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Why customer reviews are becoming a multi-billion-rand powerhouse

Source: News24, 01/08/2023




Customer reviews are becoming increasingly powerful.
Many businesses are making the mistake of chasing new customers when what they should be doing is ensuring the customers they do have give them a good review, says Amanda Reekie.
South Africans are coming into their own when it comes to voicing their opinions online ` good and bad - through the ability to post experience reviews on a business’s website, their social media or via third parties like HelloPeter. So significant is this trend that it underpins the key findings of the fifth edition of The South African Customer Experience Report, which I recently co-authored with Rogerwilco’s CEO Charlie Stewart and Julia Ahlfeldt from Julia Ahlfeldt Founder of Julia Ahlfeldt CX Consulting.
In fact, so influential are online reviews that the report found that they accounted for a significant R40.2 billion in e-commerce spend this year alone. This is nothing short of a review revolution.
Reviews give customers power ` and they’re using it: not only are they posting more reviews more often, but they are also regularly referencing them before making a purchase, whether that is online or off.
It appears that conducting due diligence before buying is the new way to shop particularly as a credible online review from another customer can make or break a transaction. It makes sense then that HelloPeter called on consumers on Mandela Day through a ‘pay it forward’ campaign to feed the `review ecosystem` and give their favourite brands a thumbs-up review, while MiWay insurance actively asked customers via a newsletter to look at the reviews they had received on a third-party website.
To bring it closer to home, just consider how many times you, the consumer as a sample of one, glance through the posts of previous buyers on a brand’s website (67% of our report’s sample do) or via social (66%) before committing? If there are any negative reviews ` even one ` it can quickly turn you off following which you’ll likely look at your next shopping option, easily available via App or online.
This is particularly true of the travel and tourism, hospitality, and retail sectors. A bad experience at a guesthouse or restaurant for instance can lead to a missed purchase or worse, cancelled booking. Given it’s impossible to get rid of these reviews unless business owners beg for them to be removed by the people who posted them, it’s in every business’s interest to keep as squeaky clean, quite literally in some sectors as they can, to prevent any poor experiences from leaking online ` and staying there in perpetuity.
Interestingly, despite this probability, most businesses that were surveyed as part of our report say that they are far more focused on acquisition of new customers than retention of their existing base.
This could be due to the poor economic climate that businesses are operating in where securing sales has become a necessity for many as consumers pull back on their purchasing habits.
Yet it’s also a paradox especially when one considers that even a 5% improvement in customer retention can yield as much as a 25% increase in profits. That fact should not be ignored, especially in this environment when bringing in the bacon is critical for a business’s longevity or even survival, particularly among smaller businesses that don’t have the financial reserves to fall back on that their larger peers do.
Consumers have the power
Reviews are not the only arsenal that savvy ` and getting savvier ` consumers have in their back pocket either. Online research is just as, if not more powerful than reviews. We found that online research in its totality ` checking out different prices, offers, discounts, availability, shipping etc. ` is a giant contributor to offline sales: a R516 billion giant. That is a massive piece of retail pie that businesses do not want to miss out on.
Google Search or, more recently ChatGPT, strongly informs consumers through their research phase according to 51% of our survey’s respondents. The latter is also likely to turboboost this behaviour as consumers expect answers in real-time that are tailored to their needs and provide near accurate sources of information. While ChatGPT was only launched last November, it already has millions of users. Businesses would be wise not to discount this piece of technology and the impact that it is already having on consumers’ purchasing habits.
What then must businesses do? Up the ante on customer experience and decrease the pain points. Think frictionless websites, simple-to-pay online till points, easy to see products and their prices online, great delivery and affordable shipping…. all of this makes a major difference to the consumer’s buying behaviour. Yet again, only a handful of businesses we surveyed (14%) are taking this seriously and doing the work that is needed to retain customers.
So poor is this phenomenon that we are experiencing a ‘leaky bucket’ syndrome where, instead of fixing what is broken, businesses are chasing new income, even if their CX is not up to scratch. For many it appears to be a case of bring in what they can to make up for what they lose. This does not an effective business strategy make and is a troublesome state of affairs.
The net outcome of this behaviour from businesses is that consumers have become apathetic, jaded, and disappointed in their purchasing experiences. Much like the malaise they experience in their everyday lives ` think load- and water-shedding or poor service at public, and some private, enterprises ` consumers are accepting that good enough is good enough and that excellence is rare. The golden opportunity that this presents however is that most sectors are ripe for disruption and challenger brands can truly offer experiences that are not just good enough but that are great.
Given consumers have instant access to impressive international brands such as Amazon ` the darling of CX ` to Wish and Netflix, local counterparts have nowhere to hide and are, like it or not, compared to these global giants’ customer experiences.
My advice to South African businesses is not to let another customer fall through their many cracks by improving their customer service across all their engagement channels ` website, social, email, chatbots, call centres, etc., - especially if that customer has had a poor experience. This is not least because it very likely will end up as a bad review and will forever stay online only to be found as part of the consumer’s research phase prior to purchase.


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