Word-of-mouth communication has long been acknowledged as an influence on consumer behavior. The power of word-of-mouth is evident as marketers are increasingly seeking ways to engage in viral marketing and social networking. We know that negative word-of-mouth has potentially undesirable effects, but can the benefits of positive word-of-mouth be assessed? Absolutely, according to comScore, a marketing intelligence firm.
In a survey of the impact of onlione consumer-generated reviews on consumer behavior for certain services, comScore found that word-of-mouth in the form of user reviews are often accessed, have an influence on buying decisions, and can even lead to a willingness to pay a price premium. Restaurants, hotels, and travel were the three services for which highest percentages of consumers reported reading online reviews and acknowledging that reviews influenced their buying decisions. These findings are not surprising as the intangible nature of services leads us to seek information pre-purchase to help us make an informed buying decision.
The effect of user reviews on price willing to pay for services is particularly noteworthy. When a service provider is rated "Excellent" in user reviews, consumers sampled said they were willing to pay price premiums ranging from 22% for travel services to 99% for legal services compared to service providers rated as "Good." It is a given that it makes sense for a business to monitor word-of-mouth about its performance on online user review websites to understand customers' likes and dislikes. Now, we know it makes dollars, too!
Labels: Consumer Behavior, Internet