The Relationship between Online Customer Reviews and Brand Equity
March 3, 2014 § Leave a comment
Products with low brand equity require different strategies than products with high brand equity.
Online Customer Reviews
A recent study showed that encouraging customers with positive experiences to post online reviews can be a powerful strategy for driving customer acquisition. However, such a strategy may not be equally effective for all products. For products with low brand equity, such as new or emerging brands, there is a significant correlation between cumulative online customer reviews (positive or negative) and sales impact. But for products with high brand equity, such as category leaders and well-established brands, cumulative online customer reviews (positive and negative) do not have a significant effect on sales. The study concluded that different strategies are needed for each group.[i]
Low Brand Equity Products
A proactive strategy should be adopted that focuses on generating positive online reviews for product models with low brand equity. This is because they can benefit sales of that particular model directly as well as strengthen equity for the brand overall. This can enable weaker brands to compete more successfully against stronger brands by “flipping the funnel” (Spending less on traditional advertising and more effort on increasing satisfaction and loyalty to drive word of mouth and customer acquisition).
An essential requirement for this strategy to succeed, of course, is a truly superior product offering. One that is relevant, differentiating and, ideally, has the potential to become a category changer. Tactics that can be used to encourage positive online customer reviews include:
- Make detailed information about products available and easily accessible online.
- Establish brand communities and early adopter clubs. Members of these clubs can buy products with incentives before launch to spark the feedback process. Management can also use positive feedback as seeds and negative feedback to modify and improve their products before launch.
- Provide samples to expert review websites. (Anecdotal evidence suggests that customers often refer to expert reviews in their own reviews.)
- Send reminders and incentives to customers to encourage posting reviews.
High Brand Equity Products
Product models with high brand equity, however, have little to gain by pursuing a concentrated strategy designed to garner and leverage positive online customer reviews. That said, “These products models still receive a significant sales boost from being part of a strong brand; therefore, their resistance to positive reviews does not disadvantage them and they are protected to a degree from negative review.”[ii] And, although models of a strong brand are not affected directly by their own online customer reviews, they can be adversely affected by positive customer reviews for models of weak brands, allowing these competitors to draw consumers away from them. Furthermore, while controlling negative online customer reviews may not be as important for strong brands, brand managers are well advised to monitor them and take corrective actions. This is because the cumulative body of negative reviews overtime can become increasingly important if these brands lose category relevance and strength.[iii]
So, to avoid risk of losing category relevance, strong brands have more to gain by being vigilant in their efforts to create barriers to competition instead of on generating online customer reviews. Two leading strategies to consider include:
- Invest to create superior product models that leapfrog the competition by improving performance around common features, adding new features or eliminating major limitations. Such a leapfrog strategy can dramatically reduce incidences of positive online customer reviews on product models of weaker brands and essentially make these competitors irrelevant.
- Create energy through branded sponsorships (e.g., Valvoline motor oil and its NASCAR sponsorship) or branded social programs (e.g., Avon Walk for Cancer). Brand energizers, such as these, can dramatically strengthen brand loyalty and negate the impact of positive reviews on product models of weaker brands.
Summary
Brand equity plays a significant role in moderating the relationship between online customer reviews and sales. Products with low brand equity have much to gain by directly pursuing strategies to capture and leverage positive online customer reviews. While products with high brand equity have more to gain by being on the offensive and continually raising the bar through innovation or creating brand energy to strengthen customer loyalty and reduce the impact of positive reviews on competitors’ products.
Raising the Bar on Customer Experience Drives Brand Engagement and Customer Loyalty
May 29, 2012 § Leave a comment
Is Engagement the Best Way to Keep Customers?
According to a recent article titled Three Myths about What Customers Want by Karen Freeman, Patrick Spenner and Anna Bird on the HBR Blog Network — interacting as much as possible with customers and building relationships with them actually does very little to increase customer retention. In a study involving more than 7000 consumers, HBR found that companies often have dangerously wrong ideas about how best to engage with customers and cites three common myths.
Myth #1: Most consumers want to have relationships with your brand.
Actually, only 23% of the consumers in HBR’s study said they have a relationship with a brand. In the typical consumer’s view of the world, relationships are reserved for friends, family and colleagues. (What consumers really want when they interact with brands online is to get discounts).
Myth #2: Interactions build relationships.
Shared values build relationships, not frequent interactions. A shared value is a belief that both the brand and consumer have about a brand’s higher purpose or broad philosophy. For example, Pedigree Dog Food’s shared value is a belief that every dog deserves a loving home. Southwest Airlines’ shared value revolves around the democratization of air travel. Of the consumers in HBR’s study who said they have a brand relationship, 64% cited shared values as the primary reason and only 13% cited frequent interactions with the brand as a reason for having a relationship.
Myth #3: The more interaction the better.
According to HBR, there’s no correlation between interactions with a customer and the likelihood that he or she will buy, buy again or recommend your brand. Yet, most marketers behave as if there is a continuous linear relationship between the number of interactions and share of wallet. Without realizing it, many marketers are only adding to the information bombardment consumers feel as they shop a category, and are actually reducing stickiness, not enhancing it.
Based on HBR’s findings, the authors suggest three different strategies for marketers to improve their effectiveness:
- Understand which of your consumers are in the 23% who have a relationship with your brand and which are in the 77% who don’t. Apply different expectations to each group and market differently to them. Stop bombarding consumers who don’t want a relationship with your attempts to build one through endless emails or complex loyalty programs. Those efforts will be low ROI. Chances are there are higher returns to be had elsewhere in your marketing mix.
- Communicate your brand’s philosophy or higher purpose. Patagonia’s commitment to the environment and Harley Davidson’s goal “to fulfill dreams through the experience of motorcycling” are excellent examples of brands that have a demonstrable higher purpose built into their missions. These offer a credible basis for shared values and relationship-building.
- Instead of relentlessly demanding more consumer attention, treat the attention you do win as precious. Then ask yourself a simple question of any new marketing efforts: is this campaign/email/microsite/print ad/etc. going to cut the cognitive overload consumers feel as they shop my category? If the answer is “no” or “not sure,” go back to the drawing board.
When it comes to interacting with your customers, I agree that more isn’t better. But, I would argue that the QUALITY of the customer experience is an important determining factor that should be added to this list.
Various studies by Forrester and others have shown that marketers are still falling short at customizing experiences for each of the unique media channels and technologies (e.g., websites, mobile sites and apps, and social media) being used today to engage customers with their brands. Use of best practices for optimizing the user experience and creative ways that help potential buyers discover your brand’s unique benefits provides a practical strategy to differentiate your brand and increases brand stickiness (the likelihood that consumers will buy, repurchase and recommend your brands to others).
Creative examples include:
- Providing timely digital information via smartphone apps, such as augmented reality, personalized merchandising, product store information (e.g., hours and directions), user manuals, price comparison information, in-store product availability, expert reviews, real-time coupons, in-store navigation and checkout
- Using of video, rich brand/product content and consumer-generated content (such as reviews and ratings)
- Capitalizing on cross-channel branded content opportunities that showcase your brand’s personality using technologies, such as augmented reality, image recognition, near field communications (NFC) and QR codes
Bottom line: Raising the bar on the quality of customer experiences and finding unique ways that make it easier and more enjoyable for buyers to discover, learn and buy your brand drives engagement and abiding customer loyalty.
Related articles
April 25, 2012 § Leave a comment
This is an interesting article by Tony Fannin, CEO/Partner at BE Branded. I agree with his thinking. “There is no silver bullet.” Fact is, traditional media like TV isn’t dead and still plays a vital role. It’s become an all channel, all-the-time-world and the consumer is driving when and what media and devices they want to use to interact with people and brands. We need to look at the big picture when optimizing the media mix and leverage each channel based on its unique strengths to achieve our overall goals. Though, “liking” a brand on Facebook is an easy metric to track it really holds little weight from a brand engagement standpoint.
Albert Einstein summed this up quite nicely in one of his quotes: “Not everything that counts can be counted, and not everything that can be counted counts.”
by Tony Fannin, CEO/Partner, BE Branded |
One of the common beliefs is traditional media, like TV, is more wasteful of marketing dollars than online and social media properties. The old joke of “I know half my money is wasted in advertising, but I don’t know which half.” comes from this idea. Yes, it is often hard to quantify how a TV spot affects sales since the power of TV is mostly in awareness and brand building and less about immediate sales. So, does that truly mean that new media channels such as Facebook are more effective in reaching your customers?
There is a new study out by Ehrenberg-Bass Institute, an Australia-based marketing think tank, about social media (Facebook in particular) and the interactions with brands. The results show that less than 1% of those who “like” or “fan” a brand on Facebook actually engage with the brand or even buy…
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The Zero Moment of Truth Drives which Brands Make the Shopping List
February 21, 2012 § 2 Comments
If you haven’t read Winning the Zero Moment of Truth yet, I urge you to do so soon. This is a powerful eBook by Google’s Jim Lecinski who shares seven smart steps to help you WIN at ZMOT. ZMOT is that critical moment that occurs between stimulus and the first moment of truth (aka at the shelf). It happens when consumers grab a smartphone, tablet, laptop or other wired device and start learning about a product or service they’re interested in or thinking about buying.
Winning The Zero Moment Of Truth, Google
According to Forrester, American households now spend as much time online as they do watching TV. Yet in 2010, only about 15% of media ad budget money was spent online. Online decision-making is skyrocketing, but online marketing budgets aren’t keeping pace. Therefore, according to Lecinsiki, “change your marketing mental mode to include ZMOT, and you’ll stand to gain a very big competitive advantage. Because you’ll reach those millions of shoppers who are making decisions before they enter the store.”
A recent study conducted by Shopper Sciences revealed that the average shopper used 10.4 sources of information to make a decision in 2011. This compared to just 5.3 sources one year earlier. And 84% of shoppers said that ZMOT shapes their decisions. This compared to 76% during stimulus and 77% during the first moment of truth making it even more important in moving consumers from undecided to decided.
And it’s not just stores and consumer packaged goods that are affected. “ZMOT is at work across all industries in B2C and B2B, and in areas like politics and education,” according to Lecinski. But, if you’re still not sure that ZMOT is important in your product category, then “grab your own laptop or smartphone now and go to your favorite search engine. Enter your company’s name or the name of your company’s flagship product and add the word ‘reviews.’ Then do a new search and try putting the word ‘best” with your product category. What do you see on the page? “I’m betting you see ratings and opinion sites, online stores, coupons, images, demonstration videos.. and competitor sites” Lecinski states.
Then he asks three more potentially painful questions: “Are you happy with what you see? Based on what you see, will somebody buy your product? Can they even find your product?”
To win, you must be present at the zero moment of truth when your potential customers first begin thinking about buying. It happens online – typically starting with a search on Google, Bing, Yahoo, YouTube or any other search tool or engine. It happens in real-time – 24-hours a day and is happening more and more frequently on the go (i.e., according to Google, its mobile searches doubled last year!). And the conversation is multi-way: marketers, friends, strangers, websites and experts all have their say and compete for attention.
Bottom line: As marketers, the choice is ours. We can either choose to ignore the zero moment of truth or we can jump in, join the conversation and use Lecinski’s seven-step formula to win.
Brand Perspectives 