Good thing I checked Yelp
One in four internet users read consumer-generated reviews online, which then have a big impact — affecting not only what they purchase offline, but how much they are willing to pay for it, according to a new study conducted by comScore with The Kelsey Group, reports MarketingCharts.
The study examined the impact of consumer-generated reviews on the price consumers were willing to pay for an offline service, including restaurants, hotels, travel, legal, medical, automotive and home services.
Nearly one out of four internet users (24 percent) reported using online reviews prior to paying for a service delivered offline.
Of those who consulted an online review, 41 percent of restaurant reviewers subsequently visited a restaurant, whereas 40 percent of hotel reviewers subsequently stayed at a hotel:
Online Reviews' Influence
More than three-quarters of review users in nearly every category reported that the review had a significant influence on their purchase, with hotels ranking the highest (87 percent):
97 percent of those surveyed who said they made a purchase based on an online review said they found the review to have been accurate.
Review users also noted that reviews generated by fellow consumers had a greater influence than those generated by professionals.
Willingness to Pay More for Better-Rated Service
Consumers are willing to pay at least 20 percent more for offline services that received an "Excellent" or 5-star rating than for the same service when it received a "Good" or 4-star rating, the study found.
When asked how much they would be willing to pay for a service based on the quality of the service, consumers were willing to pay up to 99 percent more for an Excellent (5 star) rating than for a Good (4 star rating), depending on the product category:
"These data show the importance of local service review sites in consumers' purchase process," said Steve Marshall, research director for The Kelsey Group. "With such a large percentage of review users subsequently purchasing, it's vital that local service providers have a positive presence on these review sites."
"This study underscores the importance of providing not just good, but excellent, service if a business hopes to generate positive consumer reviews which will result in greater sales," pointed out Brian Jurutka, senior director, comScore Marketing Solutions.
About the study: The comScore study was based on 2,078 survey respondents, including 508 who used online consumer reviews, conducted from October 12-18, 2007.
Consumers were asked about their usage of online reviews and were also asked what price they would be willing to pay for a service given an average service price and an aggregate consumer rating.