NEW YORK--(BUSINESS WIRE)--Ratings are an increasingly important evaluation tool for almost every kind of purchase. Worldwide, 71 percent of consumers consider product ratings to be “important” or “very important”. In the U.S. this figure is 74 percent and 71 percent in Canada. Furthermore, ratings are the third most important criterion in buying decisions after product features and price, and even more significant than brand. This was the finding of the recent Trend Radar 2019 – The Rating Economy* study by the global strategy and marketing consultancy Simon-Kucher & Partners.
Product ratings are the new standard: More product ratings or better ratings?
Almost half of those surveyed said they regularly read reviews before making a purchase. One third of participants usually leave their own ratings of products purchased, while the majority of consumers (76 percent) have rated a product at least once. Also, two thirds of highly dissatisfied customers leave a rating, but 75 percent of consumers are also motivated to submit a rating when particularly satisfied with a product.
With the substantial role of product ratings in the path to purchase, and its position relative to product features, price, expert reviews -- and of even greater consideration than brand -- it is critical for companies to generate higher volumes of quality ratings.
“Our study indicates a simple rating process is the third most significant factor in motivating consumers to leave a review,” explains Ricardo Rubi, Simon-Kucher & Partners New York City-based Partner specializing in consumer and retail sales, marketing and pricing strategy. “Companies can increase ratings volumes by making it easier for customers to rate their purchases – by removing complicated log-in processes or not asking too many detailed questions. However, to obtain higher quality ratings companies must invest in delivering customer service, be strategic about the timing of when to ask for ratings, and use brand-tracking studies to understand what motivates ratings in their category.”
Perception of better quality and transparency leads to higher customer satisfaction
Fifty-one percent of survey participants believe they receive greater value with their purchase because of product ratings. “They feel better informed, make fewer bad purchases, and say they receive better quality products,” Rubi emphasizes. The rating economy gives customers more insights on a product’s value before they reach the point of purchase. With ratings, they gain more influence by quickly sharing their experiences with other potential buyers, thus determining which products and companies succeed. “With product ratings, the balance of power is shifting toward the customer, as they are less reliant on marketing promises and advertising messages from providers,” notes Rubi.
The rating economy: Do companies need to rethink their traditional marketing strategies?
The ability to directly compare products quickly and easily between different providers is making customers more likely to switch; as a result ratings are eroding brand and company loyalty. One in three survey participants stated they had switched to a different brand due to the product having a better rating. In many cases, customer reviews have overtaken brand in importance as a buying criterion. “Notably, people under the age of 40 living in urban areas have less attachment to particular brands, finding shopper recommendations to be more credible than marketing messages and using ratings to identify the products that best fit their needs,” says Rubi. “This makes positively-rated products more valuable for the company and should motivate providers to continually improve the quality of their products.”
Companies can also benefit from the rating economy since 20 percent of consumers report they would buy more when products are rated highly, and 15 percent would select more expensive products. 19 percent expressed a willingness to pay more for products with higher ratings. This presents an enormous opportunity for companies, and not only because the increased transparency means providers with high-value products are more clearly differentiated from those with low-value products. “Providers will have to carefully consider how to motivate their customers to submit more ratings. For example, how can companies design online shops to make the product rating process as seamless as possible?” asks Rubi. “Eventually, every provider will need to develop a strategy for product ratings.”
Consumer electronics and tourism lead the way with ratings
Ratings aren’t given the same level of importance in every industry. Overall, the role of product reviews is most significant for consumer electronics (60 percent of consumers worldwide refer to ratings before making their purchase decision; in the U.S. and Canada this figure is 63 percent), and travel and hospitality (worldwide: 60 percent; U.S. and Canada: 59 percent). “In other industries, particularly insurance, automotive, and construction, ratings are seen as having little influence in purchase decisions,” Rubi adds. “Although the rating trend is still in its infancy, we fully expect to see it develop further in the future.”
*About the study: The Trend Radar is a global study conducted by Simon-Kucher & Partners for the first time in 2019. Focusing on the topic “Rating Economy 2019,” approximately 6,400 consumers in 23 countries worldwide were asked about their rating behavior in February 2019. The sample included 768 participants from the U.S. and 213 from Canada.
Simon-Kucher & Partners, strategy & marketing consultants: Simon-Kucher & Partners is a global consulting firm specializing in TopLine Power® with a focus on strategy, marketing, pricing, and sales. We help our clients achieve growth and profit targets by applying practical, evidence-based strategies. Simon-Kucher & Partners is regarded as the world’s leading pricing advisor and thought leader. The firm has 1,300 employees in 38 offices worldwide.