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How do Reviews and Testimonials help with conversion rates?

Based on a detailed analysis by online research firms (Pollara, Nielson and others) the following statistics were found:
  • Overall, products and services with reviews and testimonials have a 12.5% higher conversion rate than those without.
  • Products or Services with 5+ reviews have a 74.85% higher conversion than those without reviews. People who had services reviewed positively were contacted more than the people who had no reviews or negative reviews. Note that products / services prompting the most reviews tend to be the best sellers and thus are generally higher converting. 
  • Independently verified reviews had a 86.2% higher conversion rate - a difference of more than 12% from non verified reviews and testimonials
  • The look-to-book ratio is 4x lower (better) for products or services with reviews compared to those without.
  • Overall look-to-book is 32.6% higher (worse) for products without reviews.
  • Products /Service without reviews saw a very small gradual decrease and the one's with negative reviews showed a faster decrease in sales.