The Impact of Electronic Word of Mouth

By Scott Lipow

In the purchase decision process, a consumer considers many different factors. At the top of the list – the reputation of a product or service and how it has been experienced by others in the past. Consumers typically research a product or service before purchasing, as they want to be assured of quality. They listen to the opinions of others, whether it be experts or strangers or close family and friends. This is called word of mouth.

The Internet Era

Word of mouth has been taken one step further in the Internet era. Now, consumers can evaluate the experiences and reviews of people from all over the world merely by browsing through review websites. According to one survey with more than 2,000 U.S. adults, “between 79% and 87% of the readers of online reviews of restaurants, hotels, and travel services reported that the reviews had a significant influence on their purchase decisions.” Communication has become much easier and the influence of word of mouth has increased significantly.

Hospitality and Tourism Industries

Electronic word of mouth is especially prevalent in the hospitality and tourism industries, as quality is difficult to evaluate beforehand. One study suggested that tourists’ restaurant selections are primarily influenced by the recommendations of relatives, friends, and even hotel staff, rather than by traditional advertisements and tour guide books.

In the study, researchers collected the following data for each restaurant: the overall consumer rating of its food quality, environment, and service; the average cost for each dinner, the number of the consumer text reviews; and the editor’s comment and star rating. Also, the researchers collected the number of views that a restaurant’s webpage received during the previous month.

The Power of Consumer Reviews

It was found that consumer-created reviews of food taste, environment, and service were all significant predictors of online popularity. It was also found that the quantity of consumer reviews for a restaurant can significantly increase the interest of consumers visiting the restaurant’s webpage. In contrast, researchers discovered that the existence of an editor’s rating and comment actually plays a negative role in attracting users to visit a restaurant’s webpage.

These findings are important as they suggest that consumer-created reviews are favored over professional editor-created reviews. Individuals feel a personal connection with consumers like themselves, and may perceive editors to be advertising or endorsing restaurants, instead of offering their honest opinion. Restaurants should strive to gain more consumer reviews to increase website traffic.

It is 2016 and we rely on technology in our day-to-day lives. On our smartphones, we can research and find reviews on a product or service in a matter of seconds. Businesses of all sizes should strive for high customer satisfaction, and encourage the online feedback of their happy customers. With more positive consumer reviews, comes more business.

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Scott Lipow
Scott is Founder & CEO of Six7 Marketing. Scott has extensive experience delivering advertising services for both small business and Fortune 500 clients. He earned his MBA from Emory University and received his undergraduate degree from the University of Wisconsin-Madison.

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