Recommendations Have More Impact Than Brand or Price According to New Study

WOM Research 2014

A new study by ShareThis and the Paley Center for Media has shown that when it comes to purchasing products, “a positive recommendation is more important to consumers than price and brand combined”. Take it a step further and this new research has shown that recommendations from one friend to another can even motivate buyers to spend 9.5% more on a product than they would have usually spent.

In a world where consumers trust their online peers more than the big brands, this doesn’t really come as a surprise. The nature of the online world has seen a distinctive shift from the power of ‘push’ marketing to the trustworthiness & credibility of online reviews & recommendations.

The psychology of online recommendations

Look at it through a behavioral psychology lens and it’s all quite straightforward. Online reviews & recommendations simply draw on ‘social intelligence’ – our ability to understand and learn from each other and profit from social situations.

Or put it another way – online recommendations simply help us to make purchase decisions. Why wade through the quagmire of inauthentic brand messages when you can get REAL reviews from people with no ulterior motive?

ShareThis CEO Kurt Abrahamson said: “We found that highly positive online shares can generate an almost 10 percent increase in purchase intent, and negative reviews can also have a correspondingly negative impact, [reducing purchase intent by] 11 percent.”

The truth is: we don’t trust brands. We trust people.

And where are all the people right now?

Online…sharing their opinions….in droves.

Measuring different types of reviews

The ShareThis study surveyed 6,000 people to measure how different types of reviews — recommendations from strangers versus friends, online versus in person, translated into willingness to pay more or less for specific products.

Unsurprisingly recommendations with the closest ties (ie in-person, close family/friends) warranted the highest prices and these guys were happy to pay $31.22 more for an iPad as opposed to people who had merely seen a star ratings review from a stranger (who would only be up for paying $21.77 more).

Interestingly in the electronics sector, reviews by Professionals ranked equal to in-person reviews by friends & family members.

What about negative recommendations?

As expected, bad reviews saw decreases in pricing – seeing a stranger complain online about the iPad made people want to pay $32.30 less for it.

One of the most surprising findings was that negative reviews by friends & family members had little impact on people’s iPad price points. While we trust those close to us when it comes to good taste, perhaps we are less likely to listen when they are ‘ranting’ or ‘overly critical’ based on a one off experience.

Positive in person & negative online

So in a nutshell positive reviews are more positive in person and negative reviews are more negative online. So the opportunity lies in encouraging large groups of advocates or influencers to review your brand or product – ideally in-person as-well as online. And there’s nothing to fear with in-person negative reviews because these are less trusted. Win: Win right?

What does this mean for brands?

So if you work for or represent a brand here’s my advice:

1. Change the way you view the online purchase funnel – people now buy products based on different factors (reviews being one of those factors)
2. Remember that recommendations can have more of an impact than brand or price: ensure online customer reviews are a large part of your marketing strategy
3. Focus on the reviews that will yield you the best results (in-person, family, friends)
4. Create only credible, trustworthy reviews
5. Instead of attempting to reduce the amount of negative reviews you receive, turn your focus to generating a critical mass of positive reviews – this will have a much greater impact on your business

Contagious have helped brands like Nestle, Woolworths & Telstra create thousands of customer reviews & positive word of mouth online. To find out more about how we could help you and your brand, drop us a line.

Zoe Boalch

About Zoe Boalch

Zoë Boalch is co-founder of Contagious Agency. Zoë likes: hot chili, yoga, learning new stuff, positive people, taking risks Zoë dislikes: naysayers, grumpy people, rather large egos
This entry was posted in feature articles, research & stats, word of mouth and tagged , . Bookmark the permalink.

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