Context
Today, consumer reviews seem to be ubiquitous. When buying online, people are expected to provide feedback for all kinds of purchases: travels, hotels, cab ride, computers, cars, etc. The list is endless. As a result, 93 % consumers report that reviews influence their purchase decisions. That being said, one can easily understand how the positive or negative overall rating of products can influence purchase intent.
Research questions
However, little is known about the dynamics leading to the positive or negative overall rating of a product. Previous research has investigated the reviewers’ motivations. Park, Shin and Xie propose a new insight in review dynamics by studying the origin of the overall rating: the first review. To tackle this issue, the authors answer these research questions:
– How does the first review impact the number and the valence (i.e. the fact that the review is positive or negative) of future reviews?
– Does the first-review effect last over time?
– Does the first-review effect still hold when consumers rely on other sources of information?
Method
Park, Shin and Xie’s research builds on a model and on an empirical study.
First, their model was designed to include several hypotheses:
– consumers are risk-averse and rational (with no behavioral bias),
– they compare expected utility of purchase and expected utility of no purchase to make purchase decisions,
– not all consumers post reviews,
– consumers have a different sensitivity to product quality,
– mismatch between the valuation of the product and consumers’ tastes should be considered.
The model allowed the authors to examine the effects of valence and volume of online previous reviews (and especially the first review) on valence and volume of newly posted reviews.
Second, their empirical study consisted in the comparison of the valence and volume of reviews for 177 vacuum models that were sold both on Amazon and on Best Buy during a one-year period. The discrepancy in the valence of first reviews for several of these brands allowed the authors to test the impact of the first review.
Results
When reviews are positive, sales increase, and consequently, the volume of new reviews increases.
When there is a high volume of newly posted reviews, the gap between the “true quality” of the product and the average evaluation of the product decreases. In other words:
– if previous reviews depicted the product as better than its “true quality”, the newly posted reviews will be bad;
– if previous reviews depicted the product as less qualitative than its “true quality”, the newly posted reviews will be good.
A product’s first review will persistently influence its future consumer reviews. The authors believe that the same product may generate different volumes and valence of online word of mouth and different levels of sale, depending on its first review.
The better the product’s first review, the higher the product’s future rating: because the product’s rating at a given period depends on the average of old reviews and new reviews, the high average of old reviews is likely to persist in the next period.
The better the product’s first review, the higher the number of reviews in any given period: because consumers are more likely to buy a product when reviews are favorable and when many reviews are available to reduce uncertainty surrounding the product.
The first-review effect on the product’s rating diminishes over time, because the gap between the true quality of the product and the average evaluation of the product decreases with the increase in posted reviews. However, the first-review effect on the volume of reviews increases over time.
Finally, online reviews are not the only source of information consumers use to make decisions. As consumers rely more on non-review information, the first-review effect on product evaluation becomes smaller, which decreases its impact on sales and on the number of future reviews. In short, in this case, the first-review effect on the volume of reviews decreases.
However, in this case, the first-review effect on the product’s rating could be either positive or negative.
Why is this article relevant for researchers?
First, this article gives a very thorough insight into the first-review effect. It sheds new light on the review dynamics which mainly focused on the reviewer’s motivation and the valence of the review. However, since this article focuses on the valence of the first reviews, there still are avenues for future research in review dynamics, considering for instance the timing of the first review, its length, the product characteristics it depicts, source credibility of the first reviewer etc.
Additional impacts of exterior factors could also explain or derive from the first-review effect, aside from the other sources of non-review information consumers use in decision-making. For instance: does the first-review effect have an impact on offline sales? Is the first-review effect still relevant cross-categories? Can brand conversation diminish a negative first-review effect?
Moreover, since this research focuses on review dynamics, future research could study the impact of the first review on other indicators of the firm’s commercial and financial performance.
As a bonus, researchers should appreciate the authors’ educational efforts to present a rather complex model in such an understandable way. Their reasoning is explained step by step, and the results follow very naturally from their explanations.
Why is this article relevant for professionals?
This paper is an incentive for professionals to remain extra careful when it comes to their e-reputation management. It shows that the first review, if negative, can have dramatic effects on the quality and the number of future evaluations. However, a positive first review will trigger more reviews and positive evaluations.
This implies that:
– professionals should carefully monitor first reviews on the different platforms they use
– professionals who engage in promotional reviews should, of course, make sure that their first review is a good one, but can harm competitors by posting negative first reviews (though ethically reprehensible)
– professionals who fear the first review effect could wait for a minimum number of reviews before allowing their publication
Source : Park, S., Shin, W., & Xie, J. (2021). The fateful first consumer review. Marketing Science.