Like many retailers, Jim Hobart knows the value of a good testimonial.

The online store he co-founded, AlpacaDirect.com, always offered a page full of cherry-picked customer comments raving about the site’s alpaca sweaters, socks and yarn. But recently Hobart, 47, decided to take the idea a step further: He hired PowerReviews, whose software lets shoppers write their own product reviews directly on the retailer’s Web site.

It was a risky move for the four-year-old company, based in Brentwood, Calif. Hobart was effectively paying to host bad press — such as posts by customers who described AlpacaDirect’s golf cardigan as “kinda sweaty” and a “poor fit.” Both awarded the cardigan three out of a possible five stars.

But a month after installing the PowerReviews service, Hobart saw sales climb 23% on items that had customer reviews (even that cardigan, which garnered an average of four stars).

“People are really researching their purchases,” he says. “We knew our customers liked our products, and we wanted them to tell one another.”

Online reviews have been spreading ever since Amazon.com (AMZN, Fortune 500) pioneered them in 1997. Witness the rise of “social shopping” Web sites like Kaboodle and ShopWiki and of consumer review sites, including Yelp and Judy’s Book. But today’s customer feedback software is growing more sophisticated, more personal and more affordable for small businesses.

Consumers are becoming used to searching for reviews when they shop online. Internet shoppers rank reviews as the most desired feature of a Web site, according to a recent survey by Forrester Research. “People want to talk among themselves,” says Jacqueline Anderson, a senior consultant at Forrester.

Adds Larry Freed, CEO of ForeSee Results, which provides customer satisfaction surveys for Web sites: “If they leave your site to look for reviews, they most likely won’t come back.”

Owners are the best source to convert prospects into buyers. Reviews are an easy way to start the conversation.