicate with each other more".  What has changed is the ease of communicating in a globally-connected sense.  This has profound implications for word of mouth and is driving an explosion in consumer-generated content.  As Anderson writes, "the Internet's peer-to-peer architecture is optimized for a symmetrical traffic load, with as many senders as receivers and data transmissions spread out over geography and time".  For all of the wonder of the Internet, it may be the most wondrous medium of all due to its power to connect people like we used to be connected locally (before the advent of the one-way, controlled broadcast medium).

I would recommend that you read Anderson's article (I can't recommend his book yet as I haven't read it) and think about how it will change your business.  Here is how I think "the long tail" changes the world of retail and eCommerce:

• More personalized products
• NikeID is just the beginning
• Community-driven commerce is a window to the future
• More niche eCommerce opportunities with established and start-up businesses capitalizing on them
• Stay tuned for The Home Depot, Gap, and many other giants launching more direct-channel-only brands
• Talk about a niche – check out Black Socks, which offers sockscriptions and won the Customer Experience Council's prestigious Copernican award last year
• The "green" or "eco-friendly" niche is going to be huge and almost all large retailers will capitalize on this, especially after An Inconvenient Truth comes out, which is sure to be remembered as the most impactful documentary to date 
• Faster product cycle times due to better and more accessible information from customers about what they like and don't like about the product
• Product reviews will play a big role here; we are already seeing our clients make some pretty profound merchandising decisions based on our word of mouth analytics
• Better customer service
• Store reviews and customer reviews will also play a big role here
• With more choice, tighter community, and a greater demand for niches, personalized service will become an even more important differentiator
• Better multichannel integration
• Buy online and pick up in store initiatives are just the beginning; REI is a good example (30% of all online purchases are picked up in their stores)
• Retailers will have to leverage their use of channels to provide a better overall customer experience or risk losing them to niche businesses
• Customer-centric, multichannel database and analytics opportunities will be a huge area of opportunity and frustration; RFID will only make this more complex
• More private-label brands
• JCPenney's ana line is a good recent example but there are many, many others
• This bullet may be redundant with the second bullet as the reason these private labels are being launched is a combination of profit margin motives as well as focusing on attractive niches for revenue growth and differentiation
• An entire discipline will evolve on creating products that drive word of mouth
• I enjoyed Bryan Eisenberg's article on ClickZ this week and think that he and Roy Williams are on the right track here; Bryan cites three triggers – architectural, kinetic, and generous – and provides examples from our client's product reviews of these triggers driving five-star product satisfaction and word of mouth
• This will lead to much tighter communication between retailers and their suppliers with product reviews being one of the most important sources of data for these conversations (obviously returns and sales being the two longest-adopted sources)
• Members of the rapidly growing Word of Mouth Marketing Association will play a big role in this evolution

What am I missing from this list?  And how do you think it will change your business?

Two other important notes that are relevant to this post:

1. In this same issue of Wired, I was happy to see "The Power of Peer Production" named as one of the six trends driving the global economy, by Chris Anderson no less.
2. Speaking of hits, Bryan and Jeffrey Eisenberg's new book, "Waiting For Your Cat to Bark?", is out and has already been named to the New York Times, Wall Street Journal, and USA Today bestsellers list.  Here is the praise I wrote for the book when Bryan was nice enough to give me a preview copy:

   "The Web is a democratizing force as the world's largest global brain.  It educates everyone on the pros and cons of every product, service, and even person.  An educated person doesn't react well to the traditional art of manipulation that some marketers attempt to employ in their campaigns.  As a matter of fact, it makes them angry and defensive … like a cat backed into a corner.  No one understands this new world of marketing better than the Eisenbergs.  Waiting For Your Cat to Bark? is the marketing manifesto of our generation.  Read it, weep, and then go do something about it."