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Posted by Steven Rydin on Nov 02, 2017
Steven Rydin
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Introduction

I want to share three immutable – or unchanging – laws of online consumer behavior. I settled on this alternate title because the social media team told me my original title was too long: “Three laws of human behavior (that just happen to be manifested in consumer behavior in our new online marketplace).” These 3 laws are immutable because they are tied to longstanding truths from psychology and sociology. First, let me give you the laws, then I’ll support each one with research:

3 Immutable Laws of Digital Marketing

  1. Online reviews are powerful behavioral signals
  2. Some customers are review givers, others are review takers
  3. You need a third-party to carry the message

Law 1: Online reviews are powerful behavioral signals

 

Decisions to Make

Consider the signals that consumers use to make quick product decisions. When a company sets its price, they (wittingly or unwittingly) use price as a signal. Brands serve as signals when celebrities or other users teach us how to use or perceive a product. These signals are being communicated all the time and evaluated by consumers to form a message.

Maybe think you’re a trailblazer -- immunized to persuasion. But ask yourself, have you ever been told what someone else bought (a lawn-mower, a margarita machine, a television), so you went and purchased the same thing with little or no scrutiny? Of course, you have. We all have. It’s what consumers do.

 

Signals

There’s an explanation for this phenomenon. It comes from signal theory. Signal theory describes a process we all rely on: one party conveys useful information to another party. We use that information to make our own decisions quickly and more easily. As consumers, we do this when buying things for the first time, or when making a choice to try something new. As a result, customers can be your best salespeople.

Law 2: Some customers are review givers, others are review takers

 

Signals Everywhere

Evidence suggests this signal-based consumer behavior has accelerated in our connected 24-7 marketplace. A recent Pew Research study found roughly 4 in 10 U.S. adults have expressed their feelings about companies or products on social media. So customers are clearly sending signals, but are they receiving them? The answer is a definite yes. The Pew study also indicated 82% of the group admitted they at least “sometimes” read online reviews before purchasing for the first time. Another study found that an Amazon product that has just one review is 65% more likely to be purchased.

 

Helpfulness and What that Means to Your Business

It turns out this kind of consumer helping consumer behavior is exactly what Wharton researcher and author Adam Grant discusses in his book “Give and Take.” Grant describes “givers” and “takers” and how they influence one another. In short, there are many takers and few givers. You may know this to be true from your personal experiences. We are all seeing the sociological phenomenon plays out in online review dissemination, where a vocal minority are giving a majority of the reviews (think: Pareto’s Principle).

One of the maxims of Grant’s book is that giving and taking is contextual, or influenced by the environment. Left on their own, a consumer is more likely to take a review than give one. However, and this is critical, Brightlocal found that 7 out of 10 customers will leave a review if asked.

Law 3: You need a third-party to carry the message

 

Sounding Board

More practically, in order for customers to find reviews, you need to develop sounding boards and solicit customer feedback. The solicitation can be an email, text message, phone call or paper survey. Each medium has different conversion rates, and no one medium is best for all audiences. Customer reviews need to be posted on sounding boards where customers gather: in online search pages, your corporate website, and also on third-party review sites.

 

Credibility

One factor that moderates the strength of a signal is the credibility of the source. To give an example, imagine you are buying a nutritional product in a local sports store. Who would you be more likely to take advice from: A) a doctor in a lab coat, or B) the person sweeping the floors.

Be honest. The point here isn’t that there’s anything wrong with sweeping floors, but rather that the source of signal information is directly related to its credibility.

 

Implications for Marketing Managers

 

These immutable laws can be applied to marketing practice. As a marketing manager, you should 1) make sure there are platforms for customers to signal each other, 2) listen to (don’t just solicit) what customers are saying, and 3) find third-party advocates.

 

  1. Let customers signal each other

    If a majority of consumers are researching online about products and services, your brand needs a review platform. Give consumers a system for posting their tips, highlights, and frustrations. This creates user engagement and a feedback loop for consumer-brand dialogue. Most importantly, online reviews provide a way for consumers to tell each other it’s a good idea to buy your best products and services.

  2. Listen to (don’t just solicit) what customers are saying

    Marketing researchers hire focus group moderators and distribute questionnaires because customer feedback is important. Often this research is expensive. Discussions echoed in a focus group can be replicated online via customer reviews. If you looked at each reviewer as a focus group participant, would that change how you place a value on reviews? Fortunately, digital technology has given marketers the ability to solicit reviews now in mass with volume that is a good addition to the high fidelity, low-frequency approach of old research methods.

  3. Find third-party advocates

    What do you know about JD Power? Odds are you know the company recommended a vehicle that you or your neighbor bought, but do you know anything the company’s evaluative practices? Do you know anything about the company at all? Chances are you or someone you know accepted this third-party endorsement without skepticism. Third-party advocates can do for you what you’ll never be able to do: overcome doubt quickly by conveying credibility. It’s one thing for a company to claim it has the best products or the most satisfied customers, but when an independent third party does this- with a voice that’s magnified by hundreds or thousands of consumers… well, that’s something else entirely. Something every business should want.

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