Customer Reviews More Important Than Pricing: 3 key marketing strategies

In Marketing and Sales by Kevin Kelly


It's summer time and that means one big thing for me: summer reads. As an already established Amazon Prime addict, the leading ecommerce site always furnishes me with the books I want. But that's the problem—what books do I want?

So last week I went online shopping at Amazon (with a taint of guilt as I think my colleague who works near the elevator is fed up with the diluvia of Amazon Prime packages for Kevin Joseph Kelly). I didn't let The New York Times or the ‘Recommended for You' guide me but rather, I let the customer reviews do so. And I realized something—pricing on Amazon is already so competitive that the price points don't matter that much. It's the customer reviews.

One week later, I am happily enjoying Chris Ware's Building Stories at home and Cheryl Strayed's Wild on my commute. These are two books I didn't know about until I embarked on my ecommerce adventure. I didn't care about the pricing because I knew it would already be the best on Amazon: instead, I entrusted customers to tell me. I deleted my Facebook a while back, so I may be a little deprived of investigating online personalities and reviewers. This provides new prospects for me and Amazon: click on a reviewer and you can see everything else they reviewed. I ended up purchasing the above books because the reviewers who gave it five stars also gave five stars to many other favorite books of mine—it was like a creative LinkedIn.

It was thus a fortifying moment when a study was released by Pennsylvania State University and SAS that highlighted three key marketing strategies regarding customer reviews and hotels. These three touchstones are applicable far beyond the hotel industry:

These are three strategies directly from the study press release:

1. "Price is not an indication of quality for consumers
Reviews had a far stronger influence on consumers' perceptions of the quality of the hotel purchase than price. This means hotels can vary price to suit demand patterns (within reasonable boundaries), without damaging consumers' quality perceptions. However, all things being equal, consumers prefer to pay less.

2. Competing on price alone is not a winning strategy
Merely benchmarking against the competition's price isn't enough. Monitoring UGC about competing service offerings enables management to better evaluate where a service offering stands vis-à-vis its competition – or how consumers perceive the value of their intended purchase. Using these data together helps develop both pricing and operations strategies to gain competitive advantage.

3. Reviews are preferred for evaluating a hotel purchase
Ratings influence quality and value perceptions. But consumers are much more reliant on reviews to determine the perceived quality and value of a hotel purchase. When review sentiment conflicts with ratings, consumers rely on the sentiment, ignoring the ratings."


[PHOTO: Flikr agaumont]