Simonkucher : The Rating Economy - Company Survey
Rating strategies affect product development, pricing strategies, and much more
Implementing a rating strategy has many facets. Companies that follow through on their strategy may first of all spend more money on dealing with ratings. They will also incorporate ratings into product development, offer and portfolio design, pricing strategies, and monitoring. And they may incentivize customers to give more ratings. Unsurprisingly, the “Frontrunners” are leaps and miles ahead of the other groups in all of these areas. In order to deal with the rating trend, the “Frontrunners” have increased their marketing spend to a much bigger extent than the other groups.
When it comes to product development, monitoring and integrating ratings in the pricing strategy, again the “Frontrunners” are very clearly ahead of all other groups. They have understood that optimizing new products based on customer ratings and refining their product portfolio in line with what their customers want is valuable to themselves as well as to the their customers. Compared to the other groups, the “Frontrunners” are also very systematic about linking their price setting decisions to ratings: they act on the price potentials for well-rated products and decline prices for badly-rated products.
In summary, consumer ratings are becoming increasingly important. However, the trend is still in a very early stage and even though it holds lots of potential, it also comes at a risk, as ratings can go both ways: They can increase profits or decrease them. Companies need to strive for superior ratings and definitely need to steer clear from bad ratings. In order to achieve this, they need to listen more than ever to what their customers need and value. This will over time improve the value-for-money ratio for customers – and means that to be successful, companies need to become really customer centric. However, there is still some way to go.