Conservative industry estimates put the Cost of Poor Quality total at higher than 10% of sales through its impact on gross margin. And one place this is most transparent to customers is through online reviews.
Historically, reviews were a distant second to contact centers and instore returns in terms of customer feedback; but with the shift to online sales accelerated, due to lockdown and social distancing rules, online reviews will become more important and retailers need to give higher priority to how they manage and respond to these reviews.
According to Social Media Week, 92% of consumers read online reviews and when judging a business the star rating is the #1 factor. The importance of reviews clearly depends on the value and nature of the purchase. Consumers will spend more time to assess reviews on a new five hundred dollar TV, than on their next purchase of canned corn. But according to research, independent of product, up to 90% of sales are lost if the product has a one-star review. And an increase in average online rating by 0.5 can have as much as 1% and 10% increase in propensity to purchase.
For a retailer with $10Bn online sales, that modest 0.5 increase in online rating can translate to millions of dollars in incremental sales. Clearly the converse is true if reviews move in a downward direction. So at a time when many retailers are working hard behind the scenes to “just get products online” need to consider how they review and manage feedback. As with most things, for the larger supermarket retailers the issue is one of scale. The sheer volumes of reviews across tens of categories, thousands of products, and hundreds (or thousands) of suppliers means that no retailer has the resource to review them all.
Tools such as S4RB’s Affinity™ platform aggregate feedback from returns, complaints and online reviews to help retail teams identify issues and trends; help to separate the proverbial wood from the trees and identify where there are issues. But inevitably this will still only be the tip of the iceberg, and therefore Affinity also embodies the principles of supplier engagement to share this feedback with private brand suppliers to increase the eyes on the problem. In our experience suppliers will spend a minimum of 3+ hours per week to review this customer feedback and take action. For a typical private brand operation that is an increase in output equivalent to five FTE; a positive impact of over $500k.
Most importantly, it will drive quality and consistency and time to react to issues. According to Vendesta, if your business helps solve an issue quickly and efficiently, 95% of unhappy customers will come back and do business with you. That's a big number and hard stat to deny. So how do you monitor conversations about your brand online? Do you have the resource to review for all products across your brand? Do you share information every day with all of your private brand suppliers?
It may be your private brand on the pack - but your private brand supplier’s sales are just as directly linked to that positive feedback. Share the information. Enable and empower suppliers to address the issues and maintain the quality and consistency required. If you only focus on the tip of the iceberg, poor reviews could be costing your brand millions.