Challenge: The Shift of Trust to Unverified / Incentivized Sources
Consumer Reports produces trustworthy reviews: Since 1936, Consumer Reports, a nonprofit, has been independently testing over 7,000 products including electronics, appliances, home & garden, cars, baby gear, and food in their state of the art labs1. Their testing is extremely rigorous and detail oriented. For example, to test washing machines, they run identically stained pieces of fabric through several brands of washing machine. Once cleaned, the fabric is examined by a lab technician who uses a microscope and pin to count the number of fibers that are still stained. Similarly, they test helmet functionality by using a machine to simulate a crash to understand the damage that would be done to the person wearing the helmet. They spend millions of dollars per year to produce these detailed, trustworthy results.
Consumers don’t care: It today’s digital world where we can have almost any type of information at our fingertips for free, people do not want to pay regardless of the increased quality nor do they want to pick up a magazine and spend time searching through it. Consumers used to find Consumer Reports’ reviews extremely valuable as it guided them toward safe and reliable products. Today’s generation prefers to be guided by online reviews such as those on Amazon.
The problem for consumers: There are three main problems with these types of reviews. First, they are often written by consumers who are on one extreme or another either loving or hating the product. Second, they are often written by people who have not even consumed the product. In 2011, Amazon sued people for writing fake reviews for $5 each. Sellers are highly incentive to cheat and find ways to inflate their ratings2. The final and arguably most troublesome problem is that consumers may rate a product for all the wrong reasons. For example, a consumer may rate a helmet 5 out of 5 because it looks nice and appears to fit without realizing that in a crash, this helmet will fall apart and not perform as the packaging indicates.
The problem for Consumer Reports: While many people may suggest that Consumer Reports should shift its business model by simply offering the reviews for free and instead charging for things like advertising or the use of its stamp on products, this is not an option. Consumer Reports places strict independence regulations on themselves in their No Commercial Use Policy. They do this to maintain complete independence and objectivity. Regardless, Consumer Reports must shift their business model to survive in this digitally transformed world.
Current Solutions: Mobile App, Search Functionality and Videos
Consumer Reports understands that their user base is declining and more people want instant access to information in an easily searchable format. In order to appeal to a digital-centric consumer base, they have overhauled their buying guides with added interactive videos and have launched a video hub with advanced search and 360-degree videos where consumers can take virtual tours of products1. They have also developed a mobile app so that consumers can have access to information where and when they want it.
Additional Opportunities: Utilizing Valuable, Untapped Data
While Consumer Reports’ current solutions help improve the customer experience, they do not address the fact that the digital age now offers free alternatives that are more attractive to consumers. In order to compete with these free sources, Consumer Reports must also eventually become free. To do this, they must find alternate sources of revenue to fund their product testing. For example, their testing data is a valuable asset for all types of companies from manufacturers of the products to third party data aggregators to consumer research organizations. While they must be careful to not violate their Independence and Commercial Use policies, they can find ways to get the data in the hands of people who can use it to improve products. Perhaps they can even start a new business line where manufacturers can send Consumer Reports their products before they go to market to make sure there are no issues. This would create a world of safer, more reliable products.
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