Social media is changing the landscape of communication. Sites such as TripAdvisor, Yelp and YouTube influence consumers’ buying decisions on a wide range of goods and services. Such digital raitings platoforms have become very influential in shaping customers’ decisions, in fact, when making an online purchase, consumers tend to rely on online reviews generated by other consumers. Online consumers reviews are trusted 12 times more, in comparison with descriptions of the product stated by the manufacturers themselves (eMarketer, February 2010). The video below describes how consumers can evaluate online reviews and recommendations when shopping.
So we do know that customers base their buying decision on online reviews. But, as a customer, have you ever asked yourself how objective these reviews are? I usually have faith in these raitings and view them as trustworthy. Before booking a hotel room, buying a book or any other product, 90% of the times I’ll study reviews before actually purchasing the product. Indeed many studies confirmed that my behaviour is not unique, at all. For example, a 2012 Nielsen report surveying more than 28,000 Internet users in 56 countries found that online consumer reviews are the second most-trusted source of brand information (after recommendations from friends and family). Another interesting point arising from the survey, is that more than two-thirds of global customers say they trust messages on digital rating platforms (1).
Here is where we can talk about herd instincts: a mentality characterized by a lack of individual decision-making or thoughtfulness, causing people to think and act in the same way as the majority of those around them (Investopedia). That’s the heart of the problem with online ratings. When we see that other people liked a restaurant , enjoyed a confortable sofa or just loved a hotel room, we are inclined to feel the same way after reading their high online rating. These herding effects have been analyzed by Lev Muchnik et al (2013) in a randomized experiment on a social news aggregation website. Using regression models, the authors did find evidence for such effects when positive social influence is concerned. Whereas negative social influence inspired users to correct manipulated ratings, positive social influence increased the likelihood of giving a positive rating by 32% and created accumulating positive herding that increased final ratings by 25% on average (2).
Do you also always check and ,especially, trust previous customers reviews? With the findings of this post in mind, would you be more critical about online reviews? Or are they too important for your decision making process?
References:
(1) “Nielsen: Global Consumers’ Trust in ‘Earned’ Advertising Grows in Importance,” April 10, 2012, http://www.nielsen.com.
(2) Muchnik, L., Aral, S., & Taylor, S. J. (2013). Social influence bias: A randomized experiment. Science, 341(6146), 647-651. Available here: http://www.scribd.com/doc/159269556/Science-2013-Muchnik-647-51
http://sloanreview.mit.edu/article/the-problem-with-online-ratings-2/
Social Media and Social Networks 