Online reviews are crucial for decision making by shoppers. However, online retailers need to advertise their products keeping in mind that negative reviews influence customers more, and customers respond better to a higher percentage of positive reviews than to higher sales volumes. Therefore, online advertisements that underline a high proportion of positive reviews will impact purchase intention and sales more.
In the current age of online shopping, reviews are crucial for online retailers. Many shoppers (over 50% as per estimates) rely on online reviews to make purchase decisions. Reviews
provide crucial information to potential shoppers regarding whether other buyers like a product or not and which products have higher sales volumes (more reviews signal higher sales volume). Buyers use both these parameters to decide whether to buy a product or not. However, the relative importance of these parameters and their implication for advertising are unclear. A study looks into this issue and tries to answer the questions: Which matters more to customers— sales volume or reviews? And how should firms incorporate this preference in their online advertising?
The study found that shoppers pay more attention to negative reviews than positive or
neutral ones. This phenomenon, known as Negativity bias, develops from believing that negative reviews are more authentic and informative. They contain “new” information absent in advertisements or product descriptions. Moreover, negative reviews are based on a bad product experience rather than a motive to feel good about leaving a review, so shoppers trust them more.
Sales volume data reinforces this negativity bias as shoppers pay more attention to absolute numbers than ratios since numbers are easier to process. For example, they might consider a
product with 200 bad reviews out of 1000 to be a worse choice than a product with 20 bad reviews out of 100. Therefore, when the percentage of positive reviews is not mentioned, shoppers tend to have a more negative attitude towards products with high sales volume because of the larger number of negative reviews.
Presenting the percentage of positive reviews clearly can break the negativity bias of
shoppers and direct their attention to the product’s positive aspects mentioned in the positive reviews. Interestingly, this can also help to avoid the impact of shoppers basing decisions on absolute numbers. For instance, 98% positive reviews create a good impression about the product regardless of whether there are 30 reviews or 3000. Moreover, if customers see a high percentage of positive reviews for a high-selling product, their view about the high quality of the product is reinforced, encouraging them to purchase the product.
Interestingly, customers are more sensitive to the percentage of positive reviews than to
sales volume. A change in the percentage of positive reviews can impact their purchase intention more than a change in sales volume. Therefore, they are willing to buy products with low sales volumes and a high percentage of positive reviews more than products with high sales volumes but low percentages of positive reviews. For example, if Product A has only 45 reviews, but 95% of them are positive, and Product B has 200 reviews, but only 70% of them are positive, a customer will likely prefer to buy Product A.
The study has several practical implications vis-à-vis online advertising. First, using the
percentage of positive reviews when advertising can significantly improve purchase intention and buyers’ attitudes towards the product. Therefore, instead of mentioning only the overall rating and the total number of reviews, online retailers can also mention the percentage of positive reviews.
Second, because the percentage of positive reviews is more critical than sales volume, sellers with low sales volume can invest in increasing the proportion of positive reviews to boost sales. Allocating resources to drive up the percentage of positive reviews through advertising and customer satisfaction to the limit where buyers will ignore the sales volume will result in better sales volumes and higher revenues.
Finally, the wording of the advertisement is also critical. Tags like “bestseller,” which focus on sales volume, are less effective than tags like “overwhelmingly positive reviews,” which focus on percentage of positive reviews. Using positive review-focused tags in advertisements, with data to back up the claim, will lead to the maximum benefits for online retailers.