It’s long-accepted wisdom in the retailing space that word-of-mouth recommendations have enormous sway over where and what consumers choose to purchase. Just as the internet has been a game changer in every other way, it has also impacted how consumers seek buying advice. No longer are they limited to what their small circles of families and friends suggest; today, online consumers can take into consideration the opinions of every other cybershopper out there.For online retailers, this phenomenon presents major opportunities.

“Customer-generated feedback is critical to a comprehensive shopping experience,” says Jesse Goldman, global lead for retail at Endeca Technologies Inc. (www.endeca .com), a Cambridge, Mass., ecommerce software company whose solution powers more than 200 online retailers, including Borders, Circuit City, Home Depot, Nike, Wal-Mart, Tesco, and Boots.There are four basic types of user-generated feedback online retailers can apply: testimonials, recommendations, ratings, and reviews.

Testimonials and recommendations

Testimonials – written statements from customers about a positive experience with a company or product – can have a significant impact on sales.

“One of our customers increased conversion rates by more than 40 percent after including customer testimonials as part of the online experience,” Goldman says.

Results like that are not unusual.“Whether you’re dealing with consumers or B2B, it helps to have testimonials on your website,” says Miki Dzugan, president and owner of internet marketing firm Rapport Online Inc. (www.roi-web.com), Sedona, Ariz. “They give people confidence to try your product, because it worked for someone else.” One of Dzugan’s clients, an online retailer of odor removal products called Fresh Again (www.fresh-again.com), saw a 10-fold increase in sales after a website redesign that included the addition of testimonials.

“Fresh Again needed to overcome the problem of not having a well-known brand name,” Dzugan says. “Most consumers had never heard of them, but the testimonials helped people feel more secure about buying the product. Testimonials are vitally important for smaller businesses without a nationally recognized name.” While customer testimonials require active participation of users, recommendations are passive, based on buying behavior.Amazon.com pioneered the recommendation tactic, with its two-pronged approach: first, suggestions of other products based on past purchases you have made; and second, suggestions based on other purchases made by consumers who bought the same product you’re buying. “These recommendations have a real impact in terms of conversion, notably around average order size,” Goldman says.

Many other online retailers have implemented their own versions of the Amazon recommendation strategies, and have found particular success with buyers shopping for gifts or browsing without a specific product purchase in mind.

Ratings and reviews Ratings are another powerful tool in an online retailer’s kit. There are many independent rating sites, such as BizRate.com, allowing consumers to see which retailers have high customer satisfaction scores from previous buyers. Signing up as a BizRate retailer requires stores to submit a list of products, along with images and links.

When a consumer searches for a product, all online retailers offering that product come up on the results page – along with their ratings from previous buyers. If a consumer chooses a retailer’s site to visit, the retailer pays a per-click fee and can achieve a high rating after just a few successful transactions, Dzugan says.

Yahoo! Shopping at http://shopping .yahoo.com offers a similar service, giving consumers not only lists of products, but also merchants, rated with one to five stars by previous buyers.

Rebecca Bennett, a client of Rapport Online and owner of Flags On A Stick (www.flagsonastick.com), Minneapolis, Minn., saw sales of her decorative flags more than double after she became a five-star Yahoo! Shopping merchant.

“I’ve always had a rating function built into my website, and very high ratings from my customers. That’s great; but it’s hard for people to see,” Bennett says. “By signing up with Yahoo! Shopping, every shopper can instantly see we are a five-star rated merchant.” The only cost to Bennett – beyond the time it took her to export her product listings and images to Yahoo! Shopping and verify every link worked properly – is a perclick fee that averages around 25 cents.

“I am so glad I did it,” she says. “My sales have really grown.” Reviews are a more customized version of ratings, where consumers can typically express their thoughts about a product or retailer in free-form text.

“Some sites guide users in writing reviews,” Goldman says. “A good example is [the product review site] Buzzillions.com. The consumer starts typing a review, and the site uses a type-ahead feature to suggest terms they might be interested in using. It’s not trying to put words in users’ mouths, but to standardize the vocabulary. Then, the retailer can start using that information for searching in a more constructive way.” RitzCamera.com uses customer reviews extensively, according to Fred Lerner, president and CEO of Ritz Interactive Inc. (www.ritzinteractive.com), Irvine, Calif.

While it’s impossible to quantify the impact of customer reviews, “intuitively, we know customers like to buy what others like,” Lerner says. He adds the company invites consumers to review the site itself, not just products for sale.

“We get comments from our customers on how to improve our website, which we take very seriously and review daily,” he notes.“We like to think our customers designed our website.” RitzCamera.com even includes negative reviews on the site – an approach Goldman says is wise.

“Don’t be worried about negative reviews,” he states. “They are great for credibility. If everything on the site is positive, people will be skeptical. Consumers are very savvy.” That doesn’t mean a retailer shouldn’t filter reviews at all. “You do have to look for certain keywords to make sure nothing inappropriate is going up on your site.

Monitoring reviews of your site also gives you the chance to engage customers who are upset with their experience, and make it right,” Goldman says. “Filtering reviews doesn’t have to be an enormous undertaking; if you prefer not to do it manually, there is software that will filter it automatically.”
Opportunities for retailers

There are two steps to utilizing usergenerated content to its greatest effect, Goldman says.“First, set up your site with the facility to give shoppers a forum to share their input.Second, make sure you’re leveraging that information as much as possible, which means integrating it into the search and guided navigation experience. You can use that information to influence merchandising and create a much more cohesive experience.” But this is just the beginning. “Retailers can take online shopping to a whole new level by incorporating profile information of the person who wrote a review to their sites,” Goldman says.“This enables shoppers to search for products based on what other [like-minded] people think. If I’m buying a gift for my sister, I might not know specifically what camera or bag she’d like; but if I can browse for products based on reviews from people similar to my sister, that gives me better information about the type of product she would enjoy.” Some sites take consumer feedback even farther. John Fluevog Shoes Ltd. (www .fluevog.com), a Vancouver, British Columbia, Canada, company that designs and sells hip, upscale shoes both in stores and online, has incorporated interactive elements allowing users to offer advice and to suggest new designs. More than 2,000 consumers have done so. Threadless (www.threadless.com), a Chicago, Ill.-based T-shirt company, and RYZ (www.ryzwear.com), an athletic shoe manufacturer in Portland, Ore., allow consumers to design products. People vote for their favorites, which the companies then produce and sell. Even mainstream Pepsi Cola North America recently allowed consumers to decide which of three new flavors of Mountain Dew would become a permanent addition to the line at www.DEWmocracy.com, which was set up for just that purpose.

As these examples indicate, there is no size requirement when it comes to employing user-generated content in the shopping experience; small retailers, as well as huge ones, can utilize the strategy.

“Rather than size, the limit is more on the creativity of the company in figuring out the best way to implement this content,” Goldman concludes. “The biggest mistake online retailers can make is not doing it.”