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Saturday, May 25, 2024

Power to the people

Ratings have become game changers in sectors like travel and hospitality but a new study suggests consumer reviews are now more influential than a business’s actual brand. The rating economy has revolutionised shopping behaviour. According to pricing specialists Simon-Kucher, the change has been so profound that people now regard them as their third most important benchmark when buying, after product features and price –  more significant than the brand itself.

Mark Billige, Managing Partner UK at Simon-Kucher said: “There’s a lot of focus on disruptors’ technology, algorithms and business models, but their successful incorporation of ratings to rapidly build trust and loyalty has been underappreciated by many commentators – even though this key to their success is hiding in plain sight.” He added: “Successful use of ratings has been a driving force allowing Amazon, eBay, Uber, AirBnB, TripAdvisor and many other platforms to harness thousands of smaller suppliers, while building huge levels of satisfaction and trust amongst consumers with minimal marketing spend. The use by businesses of the power of ratings to influence customer behaviour is only going to grow further with time and across more sectors.”

Simon-Kucher’s Trend Radar study surveyed 6,400 consumers in 23 countries about their rating behaviour in February this year. Over 40 percent regularly read reviews before opting to purchase. Almost a third usually leave their own ratings for products bought, while the majority of consumers (71 percent) have rated a product at
least once. Around 60 percent of people who are highly dissatisfied with their purchases leave a rating, though it is not just the moaners: 71 percent say they are also spurred to submit ratings when satisfied with a product.

Almost 40 percent of UK respondents, and 51 percent globally said they now receive more value for money due to product ratings. “Not only do people feel better informed and make fewer bad purchases, they also say the products they receive are of better quality thanks to the availability of ratings,” said James Brown, partner in charge of Simon-Kucher’s UK based Consumer & Retail Practice who confirmed, in many cases, customer reviews had overtaken brand in importance as a buying criterion. “Our research found people aged under 40 living in urban areas are now particularly less attached to brands,” said Brown, adding: “It’s not just hipsters who find the recommendations of other shoppers more believable than marketing promises when finding the right product. Sooner or later every provider will have to develop a strategy for product ratings.” The research also showed that 17 percent of consumers are prepared to buy more when products are rated highly – and 12 percent would happily select more expensive products with higher ratings. Overall, product reviews remain most significant in travel and hospitality (58 percent of UK consumers refer to ratings before making their purchase decision; 60 percent globally) and consumer electronics (UK: 52 percent; globally: 60 percent).

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