Two decades ago, word-of-mouth was one of the strongest forms of advertisement. Customers would use products and services that were locally available and were recommended to them from their friends and family. But the internet changed the world. People now have access to customers’ first-hand experiences from all over the world. Online customer reviews and testimonials have completely reshaped the way consumers research and buy products, as well as how businesses market their products and services.

Over the past decade, customer reviews have become one of the most important parts of any business marketing strategy. However, financial advisors have been unable to have reviews. Until this year, the U.S. Securities and Exchange Commission had prohibited financial advisors from using client reviews and testimonials in their advertising. Now that the rule has changed, customer reviews will majorly impact the financial advisor industry, just as they did all other retail and service industries. A closer look at how online reviews have changed other industries can help us see what the future may look like for wealth management.

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How Reviews Affect Customers’ Shopping Behaviors

One study found that over 90% of customers read online reviews before purchasing any product or service. Today’s customers rely on customer reviews much more than product descriptions or friends or family recommendations. Products and services are purchased to solve a problem, and reviews allow customers to hear first-hand experiences from others that needed the same problem solved. These first-hand experiences and testimonials build trust and credibility for customers that are shopping around for a new product or service.

Customers rely so heavily on reviews that 92% of online shoppers stated that they will hesitate to purchase a product that does not have any reviews. In fact, products that have customer reviews are 270% more likely to be purchased than products that do not have any reviews.

This trend translates to many service industries as well. When seeking a physician, travel destinations, hotels, and restaurants, customers rely heavily on customer reviews. Customers feel that they can trust other paying customers and want to be able to hear others’ experiences before choosing to give their business to any establishment.

The Impact of Customer Reviews on Marketing

Businesses have begun seeing these trends and the impacts that reviews have on customers’ buying habits and have started making adjustments in their advertising efforts. Many businesses used to solely ask for new referrals from their existing clients. Now, it is more common for businesses to ask customers to complete surveys or leave reviews on popular sites like Zocdoc, Yelp, Google, or LinkedIn.

Reviews are used in almost all advertising materials, including on websites, brochures, and even product labels. It is no longer enough to make people aware that a product or service exists, now businesses must build credibility and trust via reviews and testimonials before customers are willing to make a purchase.

Aside from building trust with new potential customers, reviews provide businesses with extremely valuable feedback. Reviews allows companies to adjust their services to provide better customer experiences which in turn attract new business.