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One in four internet users read consumer-generated reviews online, which then have a big impact – affecting not only what they purchase offline but also how much they are willing to pay for it, according to a new study conducted by comScore with The Kelsey Group.

The study examined the impact of consumer-generated reviews on the price consumers were willing to pay for an offline service – restaurants, hotels, travel, legal, medical, automotive and home services.

Nearly one out of every four internet users (24%) reported using online reviews prior to paying for a service delivered offline.

Of those who consulted an online review, 41% of restaurant reviewers subsequently visited a restaurant, while 40% of hotel reviewers subsequently stayed at a hotel.

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Online Reviews’ Influence

More than three-quarters of review users in nearly every category reported that the review had a significant influence on their purchase, with hotels ranking the highest (87%).

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97% of those surveyed who said they made a purchase based on an online review said they found the review to have been accurate.

Review users also noted that reviews generated by fellow consumers had a greater influence than those generated by professionals.

Willingness to Pay More for Better-Rated Service

Consumers are willing to pay at least 20% more for offline services that received an “Excellent” or 5-star rating than for the same service when it received a “Good” or 4-star rating, the study found.

When asked how much they would be willing to pay for a service based on the quality of the service, consumers were willing to pay up to 99% more for an Excellent (5 star) rating than for a Good (4 star rating), depending on the product category.

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“These data show the importance of local service review sites in consumers’ purchase process,” said Steve Marshall, research director for The Kelsey Group. “With such a large percentage of review users subsequently purchasing, it’s vital that local service providers have a positive presence on these review sites.”

“This study underscores the importance of providing not just good, but excellent, service if a business hopes to generate positive consumer reviews which will result in greater sales,” pointed out Brian Jurutka, senior director, comScore Marketing Solutions.

About the study: The comScore study was based on 2,078 survey respondents, including 508 who used online consumer reviews, conducted from October 12-18, 2007. Consumers were asked about their usage of online reviews and were also asked what price they would be willing to pay for a service given an average service price and an aggregate consumer rating.

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