The Positive Impact of Ratings and Reviews

YouTube’s blog post last week about the overabundance of 5-star ratings—and whether this preponderance of the positive calls into question the very effectiveness of ratings systems —sparked a lot of commentary. How, many people asked, can ratings mean anything if they are overwhelmingly positive? Should we scrap ratings altogether and go with a thumbs-up, thumbs-down system, asked YouTube?

For a media company like YouTube these are important questions, and the post served as a call to action for marketers in all industries from retail through travel and financial services to take a look at their own rating systems and rating distribution. Smart CMOs and marketing VPs are asking themselves their own hard questions about how their customers use ratings and reviews and how useful this functionality is in driving sales, building confidence in purchase decisions, and increasing loyalty.

I certainly had my team take a long look at our ratings system. And here’s what we found at Bazaarvoice, based on our data and experience hosting social commerce applications, such as ratings and reviews, for 600 brands. We observed, similar to YouTube ratings, most product ratings are positive. The average rating is 4.3 out of 5. If you were to graph the distribution of one to five star reviews it would create, what we call, a “J Curve”, and it’s been that way since the beginning. Does this positivity mean ratings aren’t useful? Absolutely not. And there are a lot of reasons why.

In the realm of products and services, the starred rating system is still extremely relevant for two main reasons. First, because it’s fairly easy for a person to assign an accurate rating to a product or service on a one-to-five scale by considering variables that go beyond personal taste, such as price, performance, quality, design, ease of use, customer service, etc. In other words, you might love the product’s design (5 stars), but find it a bit too pricey (3 stars), and fairly hard to use (2 stars); in this case, you’d assign the product 3 stars. And secondly, in the products and services realm, ratings are almost always accompanied by a written review.

All Rating Systems are Not Equal
First, we need to avoid a myopic conclusion about ratings just because YouTube finds their ratings system less helpful for their users. Let’s evaluate the system of input and display of YouTube’s rating system to typical rating AND review systems for products and services.

Ratings for products and services are typically much more than just a rating. For products and services you typically see raitings AND reviews, plus more:

· Rating
· Review title
· Review text
· Rating or tags of product attributes (quality, value, fit, etc.)
· Profile information (ex: location, expertise, age)
· Was the review helpful?
· Would you recommend the product to a friend?
· And sometimes more…

A review system like this encourages the reviewer to give more. In fact, the average product review length for products is over 300 characters. All of this content, even if the multiple reviews are positive, provides the reader more to evaluate the reviewed product.

In contrast, on YouTube and other media, users simply click a star rating. That’s all they can do. You like the video, give it a 5. Don’t like it, give it a 1. Users can only ‘comment’ as a separate action, and these comments are not meant to help others evaluate the video.

Ratings with reviews are useful to consumers
Our experience shows that when consumers research products online, they rely more heavily on the review content than on the star rating. Star ratings remain valuable for their role in helping people filter or find the more helpful content. One retailer reported 125% higher clickthrough from search results on products that have a rating. Then, what they read in the review provides useful information to aid in the purchase process. Research done with KellerFay shows shows that 90% of people who write reviews do so to help others, so the content is usually helpful in tone.

Consumers appreciate ratings and reviews during the purchase process, and are more engaged with a Web site that has them. From our own research, consumers spent 42% more time on pages that contained product reviews. And overall, 70% of people trust recommendations from unknown users online, up from just 9% in 2007, according to an April 2009 Nielsen study.

Clearly, with product and service ratings and reviews, the review content and who is writing the review plays the most valuable role in helping people make purchase decisions. The ratings themselves do serve the purpose of pulling you in and allowing you to sort, as you’d like, then the review content provides depth and deeper information. Even Google understands the importance of the 5-star system – at least outside of its YouTube property. Google introduced starratings into its organic search results in May, and found that searchers are more likely to click on rated links.

Ratings and reviews are useful to companies
Ratings and reviews have changed the way companies sell products and services, and forever altered the way brands interact with their customers. Retailers, manufacturers, financial service providers, and even media companies, aren’t going to go back to a world where consumers are unable to rate their products and services – because ratings and reviews work to drive sales.

Take for example QVC, whose U.K. site added customer ratings and reviews and tracked the impact they made; customers who read reviews had 23% higher revenue per session and purchased 28% more items per order. Perhaps the best example of how well product ratings and reviews can help drive sales is Office Depot. The retailer added creative about “top-rated products” in their paid search campaigns and increased click-through rates by 78.5%, conversion by 23.8%, and revenue driven by the campaign by 196.6%. I’m sure these companies would not agree with YouTube that 5-star reviews are essentially “worthless.”

YouTube and other media sites may be grappling with where to take their ratings systems, but let’s not throw the baby out with the bathwater. After all, according to a Nielsen study of shopping behavior last holiday season, more than 80% of shoppers consult ratings and reviews prior to buying a product. And that reason alone is enough to keep us going back to the dark ages where people just had to take a blind leap when buying products.

Sam Decker is CMO of Bazaarvoice.