May 09 2007

Merchandising with reviews drives online sales

US e-retailer DelightfulDeliveries.com recently added customer feedback metrics to its Mercado merchandising solution in order to "make search and navigation results more meaningful". Sam Decker, VP of Marketing and Products at Bazaarvoice, the online customer ratings and reviews technology provider, discusses how a user-generated online merchandising strategy can drive conversion rates.

Free shipping! 10% off today! Free this with purchase of that!

You've seen these online retail headlines before because they work. Unfortunately there are two painful consequences to these promotional tactics. They reduce margin and customers begin to expect them.

Aside from a great deal, customers are in search of the right product. They don't want to make a purchase mistake; however they are more cynical than ever of marketing claims. So they seek recommendations from others.

Analyst firm Forrester reports that 71% of online shoppers seek out ratings and reviews, making this the most widely read user generated content on the Web. Online shoppers need the authenticity and credibility of what other customers publicly believe are the best products.

With customer ratings and reviews on your products or services, you can evolve your merchandising strategy to use customer input to show shoppers which products are the best and right for them. Instead of a 'merchant-created' or 'promotion-driven' strategy, you can employ a 'customer-created' merchandising strategy by selecting and merchandising products chosen by shoppers to be winners.

This type of strategy can work in conjunction with promotional tactics and merchant insights. What's more, you can expand its use beyond your web site. Bazaarvoice has worked with clients implementing the power of customer voice in email, navigation, and even offline sales.

Here are 13 ways to blend the power of customer ratings and reviews into a user-generated online merchandising strategy that will drive conversion rates and margin pounds.

Product Selection

How do you choose which products get featured on your site, in your catalogue or in your email? With the validation of customer feedback, you can confidently choose popular products to feature or merchandise, perhaps using an online merchandising rules system such as Celebros, Mercado or Endeca.

Choose top rated and top seller Choose brands or popular products based on both rating and the volume of ratings, but also actual purchases. When merchandising according to season, consider looking at last year's top sellers too.

Choose high margin and high rated products Merchandisers often feature high margin products to increase profits. However, you miss out on total margin pounds if you are not selecting and merchandising the high margin products that others rate well, and therefore will sell at higher volume.

Choose top rated by product attributes Your customers can not only give products an overall rating, but rate attributes of the product. For example, rate the battery life, zoom quality and ease of use for camcorders. With these attributes you can select and merchandise camcorders with the "Best Battery Life" and other attributes that are important to certain segments of your customers.

Rating velocity X average rating Imagine when the iPod came out; it was likely that there were high ratings given to this product (latest ipod is 4/5 stars on Amazon.co.uk) and many reviews. Products that stir passion attract a high velocity of reviews quickly. By choosing to merchandise these hot products early on, you have a competitive advantage of featuring the hottest products.

Site Merchandising

Choosing a headline often depends on your promotion. Choosing a promotion often depends on a multitude of factors. Add top-rated products to the mix to how you merchandise your promotion and product on your site.

Top-rated products Consider merchandising 'top-rated products' as a regular feature on your home page. This could span across multiple categories or within a specific category. US retailer Bass Pro saw a 59% higher conversion on top-rated fishing poles featured on the home page than any other path on the site.

Discounts on top-rated If you're going to give a discount, also give customers another reason to buy that product. For example, feature a limited time offer of percentage off or free shipping of top-rated products for a week.

Top reviewer recommendations Feature the products reviewed by your most prolific reviewer. That adds a personal touch to merchandised products and allows shoppers to connect to customers who have bought that product.

Most talked about products Create a 'most talked about products' feature, which are products that have the most positive reviews (similar to hot products, but a different take).

Online Marketing

What works on your site to drive conversion also works in online marketing to drive click-through and conversion. So, it stands to reason that featuring top rated products, review copy and rating icons can be used as tools to maximize your online marketing spend.

Top-rated SEM campaigns Create an SEM / AdWords campaign for top-rated products by category, or a special offer on specific top rated products. You can also create SEM campaigns targeting 'rating' and 'reviews' in keywords.

Rating icons in banners and email Put rating icons next to products featured in email, a banner ad or micro site. It gives customers another reason to consider clicking through to read reviews and then to purchase.

Discount off top-rated campaign Adverts always do better when there's a limited time offer. You could feature your promotion with a set of top-rated products. This could be an internal site ad, email campaign, SEM campaign or banner ad. Point the advert to a landing page featuring products with ratings and clear communication of the promotion across those products.

Review text as copy What copy do you put in your emails? Feature customer review text as copy in seasonal emails. US retailer PETCO featured snippets of customer reviews under each product instead of its own copy and saw a 200% higher click-through to its site.

Merchandise top-rated products emails Similar to the home page strategy, merchandise the 'top rated products' path in email and on the home page. You can also bundle products together as 'top-rated bundles' with or without a discount.