Social Proof: The New Currency of Credibility

Daniel Tay
Daniel Tay Marketing Executive, ReferralCandy

Posted on November 15th 2013

Social Proof: The New Currency of Credibility
facebook social proof

Image Credit: Wiki Tech

It is hard to go anywhere on the vast Internet and NOT see Facebook, Twitter, Google+, Pinterest or some new-fangled social icon adorning the walls of websites.

Whether you like Mark Zuckerberg’s mug or not, the social web is here to stay, and businesses that can integrate social proof into their marketing efforts seamlessly will join this new “socially rich” class. We mean richness in fans and followers, not number of zeroes in your bank account. Social proof is the new currency of credibility.

You see, people care about what others think. When we buy stuff, we want to know what others think about it first. A 2012 Nielsen survey indicated that 92% of people globally trust word-of-mouth recommendations from friends and family.

Happily for customers, the power of the Internet allows customers to access a vast wealth of information that is literally right at their fingertips. 85% of consumers say that they refer to online reviews before making a purchase at a local business, and 67% of shoppers read 6 online reviews or less before feeling that they can trust the business.

All it takes is a simple Google search for “[insert topic] reviews”, and one can find either stunningly positive or scathingly negative reviews scattered all over the web.

social proof

Thankfully, Zopim’s reviews seem quite positive!

Naturally, this is an area of concern for any company, regardless of whether they have an online presence or not. Reviews can either build up a brand’s name, or tear it right down to the ground.

Shift in the Balance of (Social) Power

Once upon a time, companies had complete control over their image and branding. By pouring money into advertising, they could effectively steer and control the perceptions of consumers.

Unfortunately for companies – and fortunately for the rest of us – the information revolution transferred this power squarely into the hands of consumers. Armed with this newfound power, customers found themselves with an edge over salespeople. The principle of the marketplace hence transitioned from caveat emptor to caveat venditor – that is, from “Let the buyer beware” to “Let the seller beware”. Customers now rule the roost.

customer power

Image Credit: Desk

Here’s a sampling of the clout customer reviews currently hold: An unhappy customer will tell, on average, 24 people about their experience, while a happy one will only tell 15. This is quickly and easily be done today thanks to social media. And, as we know, people tend to remember bad events as opposed to good ones – they wear off more slowly, too.

What this means is that a single unhappy comment made online can potentially escalate into a mass movement that lingers on forever in cyberspace, to be viewed by our progeny for all of time. For example, Kenlie’s negative experience with Southwest Airlines, made public on her blog (which received 234 comments) back in 2011, continues to show up on Google even today.

This phenomenon of taking to the web to air frustrations is especially prevalent among Generation X (36-50 years old) and high earners (those earning $150K or more a year). When asked whether they would share a bad customer service experience with others, an overwhelming 99% of the Gen X group and 100% of the high earners group responded that they would.

Simply put, companies are under tremendous pressure to get positive reviews from their customers, and hence prove their social clout.

Making Use of Social Testimonials

When given a choice between trusting an online review by a stranger, or a recommendation given by a friend, which would you choose to follow? Chances are that you would decide to go along with your friend’s advice, and this would make perfect sense.

Companies take advantage of this by putting two and two together and showcasing reviews from the consumer’s social groups as opposed to random people. By showing a familiar face giving the product or service a thumbs up, the company effectively creates a sense of reassurance of their legitimacy. Such social testimonials tap on the legitimacy provided by the opinions of a consumer’s circle of friends, reducing any uncertainty one might have about the product or service.

tripadvisor social reviews

Image Credit: The Next Web

Another way companies attempt to reduce uncertainty is by showing reviews written by people who “resemble” the consumer in question. Studies on implicit egotism suggest that we subconsciously tend to like things that “resemble” us. Building on this, by showing the consumer the testimonials of people who are similar to us, our brains naturally place more weight on them, thanks to the mirror neurons that make us feel connected when we imagine ourselves in the same situation.

consumer feel connected

Image Credit: Client Resources Inc

Is it any wonder that 79% of online shoppers tend to trust online reviews as much as recommendations from friends and family? Social proof, it seems, relies largely on framing. All it takes is for the company to display the optimal combination of online reviews, and they can achieve credibility and trust.

Dynamics Behind Social Reviews Not So Straightforward

If it really is that easy to earn a consumer’s trust, why are so many companies today still failing terribly at it? A recent Wharton research paper suggests that the dynamics behind social reviews make finding that perfect combination far more complicated than it seems.

social proof wharton

Image Credit: Atelier

Two features of the relationship between the consumer and his/her social group impact social reviews prominently – how similar people tend to associate with each other, and the balance of preferences among them.

In sum, Wharton doctoral candidate Jae Young Lee and Wharton marketing professor Raghuram Iyengar came up with the following hypothesis: Reviews from people who “resemble” you might not necessarily, in aggregate, yield profitability for the company.

Ratings being held equal, Lee and Iyengar found out that 63% of reviews should come from people with more similar preferences as the consumer, while the remaining 37% should come from people with less similar tastes. This fine balance would yield maximum profits.

Compare this to a case where 100% of reviews come from those who are similar to the consumer. In this instance, the profit would decrease by a staggering 24%. Consumers, it seems, are also interested in seeing reviews from others (within their social networks) who have differing preferences from themselves.

Lee and Iyengar also found that no reviews causes a decline in sales, which is rather surprising, given that it runs counter to the popular notion that no proof is better than low proof.

The conclusion: It’s always better to have some social proof; the reviews should be mixed, in terms of similarity in preferences, in a 6:4 ratio. The first part is simple enough to achieve; the second, not so.

Optimization of Social Proof = Social Riches

It is quite clear that online reviews are here to stay. The question companies should be asking themselves today is twofold: How can I reduce the amount of negative reviews, and at the same time achieve the right balance of positive reviews among the consumer’s social groups? While there is no one-size-fits-all solution at the moment, those who manage to figure this out first will certainly find their companies elevated into the realms of the new “socially rich”.

Does social proof work for you? What kind of methods and tools do you use for improving your “social richness”?

Daniel Tay

Daniel Tay

Marketing Executive, ReferralCandy

Daniel manages the content strategy at ReferralCandy, and is a (sometimes) writer-for-hire. He is madly passionate about entrepreneurship, marketing, and productivity. His byline can be found all over the web, but his home is at danieltay.me.

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Comments

Ha great article. I love the currency image at the top. I agree with your stance on social reviews. Social media is a great way to get reviews as you have a closer relationship with your viewers. You can send them specific social posts and quizzes.

Thanks Nate! You're absolutely right.

Hi Daniel. Great article! Customer statistics is another form of social proof. You can highlight what your brand has achieved monthly or annually on your social media presence such as the increase in customers or the success of your customers. A great example was Hubspot. They included stats in 2011 Hubspot Year in Review like “HubSpot customers generated a grand total of 12.4M leads in 2011, which is testament to the effectiveness of the HubSpot software.” What are your thoughts on it?

Thanks Adella! That's definitely one way of doing it. However, such stats can be rather general, and doesn't specifically reflect what your immediate social group actually thinks about the brand - those people are key to building credibility!

Hi Daniel!

This is so true; social proof is one of, if not the most impactful influencer these days!

It's pretty scary how news, especially bad ones, can spread so fast across social media!

Businesses really cannot simply focus on nudging consumers to buy; they have to make them happy. Customer service is now something that cannot be neglected upon. 

I do think this is a good thing. More instances of social proof helps us consumers make *slightly* more informed decisions, and also indirectly helps businesses by making sure they focus on customer satisfaction. This will keep them on their toes, and work hard to ensure that the consumers are always smiling =)

Thanks for the article!

Amazing customer service leads to happy customers, and happy customers lead to a strong brand. It's win-win all around! Just look at Apple and it is pretty apparent: http://zop.im/apple-experience.

Glad you enjoyed the article, Samuel :)

Great post Daniel. I recall another article on TechCrunch by Aileen Lee which also had some really compelling stats on social proof - Why People Like to Follow the Crowd. 

You bring up some great points about the need to generate positive buzz. People are more inclined to write about a brand after a negative experience - that's just human nature. One way to accumulate positive sentiments are to capture users at the point of excitement. E.g. right after they make a purchase! Retailers are using this 'share-a-purchase' flow very effectively. Amazon has a social sharing widget on their checkout page. ShopSocially has a platform which allows other retailers to embed such functionality easily. Here are a couple of interesting examples to look at: Star Trek and H2OPlus.

 

Thanks Jai - I have read that particular article before as well, a great read with highly applicable points!

You're absolutely right about capturing sentiments right after a purchase is made. Though, these "reviews" might not exactly be the most reliable indicators of the actual product itself because the consumer has not actually used it yet. That said, it definitely lends confidence to potential buyers i.e. that there are many people purchasing this product.