More customer centricity due to product ratings
Studies show clearly that product ratings are a highly important decision criterion for consumers in the purchasing process. But only 15 percent of companies have a comprehensive and effective strategy to deal with ratings. Read more about how ratings affect sales volumes, price potentials and brand building, why developing a sound approach to act on them becomes more and more important, and how companies implement their rating strategies.
- Ratings have become increasingly important to companies: 54% of companies think that product ratings are very important to them. For another 29% they are somewhat important.
- Admitting that ratings are important is much easier than developing a sound strategy to deal with them: Only 15% of the participating companies claim having a strategy to facilitate ratings and 16% one to improve ratings. Another 28% have a first draft of a strategy that still needs improvements.
- Only few companies are following through on their rating strategy: Based on the maturity of companies’ dealings with ratings, four groups can be defined: The “Laggards” (17%) for which ratings are not yet an important trend, the “Activists” (47%) that consider ratings important and started acting on them, but lack an overarching strategy, the “Talkers” (19%) that don’t seem to implement their rating strategy, and the “Frontrunners” (17%) that “walk the talk”, have a rating strategy and follow through on it.
- Rating maturity and e-commerce go hand in hand: Compared to the other companies in the survey, the “Frontrunners” are larger companies with slightly higher EBITDA margins – and they are online-savvy: 37% of them conduct more than half of their sales through online channels compared to 26% overall.
- The “Frontrunners” excel at utilizing ratings: The “Frontrunners” implement their rating strategies in many aspects, and much more so than the other companies in the survey: They monitor ratings to use them as KPIs (100%), replace badly rated products with better versions (96%), use customer ratings in product development to optimize their new products (91%), and integrate insights gained through ratings into pricing strategies (94%).
- Ratings have a huge impact on brand building: Across all groups in the survey, companies agree that ratings are especially important for brand building (81%), followed by lead generation (74%) and conversion (73%)
- Ratings affect the top (and bottom) line: Most companies see the economic impact of ratings on sales volumes and price potentials. Well-rated products are seen to warrant higher prices (68% state that), and to increase sales volumes (83%). On the other hand, badly-rated products lead to a loss in sales volumes (82% state that) and may make price reductions necessary (68%).
About the study
The Trend Radar is a global study conducted by Simon-Kucher & Partners for the first time in 2019. Focusing on the topic of the “rating economy,” in the company survey, more than 1,600 companies across all industries were asked about their rating strategy in April 2019.
Click here to read the results of the accompanying consumer survey from earlier this year.