Yale School of Management Word of Mouth Study Finds Customer Reviews at Amazon, BN.com Influence Book Sales

New Haven, Conn., November 15, 2005
Many online retailers encourage customers to post product reviews believing that they will influence the purchases of other customers. A new study from the Center for Customer Insights at the Yale School of Management that examines the effect of consumer reviews on book sales at Amazon.com and Barnesandnoble.com finds that this community content does have an impact on what consumers buy.

The Effect of Word of Mouth on Sales: Online Book Reviews” by professors Judith Chevalier and Dina Mayzlin is forthcoming at the Journal of Marketing Research.

To determine whether differences in customer reviews across the two websites affect sales, Chevalier and Mayzlin chose random samples of titles from Global Books in Print and Publishers Weekly bestseller lists. Book and review data were collected from the Amazon and BN.com websites. For each book, they looked at price, shipping time, sales rank, the number of reviews, and the average number of stars assigned by reviewers.

The study shows that the addition of favorable reviews at one site increases book sales at that site relative to the other retailer. It also finds that negative “1-star” reviews carry more weight with consumers than do positive “5-star” reviews. The impact of a negative review is more powerful in decreasing book sales than a positive review is in increasing sales. The authors attribute this to the credibility consumers place on the reviews. For example, multiple glowing reviews for a book may be perceived as hype generated by an author or publisher.

Overall, reviews are overwhelmingly positive at both sites, but reviews at Amazon are longer and more detailed. Although the results stop short of showing that the retailers profit from providing customer reviews the authors assert that it is plausible. “Our results show that customers behave as if the fit between customer and book is improved by using reviews to screen purchases,” said Mayzlin. “Since Amazon has a lot of reviewing activity, and its reviews are on average quite positive and lengthy, we can speculate that the total number of books sold at Amazon is higher than it would have been without the customer review feature.”

The Yale Center for Customer Insights at the Yale School of Management is a research center that studies the behavior of customers and marketplace dynamics. The Center welcomes inquiries from organizations interested in research partnerships and sponsorship opportunities. For more information visit: http://www.cci.som.yale.edu or contact Eugenia Hayes at 203-432-6069 or Eugenia.hayes@yale.edu.