How Influential are Individual Online Reviews on Consumer Purchasing Decisions?

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How Influential are Individual Online Reviews on Consumer Purchasing Decisions?

New Study Finds They Can Mean All the Difference, but Knowing When they Work is Key

Key Takeaways: 

  • Individual online reviews affect a customer’s purchase decision even after they consider the average rating of a product and the number of reviews it has.
  • Individual online reviews are most effective when there is limited information in the description of the product or when the product only appeals to a niche group of customers. 
  • Individual online reviews are effective when they offer contrasting information, such as a one-star review for a product that is on average rated very highly or a five-star review for an inexpensive product. 

  

CATONSVILLE, MD, September 7, 2021 – We often look at the average rating of products, but how influential are individual online reviews when it comes to helping consumers make purchase decisions? According to new research, not only are they influential, but understanding when they work best is key.

The study, “The Effect of Individual Online Reviews on Purchase Likelihood,” authored by Prasad Vana of Dartmouth’s Tuck School of Business and Anja Lambrecht of the London Business School, found that reviews matter most when information on a product is otherwise limited. The authors also found that reviews have a greater impact on purchases when the product’s characteristics are likely to appeal only to a narrowly focused subset of customers. 

“Consumers tend to use reviews to resolve uncertainty,” says Vana. “Our research has also found that reviews are of most value to consumers when the content of those reviews provides contrast and comparisons with information that consumers may be otherwise gathering on the same website.”

Vana adds, “One of the interesting findings is that when the overall rating of the product is relatively low, a good review will have the highest impact on sales of that product. Similarly, when the lower price of a product signals possible lower quality, a good review of that product can greatly enhance the chances that the consumer will actually buy the product.” 

The researchers centered their study on how the star ratings of individual online reviews influence consumers’ purchasing decisions. They looked beyond a product’s aggregate rating and studied how the position of the review on the web page influenced buying habits.   

“We examined the effect of individual reviews on purchases by using a unique dataset from an online retailer in the United Kingdom,” says Lambrecht. 

“For very positive, that is five-star reviews, we found that it matters where that particular review is placed among the other reviews that are available for that product. When the first review displayed on the product page is five-star, it has the greatest influence on a customer’s buying decision, relative to that review being in any other position.”

The study authors examined three datasets collected between February 1 and March 31, 2015. That data provided insights on consumer browsing patterns, from how consumers logged onto the retailer’s website to how they browsed throughout individual sessions. 

The data the researchers used was drawn from 126,375 unique user IDs and 46,170 unique IP addresses.

  

 

Link to Study

  

About INFORMS and Marketing Science 

Marketing Science is a premier peer-reviewed scholarly marketing journal focused on research using quantitative approaches to study all aspects of the interface between consumers and firms. It is published by INFORMS, the leading international association for operations research and analytics professionals. More information is available at www.informs.org or @informs.

  

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