Customer ratings now more influential than product brands

21 May 2019 4 min. read

Digital culture has been a major disrupting force for consumer brands in recent years, particularly due to the growing prominence of customer reviews posted on the internet. A new study has found that customers now rely much less on marketing messages, with the balance of power shifting from companies to consumers – something harnessed by disruptors to benefit consumers and small suppliers.

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

Recently, consulting firm OC&C Strategy Consultants found that even as a host of pressures impact peoples’ spending power, consumers remain committed to spending on ‘experience’ consumption – and will pay good money to back this up, as long as other consumers endorse products. While the positive sentiment of consumers regarding theme park Thorpe Park or holiday hubs Butlin’s or Royal Caribbean obviously consolidated sales, the evidence also suggested that this could have a positive impact on services in which experience is thought of as secondary to a physical product.

Customer ratings now more influential than product brands

For many people – and almost every kind of purchase – customer opinions are an important decision-making tool, then. As they are increasingly growing in importance, ratings start to impact shopping behaviour and brand loyalty. As a result, there has been a seismic shift of power away from companies towards consumers. According to a new report from consultancy Simon-Kucher, 71% of customers find ratings important, marking a change so extensive that consumers now see ratings as their third most important criterion when buying, after product features and price, and more significant than the brand.

The Trend Radar 2019, which took into account the opinions of 6,400 consumers in 23 countries worldwide, 38% of UK survey participants believe they receive more value for money due to product ratings. This number was lower than the international average of 51%, however, rather than being seen by companies in the UK as a reason to treat ratings more flippantly, the report argues this should in fact be taken as an opportunity to prepare for further change.

Value for money

With an ageing population in the UK likely to see a large number of elderly consumers eventually give way to new generations of digitally savvy customers, British companies will almost certainly see the importance of reviews catch up with – and even surpass – the global average. According to James Brown, Partner in charge of Simon-Kucher’s Consumer & Retail Practice in the UK, it is a trend that businesses simply cannot afford to ignore when planning for the future.

Brown explained, “Our research found people aged under 40 living in urban areas are now particularly less attached to brands. But it is not just hipsters who find the recommendations of other shoppers more believable than marketing promises when it comes to finding the right product. Sooner or later every provider will have to develop a strategy for product ratings.”

This needn’t only be seen as a threat to brands, though. Being able to directly compare products quickly and easily makes customers more likely to switch, with ratings eroding loyalty to product and company brands. In an age of reduced brand loyalty then, it also presents them with a sizeable opportunity to seize market share from their competitors, if they can demonstrate a better product, service and customer experience.

Companies able to tap into this stand to benefit from 17% of consumers who report they would buy more when products are rated highly. At the same time, 12% would select more expensive products, while 15% are even prepared to pay more for products with higher ratings.

Mark Billige, Managing Partner UK at Simon-Kucher commented on the findings, “There is a lot of focus on disruptors’ technology, algorithms and business models, but their successful incorporation of ratings to rapidly build trust and loyalty has been underappreciated by many commentators even though this key to their success is hiding in plain sight… Successful use of ratings has been a driving force allowing Amazon, ebay, Uber, AirBnB, TripAdvisor and many other platforms to harness thousands of smaller suppliers, while building huge levels of satisfaction and trust amongst consumers with minimal marketing spend.”