Retail TouchPoints Q&A with Pehr Luedtke, CEO, PowerReviews

The power of word-of-mouth is clear in retail. As a matter of fact, 61% of people rely on user reviews for product information or research before a buying decision is made, according to Razorfish. Now that social media is at the forefront of online communication, shoppers have the power to up the ante on recommendations and product reviews.

Retail TouchPoints recently caught up with Pehr Leudtke, the CEO of PowerReviews, a solutions provider designed to help online retailers to engage and connect with customers. From the trending “social intervention” to the ROI considerations for retailers, Leudtke shared some key insights on the benefits of integrating product reviews.


Retail TouchPoints: PowerReviews believes that marketers are faced with a form of “social intervention,” and must find ways to minimize its downside, and harness its significant upside. Can you expand on this philosophy and how it relates to customer reviews?

Pehr Leudtke: Social intervention simply means customers now have the opportunity to share feedback and recommendations in real-time about a product, a store and a Brand. In fact, many believe that this “conversation” has moved out ahead of traditional marketing and merchandising to become the primary driver of brand and purchase intent.

Like everything, including customers in the conversation requires balance — retailers must find a way for their customer’s voices and opinions to be heard while simultaneously leveraging this content for their own marketing advantage. Customer reviews are a perfect example. Reviews, when delivered and packaged correctly have been proven to increase sales, loyalty and trust. However, if the reviews aren’t handled correctly, they can actually erode customer trust. That is why transparency is critical for retailers. Not only must retailers make a large volume of reviews available to consumers, but also they must not eliminate the negative ones, as consumers expect to see both sides of the coin. If they don’t, consumers become suspicious, and the reviews — and the retailer — lose credibility.

RTP: What are some of the fundamental benefits of consumer-generated reviews? Targeted recommendations?

Leudtke: The fundamental benefit of customer reviews for the retailer boils down to one thing: sales. Plain and simple, the availability of product reviews on a Web site has been proven to drive conversion and repeat visits. For example, our client Hayneedle (formerly Netshops) experienced a 26% increase in product sales for products with reviews, in addition to a 171% conversion rate uplift for those shoppers who visited the “Top-Rated Products” merchandising section across 20 product categories versus those who did not. Similarly, our client BTO Sports achieved a 96% conversion uplift after switching to our solution.

Retailers understand this, which is why you will hardly see an e-commerce site anymore that doesn’t feature reviews.

Not insignificantly, another key benefit of reviews is they drive consumer trust.

The other piece of the pie that isn’t always considered is the benefits derived by the retailer from optimizing their customer reviews. By extending the reach of their reviews with SEO tools that route organic search traffic directly to the product page, where conversion is the highest, retailers get twice the value from each review.

From a consumer perspective, customer reviews result in targeted recommendations. A social shopping study we conducted with the eTailing Group in 2007 revealed shoppers found it extremely helpful to narrow product selections based on feedback from people “just like them” — people with like interests (64%) and similar uses (59%). Customer reviews by PowerReviews are built on a learning system called “tags” or keywords that evolve to match each reviewer’s lifestyle and product usage, so this allows customers to self-segment, helping to guide them toward the right decision.

RTP: How do these offerings integrate into customer loyalty and lifetime value?

Luedtke: The value of customer reviews lie in the opportunity for real conversations, that is, the invitation for customers to voice their opinions about a product or service. How a retailer responds or acts on these opportunities — again getting back to a willingness to actually engage with customers versus create a one-way street — makes the difference between a loyal and a disloyal customer

RTP: From the retailer’s perspective what are the metrics and ROI considerations when integrating reviews on an e-commerce site?

Luedtke: The fortunate thing for retailers when integrating reviews is that several of the key metrics and measurements are already in place — all the retailer needs to do is watch them grow once the review switch is flipped. Many of our clients track average order value, return rates, and conversions to determine the impact of reviews, all of which head in the right direction post-implementation (order value and conversions up and returns down).

In addition site traffic is a key metric, which links back to SEO on how customer reviews can and should be optimized. For example, achieved a 49% boost in natural search traffic and an increase in search-based sales by 33% once they worked with us to optimize their reviews.

RTP: What are your thoughts on integrating social media into reviews?

Luedtke: We are in favor of any tool that extends the life and usefulness of the customer conversation for the retailer – whether it is rooted in SEO or social media or something else. Social media integration with reviews is just becoming an important topic for retailers, as until now there has been little data to support an increase in conversion based on social media integration of reviews. That said, we expect this to change in the coming months as more and more consumers look to people within their networks for recommendations. In fact, research has shown that customers are more inclined to seek recommendations from those they know (friends) and those most like themselves.

In short, social media is an important channel – but just one important channel – that must be combined with listening intently and acting on feedback in order to drive results.

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