User Generated Content Research Brief Retailers are beginning to understand how user-generated content (UGC) can be a critical component to their brand experience.

1. LITMUS
User Generated Content
Research Brief
A Look at Retailers’ Perceptions
of the Importance of User-Generated Content
The proliferation of consumer dialogue is still on the rise. Retailers who think about
leveraging the interactive channel may come to find that it’s more than researching,
shopping and self service. The social web is empowering consumers and creating
new consumer behaviors of creating, sharing and influencing. As a result, consumers
are increasingly turning to each other for product or service information before
making a purchasing decision.
O According to a global Nielsen survey of 26,486 Internet users in 47 markets,
consumer recommendations are the most credible form of advertising among
78% of the study’s respondents.1
O Trust in “a person like me” far outranks any other institution, business, or
spokesperson.2
O Consumers trust friends above experts when it comes to product
recommendations (65% trust friends, 27% trust experts, 8% trust celebrities).3
Retailers are beginning to understand how user-generated content (UGC) can
be a critical component to their brand experience. The opportunity to provide a
destination for the exchange of useful information which aids other consumers in
their purchase decision is most readily demonstrated through ratings and reviews,
but retailers are also branching out into other forms of UGC such as, testimonial,
blog, picture and video updates.
From our research, we understand that many retailers have been or will be
embracing consumer opinions and encouraging open dialogues online through
ratings and reviews. Return on investment has been demonstrated and this
UGC tactic is less likely to be considered risky. Retailers are enjoying increased
1
Nielsen, “Word-of-Mouth the conversion, higher average order value, increased site traffic, lower return rates
Most Powerful Selling Tool” and new opportunities for merchandising and marketing. Additionally, retailers are
2
January 2008 Edelman’s leveraging customer reviews and extending them into the offline—display in-store
Trust Barometer study, an through kiosks and product signage or inclusion in print catalogs.
international study tracking
the attitudes of nearly 2,000
opinion leaders,
3
Yankelovich
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2. Key Findings
Importance and Current Use of UGC
53% of online retailers currently utilize UGC on their site. Of these UGC adopters,
78% of have implemented ratings and reviews, 39% have implemented testimonials,
and 39% have implemented discussion boards or forums.
Almost three-quarters of retailers said that UGC is currently important to
their overall business. Respondents mostly expect their investment to impact
conversation rate, customer satisfaction, and customer loyalty.
38%
36% IMPORTANCE OF UGC TO BUSINESS
21%
5%
Extremely or Somewhat Not very Not at all
very important important important important
78%
CURRENT USE OF UGC
39% 39%
34%
29%
10%
Ratings & Testimonials Discussion Image Blogs Video
Reviews boards/forums uploading uploading
Future Use of UGC
81% of retailers who do not currently utilize UGC say they are likely to implement
UGC in the future. Ratings/reviews and testimonials were the two highest priorities
for companies who have not yet but are planning to implement UGC on their sites.
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3. The percentages below represent the percent of retailers who plan to offer each
type of UGC in the future.
70%
57%
FUTURE USE OF UGC
46%
30%
24%
14%
8%
Ratings & Testimonials Blogs Discussion Image No form of Video
Reviews boards/forums uploading UGC is on uploading
our radar for
the future
Impact of UGC
Retailers identified increased conversion, increased customer satisfaction, and
increased customer loyalty as the actual and anticipated business metrics most
impacted by online UGC. The percentages presented below represent the percent
of retailers indicating the two highest impact measures from a five-point impact scale.
57%
Increased conversion rate
42%
53%
Increased customer satisfaction
39%
57%
Increased customer loyalty
34%
33%
Increased site traffic
32%
23% IMPACT OF UGC
Increased average order value
16%
23% ANTICIPATED (NO UGC)
Decreased returned items rate
3% ACTUAL (NO UGC)
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4. Retailer Concerns
Retailers who are hesitant about deploying UGC tactics on their websites expressed
various reasons which include but are not limited to:
O Receiving negative postings about a product or service
O Fear of the unknown and loss of control of the experience
O Determine which UGC tactic is best to implement
O Prioritizing in current project pipelines
O Legal concerns
O Lack of resources to manage ongoing
O Cost to implement
Business Impact
The retailers who have paved the way with respect to user-generated content are
demonstrating a level of success and case studies that prove this is more than a
trend. Retailers that span industries and levels of online proficiency are quickly
tackling the most proven UGC tactic—ratings and reviews. We cannot promise
that negative reviews will never happen, however, we can share stories about
retailers who have taken those negative reviews and helped them to fuel product
and service improvements. Retailers who are in the process of determining their
content strategies can look to the early adopters and learn from their experiences.
Ultimately, the community itself is the most effective tool for shaping and policing
user-generated content. When empowered with reporting mechanisms, users freely
report objectionable content to the proper authorities.
Web 2.0 has unleashed a new set of consumer motivations and behaviors. Their
desire to share their thoughts and opinions will continue to evolve outside their
social networks to all of their digital experiences. This creates new demand and
retailers have to make a conscious and long term decision to support these web
empowered consumers. An honest relationship with consumers will help garner the
trust and transparency they require and will convert brand loyalists to brand stewards.
Retailers who create and support opportunities that allow their consumers to add
their voice to the marketing mix will find themselves with a plethora of new content
which can be used in a variety of ways. Retailers who have already embraced this
new consumer behavior are finding success in weaving this user-generated content
throughout the brand experience—both online and offline.
When executed properly, this type of integrated strategy can drive sales, guide
consumer expectations and decisions, and generate more powerful marketing
content. The incorporation of user-generated content creates benefits for
consumers—they can rely on their peers and affinity groups for consultation and
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5. validation. The primary benefit for retailers is their ability to tap into a new source of
content creation from their most valuable asset—their consumers.
Methodology
In January 2008, 100+ respondents in the eTail database completed an online
survey. 78% of respondents represented U.S.-based multichannel retailers, 28%
online-only. 79% of respondents had ecommerce functionality on their web sites.
Respondents’ titles were broadly varied, with the majority of respondents classifying
themselves as vice president (20%), director (28%), or manager (25%.) The majority
of respondents also had complete, extensive, or some authority over the decision to
implement user-generated content (UGC) on their site.
A working definition of UGC was used to minimize confusion. User-generated
content was defined as: “various kinds of media content that is produced by
consumers and made publicly available on websites or other channels (e.g.
specifically ratings and reviews, testimonials, image and/or video uploading, blogs
and discussion boards/forums.)”
About Bazaarvoice
Bazaarvoice brings the power of social commerce to the world’s best brands. Social
commerce happens when businesses connect customers to one another in ways
that drive measurable results to the business. Our mission is to help your customers
build your business.
Through outsourced technology, community management services, analytics, and
syndication, Bazaarvoice is the best-of-breed solution for using consumer-generated
content to drive customer loyalty and multi-channel sales.
Ratings & Reviews, Ask & Answer,™ and Stories™ enable customers to rate and
™
review products, ask and answer questions, and share personal experiences to
build an online community, establish brand loyalty, and increase buyer confidence.
SyndicateVoice™ publishes product reviews to the largest and most diverse
customer review syndication network in the world, driving qualified site traffic.
BrandVoice™ allows manufacturers to capture reviews, questions and answers and
syndicate all of that information to its retailer network. All products and programs
are backed with industry-leading services.
Bazaarvoice was named to the 2007 Red Herring Global 100 and 2006 Red Herring
Top 100 lists and received the 2006 ClickZ Marketing Innovation of the Year award.
Bazaarvoice currently serves over 160 eCommerce leaders including Bass Pro Shops,
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6. Dell, Macy’s, Office Depot, Inc., Overstock.com, PETCO, QVC, Sears, and ZipRealty.
The company has headquarters in Austin, TX and offices in London, UK. Learn more
at www.bazaarvoice.com.
About Resource Interactive
Resource Interactive is one of the nation’s preeminent digital marketing agencies,
helping Fortune 500 companies thrive in the evolving internet economy with
award-winning digital strategy, creative and technology solutions. Known for
its revolutionizing consumer insights, leading edge interactive design and
technological innovation, Resource Interactive is ranked among the top ten
independent interactive agencies in the nation.
Unique in the industry as female-founded, owned and operated, Resource
Interactive has grown over its 28-year history from its first marketing relationship
with Apple to ongoing partnerships with clients such as Procter & Gamble, Hewlett-
Packard, The Coca-Cola Company, Victoria’s Secret, Sherwin-Williams and L.L.
Bean, among others. For more information, visit www.resource.com.
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