RealTime IT News

Online Reviews Drive Offline Sales

For merchants still wondering if commerce on the Internet and in the real world exist in separate spheres, the answer is: They don't.

Research from online metrics firm comScore and the Kelsey Group, which studies local media and advertising, finds that the online ratings consumers give products and services have a direct impact on people's offline purchasing decisions, concluding that merchants who ignore their reputation in the virtual world do so at the expense of very real dollars.

The researchers found that 24 percent of Internet users consult consumer-generated reviews online before making their purchases offline. Consumers were willing to pay 20 percent or more for goods that received an "Excellent," or 5-star, rating than those same products or services that received a "Good," or 4-star, rating.

The study considered reviews of products in seven categories: restaurant, hotels, travel, automotive, home, medical and legal.

In each of the categories, around three-quarters of the respondents who consulted online reviews said they had a significant influence on their purchases.

Reviews had the greatest influence in the hotel category, where 87 percent of respondents said that online reviews played a strong role in their purchasing decisions. In the home category, online reviews had the slightest influence with 73 percent of shoppers who read reviews reporting that they influenced their decision.

Influence cuts both ways, however. Tallying the percentages of consumers who consulted reviews and then went on to make purchases, the numbers are much lower.

The highest correlation between reviews and purchases came in the hotel and restaurant categories, where about 40 percent of consumers consulting reviews ended up making purchases. Reviews in the legal category were the least likely to drive consumers to make a purchase.

"These data show the importance of local service review sites in consumers' purchase process," Kelsey Group Research Director Steve Marshall said in a statement. With such a large percentage of these review readers, he added, it's vital that local service providers have a positive presence on these review sites.

On the question of credibility, respondents to the survey said they were more likely to believe the review of a fellow consumer than one posted by a professional, and with good reason. Nearly all (97 percent) of respondents who made an offline purchase based on an online review said that the review turned out to be accurate.

That finding gives credence to the value of the "trusted referrals" that advertisers have been chasing through social networking sites and consumer-generated ad campaigns they've been rolling out on YouTube and other social media destinations.