Popular choice vs friends’ recommendations – which is most influential?

There are two sources of social influence that can shape consumer purchases:

  • Overall popularity of the product, as evidenced by indicators such as best-selling lists or online ratings, which aggregate the choices or opinions of previous buyers in the system.
  • Popularity of the product within the buyer’s social circle. This can be evidenced by people choosing the same brands as their friends, or spreading ideas and content (e.g., a video) within their social network.

 

But which effect is the most important? Will global popularity trump localised preference, or the other way around?

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Researchers Xue Pan, Lei Hou and Kecheng Liu investigated this question, by analysing supplier choice on Yelp.com. The paper is entitled “Social influence on selection behaviour: Distinguishing local- and global-driven preferential attachment” and is available here (open access).

 

The authors describe Yelp.com as “a website providing reviews and information on various businesses including restaurants, cafes, theatres or even clinics and hospitals” (p.9). They further explain that, when users search for information about a business on Yelp.com, they can see: “(V)arious kinds of ranking list of businesses on the user homepage, and number of reviews, average rating etc. on the business homepage. (…)  (T)here is also a timeline displaying the reviews of (their) friends on businesses.” (p.2).

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That is, on Yelp.com users can see both the business’s overall popularity and its popularity among their social circle.

 

The researchers found that, in general, popularity within the social circle was more influential than overall popularity, in purchase decisions. Let’s imagine two businesses, say, two restaurants. If restaurant A had higher rankings than restaurant B among my friends, but lower rankings than B overall, I would be more likely to choose restaurant A than restaurant B.

local vs global pop
Image source: Pan, Hou and Liu, 2017

The only exception to this observation was when there weren’t many reviews among the person’s social circle. In those circumstances, overall popularity was more influential than the social circle’s.

 

This means that established businesses need to go beyond overall satisfaction rates, and pay attention to how well they perform with particular groups of customers. This is because if they fail to perform well with a particular group of customers (e.g., new mums, players in a sports team, students of a specific university…), they may find it disproportionality hard to attract new customers, even though they have an overall good rating.

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This is another example of the importance of understanding satisfaction at a granular level, I suppose.

 

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