How do you predict a product’s conversion rate (CVR) when you don’t have historical data? Adlucent has found that a product’s customer reviews provide a useful data set which, in combination with other predictors, can serve as a viable proxy for CVR.
Generally speaking, the higher the ratings, the higher the CVR. This makes intuitive sense: positive product reviews are given to good products, and customers seek out products that are reviewed favorably by other customers.
Simply having ratings and reviews on a website can boost conversion. Bazaarvoice—a leading vendor of ratings and reviews software—has documented increased conversion rates for their clients ranging from 10 to 40 percent once rating capabilities were implemented. See, for instance:
- Product reviews increase conversion for Argos
- A/B test proves reviews drive up to 14.2% conversion increase
- Mistergooddeal’s conversion surges 40%, time on site increases 24% with Ratings & Reviews
- Product reviews drive 35% increase in conversion for UK retailer
The impact of the rating on CVR may surprise you. Adlucent conducted a study with a major online retailer that included approximately 67,000 conversions on 9,800 products with at least three reviews. The products were culled to try to isolate the effect of ratings and reviews from other factors which are known to affect CVR. For example, the impact of price competitiveness is larger than ratings and reviews so we had to control for this.
|Average Review Rating||Change in CVR vs. a 1.0-1.9 Rating|
|2.0 to 2.9||+16%|
|3.0 to 3.9||+58%|
|4.0 to 5.0||+65%|
For this particular retailer, products with an average rating of 4.0 or higher demonstrated a dramatic 65 percent higher CVR versus those with a rating of 1.9 or less. Adlucent also found that products with no reviews actually had higher CVRs than products with several bad reviews. In other words, it may be better to have no reviews at all than a preponderance of negative reviews.
Note that we didn’t study whether a small percentage of negative reviews affects conversion rate, but the general consensus is that negative reviews add legitimacy to all of the reviews, which is a good thing. It’s also generally better to have more reviews than fewer, though the threshold is an area we’re still studying.
In the next post we’ll discuss how Adlucent uses customer ratings and reviews to improve search marketing performance.