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Sam Decker explores the business case for implementing social commerce functionality on retailers' websites before Christmas.

Years ago, when I managed the Dell.com consumer website, it was always a mad rush to the deadline of getting site functionality up before mid November.

After that, we were in ‘make sure things stay up’ and ‘optimise content’ mode.

Deciding which projects were built before Christmas involved a strategic decision-making process that was followed each year - the key question being ‘which are the features that are going to drive traffic and sales?’

Online retailers are making these decisions right now, and one of the things they will be debating is whether they should add reviews before the Christmas period, against other priorities.

The case I would assert for adding reviews now — before Christmas — is on a simple premise of Net Present Value (NPV). The business case process I helped build at Dell was based on this simple financial principle.

Any feature you put on your site has an NPV, meaning the value to the profit and loss is the sum of the impact over a certain time period (say two to three years).

Some projects may have an opportunity to drive immediate benefit, but the impact declines over time.

Other projects, such as reviews, have a growing impact, where the impact immediately is not as great, but the sum of the impact over time is much greater.

With ratings and reviews, the value is in the content, which grows over time. The value is identifying and engaging your influencers, which also grows over time.

The value is in programmes and marketing strategies leveraging this content and your influencers, which overall has a widespread effect as you use reviews in email, natural search, advertising, catalogues and other marketing vehicles.

While at Dell.com, I launched over 100 projects and features on the site. Dell.com is a $3.5bn revenue operation - it was high stakes.

We came up with business cases for almost every one of those projects, and measured the impact of almost every one.

There were projects ‘above the line’ and ‘below the line’ that didn’t make the cut. I believe reviews are a priority for a very simple reason: it is the highest impact strategy, highest NPV project, against any other project I’ve seen (unless your checkout functionality is broken!). 

So if you implement ratings and reviews on your site, how long will it take before you start to see the benefits?

Let’s say you launch reviews in late October, and you immediately email an invitation to customers of the last six months to come back and write a review.

• In come thousands of reviews (we’ve seen some clients get tens of thousands in one week).
• By mid-November you can merchandise top-rated products on your home page, in email, and start to benefit from natural search as people search for product reviews in search engines (We’ve seen 60% growth week over week in search visitors for many clients).
• Customers can share reviews and products with their friends and family, driving viral marketing.
• You will have a new set of data to help decide what to merchandise over the holiday period.

All of these benefits take you through to January, which is also a healthy Christmas sales month.

After the Christmas rush, you have the reviews platform in place to ask these customers to come back and add more reviews to the system, which you can then use to drive sales after the festive period and exceed your spring year-over-year sales goals.

We have discovered through our clients that more reviews equals higher conversions. If you allow customers to review products on your site, you can build an annuity that drives sales over time.

This is what makes ratings and reviews, or any social commerce application, a higher NPV project than most other projects. If you calculate the impact of reviews used multiple ways as they grow and the impact it has for you over the Christmas period and the rest of the year, this relatively low effort project also becomes the biggest return on investment project.

Online shoppers will always look for reviews, and over the Christmas period most will be making more purchases than at any other time of the year. Brands' own product reviews are nowhere near as powerful as the independent, authentic voice of your customers. Not having reviews on your site means you risk losing your customers to your competitors.

US-based e-commerce software company Allurent recently carried out a study that revealed 67% of consumers who don’t find the information they are looking for on a site will abandon that site in favour of another that has the information.

According to analyst firm Forrester, 77% of online shoppers seek reviews when purchasing, and over two years ago there was a study from US research company eVoc Insights that suggested half of online shoppers would not even buy unless they had reviews.

Online retailers should prepare now and make sure that half of the visitors to their sites don’t have to look elsewhere this Christmas. 

Sam Decker is Chief Marketing Officer at Bazaarvoice

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Published 9 October, 2007 by Sam Decker

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