Tweeting All the Way to the Bank

Social media signficantly influences consumer behavior.  

Nearly two-thirds of Americans (64 percent) use social media, and the majority (84 percent) reveal details about themselves to others through these channels, says a Harris Poll examining consumer behavior and online social networks. One-quarter (26 percent) of online adults publicize their displeasure with companies, brands, or products, while nearly that number (23 percent) also discuss their satisfaction with brands, products or companies that they like. Nearly one in five respondents (19 percent) post online product reviews and recommendations. Overall, about one-third of poll participants (34 percent) say that they have gone online to compliment or slam a product, brand or company.

Notably, the same number of people who follow online reviews also trust the traditional reviews offered by newspapers and magazines. Nearly half of Americans who use social media say reviews about a particular company, brand or product from friends or people they follow on social networking websites influence them either a great deal or a fair amount (45 percent)—the same number as Americans who say reviews in newspaper or magazine articles influence them (46 percent). 

What does all this mean for consumers and companies?  

Richard Neal, founder and chief information officer of Temetic Research says that the Harris findings reflect what his company has observed for over the past year.  “People are sharing their lives as never before due to the massive adoption rate of social networks and the hardware (desktops, laptops, netbooks and smartphones) used to send and receive communications via these networks becoming ubiquitous,” he explains. “It is now becoming interwoven into our social lives—into who we are and how we self-identify.” How did social media become such a trusted source, and so quickly?  

“Social media has had explosive growth as a trustworthy source because so many individuals look to social media in their personal life, work life, and everyday life,” Michael Gaizutis, partner and brand strategist at San Francisco-based rno1. “From Facebook to Twitter, or LinkedIn to Evernote, we're constantly surrounded by family, friends, colleagues and acquaintances that rely heavily on these sources as their primary sources for information, or relevant content.” 

The poll’s finding that consumers find peer online reviews as trustworthy as professional newspaper and magazine reviews is interesting, but Neal says, “not surprising at all.” “Consumers trust other consumers for a variety of reasons,” he says. “Other consumers are ‘actual people like me’ or ‘more truthful’ or ‘have no reason to lie’ or ‘offer an unbiased opinion’ or ‘have no agenda’ or ‘you get both the positives and the negatives.’" 

Samir Bhavnani , vice president of EXPO Communications, Inc., a video-based community designed for consumers to share customer experiences, says that he has also noticed that consumers tend to trust their peers, at least more than they the companies that sell the products.   ‘We've done surveys with over 2,000 people,” he tells demodirt.com. “We asked who they trusted more when it comes to product descriptions, and more than 90 percent said they trusted other consumers over the brand’s description.” 

Like Neal and Gaizutis, Bhavnani says that social media invites consumer trust because peers simply offer potential shoppers a way to relate. 

“The reason social media has taken off so quickly as a trustworthy resource is the context of seeing what real people you know or your friends know have to say about brands and products lends a very authentic experience,” he explains.  

Neal says that consumer reliance upon online reviews depends on the situation, and on the relationships between that shopper and the reviewers.  

“The consumer relying upon posted reviews is considering posted reviews based on the type of reviews being read,” Neal says. “In the case of more generalized reviews—outside the comment ring of their friends or groups of friends—they would be seeking majority views of the ‘hive mind.’” 

For example, he explains, if the majority of reviewers give a product a positive review, then the average consumer would interpret the overall review of the items as “soundly positive.”  

Even within one’s peer group, the closeness of its members to the consumer makes a difference, Neal notes.  

“In the case of product review commentary taking place within their own social groups, the consumer would weigh the comments based on the closeness—the degree of friendship as an indicator of trust of—a particular reviewer against the other reviews,” Neal maintains. “If 5 out of 7 of my closest friends state this product ‘sucks’ while 10 other ‘associates’—closely aligned with me but not as close as my best friends—state they like it, I’m much more likely to make the decision that this is not for me.” 

Professional reviewers, he adds, simply don’t fall into the definition of “trustworthy” for many shoppers. “This definition is not inclusive of a professional tester or critic—also identified as a “stranger”—being paid for their feedback by convention media sources,” Neal notes.     

What are the benefits and disadvantages for consumers who depend on product reviews from social media outlets?  “[They] certainly get the benefits of knowing it's a real consumer providing the opinion,” Bhavnani says. “A drawback is consumer reviewers may often not have the experience or context of a professional reviewer.”

”Obviously, the advantages are that consumer information is simply a click away,” Neal states. “The disadvantages are that consumer information is simply a click away. Pressures of conformity, which skew to younger segments, once isolated in the parameter of social settings, have now permeated every waking hour.” 

Like Neal, Gaizutis says that the immediacy is a main benefit of this shift in communication. “Utilizing new media—social media—give us (the consumer) the opportunity to see a continuous movement or ‘flow’ of information and relevant content,” he explains. “Gone are the days where we have to wait to get the latest, breaking story from any one source. Now, we're inundated with opportunities to know what has happened, or what's happening, sometimes, potentially before it's even happened.”  

While the effects on the customer experience are clear, what has the popularity of reviews on social media outlets done for businesses?  

Large and small brands and businesses, Gaizutis says, can capitalize on the opportunity to speak directly to consumers, and create connections that resonate and work.

“Whether specific to a review, or more generalized as a dialogue between friends, social media is alive—it shifts and shapes as needed, and morphs to the needs, wants and desires of our changing hearts,” he maintains. “Oftentimes, it creates a potential need, want or desire to help us live a more fulfilled life. This is a major plus that most traditional media outlets can't satisfy.” 

Neal says that the Internet may make brand reputations less flexible, and less likely to change due to the permanence of reviews, which remain in cyberspace years after initially posted.

“The explosion of the social web means brand value counts for more than ever before,” he says. “Social commentary, in the form of product reviews, carries a high viscosity or ‘stickiness.’”  

Even years after a negative review is posted, future sales can be adversely affected, Neal maintains, because these reviews stick. 

“A potential consumer on Amazon.com can read a nasty review from someone with a particular agenda, truthful or not, about a product posted in 2002—even though the product has since gone through three version upgrades and represents millions in additional research and development dollars spent to make it better,” he explains. “The stigma attached to it is a hard one to overcome based on the communication technology we all utilize to offer our thoughts about it.”  

Negative reviews, according to the poll, while just as likely to come from any generational cohort, are most easily posted by younger cohorts. Why are younger people more comfortable being—as the poll says—“brutally honest” online than older generations?

“A better question would be ‘why are younger people more comfortable in stating their preferences online than older generations?’” Neal contends. “We see that people illustrate any number of agendas through their online behaviors—just like they do in the real world; some honest, some not.” 

Young people simply “leverage” online communication as if it were the real world, he explains, which is a difficult concept for older cohorts to adopt.  “The term ‘online communication’ obviously means something different for the different generations,” Neal maintains. “The digital generations think in terms of communication synchronicity, or the lack thereof, as relative—often interpreted as ‘(near) real time conferencing on a one-to-many scale.’”

Though social media may not seem as real as real life to many users, it is nonetheless its own entity.  “Social media just as much as a living thing as we are. It's agile and adaptive, and feeds off of our interactions and movements,” Gaizutis concludes. “It's truly biotic.”