The Underlying Fundamentals on Why Consumers Use Reviews Before Purchasing
Dining out, going for a movie or enjoying a bottle of fine wine all have a common feature. These are experiences a customer can enjoy and they can only evaluate them in the aftermath. In order to make an informed decision, buyers would have to source information about the quality of the service from someone else.
For this type of goods or services, customer reviews are valuable as one can find in-depth feedback from other peers. They can narrow their knowledge gap of the product with one click, by searching online. The online space allows consumers to leave their feedback to a large audience and give instant and cheap access to information.
Why Consumers Use Review Sites
Websites that allow for reviews, such as TripAdvisor or Yelp, provide consumers with user-generated content in the form of online word-of-mouth services. User generated content is usually considered more reliable as a source of information than brand advertisements.
At the same time, as customer reviews have grown in popularity as a source for information, they contribute significantly in influencing buying decisions. Data suggests that product information is more valuable for services than for goods as these appear riskier to consumers.
For example, customers of a restaurant are more likely to look for external social confirmation when they have not experienced it themselves. Review platforms address a consumer’s need to read the views and feedback of their peers. According to research the four main reasons why customers read reviews on these platforms are:
- Risk reduction: People are known to be risk-averse. Consumers see reviews as a tool to reduce the likelihood that they will end up disappointed after trying out the experience or service themselves.
- Search time reduction: With an increasing variety of options, consumers are confronted with an abundance of products and services. They will use review platforms as a filter, letting them choose from a smaller pool of options, which have already been rated by others.
- Buyer’s remorse: By gauging the opinions of peers, consumers reduce the potential of regretting spending a certain amount of money on something they might not like. The easy access to information on review platforms makes it an appropriate source of information to reduce this remorse after the consumption of an experience good.
- Social proof: Social proof is a phenomenon where the general feelings voiced in a review can affect another consumer’s perception and behavior even though the person has not experienced it themselves. A review platform will reinforce or deter a consumer from his own decision, depending on how the reviews align with their previously beliefs.