When Consumers Call the Shots
A study by the Yale Center for Customer Insights at the Yale School of Management indicates that consumer reviews on Amazon.com and BarnesandNoble.com had a potent effect on sales of the products reviewed.
Interestingly, the study's authors, Judith Chevalier and Dina Mayzlin, found that a 1-star review depressed sales more than a 5-star review boosted sales. It seems that negative packs more punch than positive in word-of-mouth.
This report contributes to a growing body of research demonstrating the impact of consumer-generated content -- whether in blogs, product reviews, or other new media -- on brand image, sales and even share price. I'll be posting more on this research in the future.
In the meantime, consider this little factoid from another study by the Yale center, which found that the new price and feature comparison capabilities enabled by the Internet is forcing a transfer of riches from auto companies to consumers amounting to at least $240 million per year for those who shop at Autobytel.com alone, or about 2.2 percent of the cost of the average car. That's $770 saved on the price of a $35,000 vehicle.
And again, that's the savings just at Autobytel.com alone.
More evidence that the Web-fueled power of consumers is increasingly being felt in the marketplace.