Knowing why and how consumers use recommendations will help you create more effective marketing programs.
According to research conducted by Nielsen, we know that 92% of consumers report that "word-of-mouth and recommendations from people [they] know" are the leading influence on their purchase behavior. Only 37% trust search engine ads, and just 24% trust online banner ads. They trust their friends and family the most when looking for brand recommendations. But what types of recommendations carry the most weight?
Brands are eager to tap into the power of recommendations, and many companies measure an "NPS," or Net Promoter Score, which illustrates how likely someone is to recommend a specific brand or company. According to a U.K. study by Fred Reichheld, "a 7% increase in word of-mouth advocacy unlocks 1% additional company growth." His research also shows that "a 12% increase in brand advocacy, on average, generates a 2x increase in revenue growth rate plus boosts market share" and, conversely, "a 2% reduction in negative word-of-mouth boosts sales growth by 1%."
What do consumers consider to be actual recommendations and whom do they trust?
A recent report by social media marketing agency Zócalo Group delves into how consumers view on- and offline recommendations from their friends, family, and peers. Their results show that 46% percent of their respondents were influenced by their Facebook friends liking pages - tied with positive brand reviews and just 1% behind YouTube video reviews.
The study found that:
- 92% of consumers view word-of-mouth and recommendations from friends and family as the most influential with regard to purchasing decisions.
- People define Facebook likes, positive brand reviews, and video reviews on YouTube as recommendations, along with someone offline who expresses their love for a brand and a friend or co-worker who uses a specific brand.
- The top 4 most trusted sources for recommendations are a close friend, a family member, a brand advocate, and a product expert.
- Peer-to-peer recommendations are 20 times more valuable than celebrity endorsements.
- 49% of people make recommendations because they want to help people.
What does this mean for brand marketers?
Recommendations are the gold standard for moving consumers down the purchase funnel. We all know that brand recommendations are happening on a daily basis, and this study shows more about where and why they're happening.
All recommendation are not created equal, of course, and the source always matters - brand endorsements must come from your customers. Some channels are more effective than others, so it's important to know where to reach your customers and inspire those recommendations.
This infographic from Zócalo Group illustrates the study's findings: