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Social media has generated an unprecedented volume of word of mouth surrounding brands and products. Customers who had historically engaged in water-cooler discussions with coworkers or backyard conversations with neighbors are now turning to online ratings and reviews, blogs, discussion groups and Twitter feeds. Previously private conversations are now publicly visible to potential customers and product managers.
From the standpoint of companies, social media can provide valuable customer feedback about their products by allowing them to eavesdrop on these conversations. The desire to listen in on customers’ online conversations about products is so pervasive across companies that it has spawned a cottage industry of listening companies that regularly scan online conversations to gauge customer sentiment.
But how accurately do these conversations represent the true underlying sentiment of a product’s customers? To probe this question, we analyzed product ratings and sales over time from a popular online retailer. By studying rating behavior at the level of individual contributors, we uncovered several key dynamics that drive the evolution of online forums. We subsequently demonstrated how these dynamics influence product sales by relating online opinions to sales performance across a sample of products.
Who Is Posting and Why?
While customers routinely seek out the opinions of others prior to making a purchase, it’s much less common for customers to share their own opinions online. As a result, the opinions that potential buyers and social media strategists see come from only a small segment of the customer population — one that may not mirror the sentiment of all customers. While market researchers have long used small samples to survey customers’ opinions, such samples are selected with considerable care to ensure that they are representative. Since the decision to post a rating or review online is up to the customer, the representativeness of the opinions posted online is outside of a researcher’s control.
Online Voices: Who We Hear
So what affects contribution to online product forums? For one thing, the decision to express an opinion may be influenced by other posters and their posted ratings. (See “Online Voices: Who We Hear.”) This phenomenon has long been recognized by political scientists, who observe that election turnouts can be affected when would-be voters know how others have already voted. Similarly, marketers know that a customer’s decision about whether to post a product rating or review may depend on previously expressed views. This is commonly referred to as a selection effect. Some psychological studies have shown that many individuals, particularly those who see themselves as experts, try to differentiate themselves by expressing more negative opinions. Other studies have identified customers who tend to “go with the flow” and express opinions consistent with the majority.
Drawing from the full set of ratings that were posted on the website of the retailer we studied, we examined ratings, contributed by 2,436 individuals, for 200 products and identified several important dynamics at work in online forums, including:
Adjustment effects. These occur when contributors express opinions that differ from their underlying product evaluations. We found evidence that more involved customers skew their ratings downward to stand out and that less involved customers tend to shift their ratings upward to further contribute to a consensus of positive opinions.
Selection effects. Forums that have a pre-existing consensus of opinion encourage participation from more positive and less involved customers. In contrast, when there is disagreement, participants tend to be the more involved customers who post more negative opinions.
Polarization effects. Customers tend to provide online ratings for products for which they harbor extreme opinions — whether positive or negative.
Together, these dynamics shape product ratings within online customer forums over time.
The Vocal Minority vs. The Silent Majority
Across a number of studies, posted ratings tend to become more negative with selection and adjustment effects, which systematically alter the tone of online conversations. As online forums become more populated, for example, customers who are more positive and less involved tend to stick to the sidelines, while customers who are more involved and more critical take their place.
W.W. Moe and D.A. Schweidel, “Online Product Opinion: Incidence, Evaluation and Evolution,” in Marketing Science, forthcoming.
W.W. Moe and M. Trusov, “The Value of Social Dynamics in Online Product Ratings Forums,” in Journal of Marketing Research 48, no. 3 (June 2011): 444-456.
The customer base’s underlying sentiment toward a product or brand helps determine rating trends. For instance, online forums comprised of customers with both strong positive and strong negative opinions exhibit faster product rating declines than in forums with more moderate customer bases — even if the two groups of customers had the same average opinion. Naysayers who had extremely negative views discouraged the participation of customers with more favorable views. Those negative customers’ influence can be so strong that the tone of a forum may closely resemble what would emerge in a forum with an exclusively negative customer base.
This is not to say that managers should entirely disregard what they hear online. Rather, they should be aware of these potential dynamics so they do not overreact to negative online opinions. In many cases, these opinions may only represent a small but vocal segment of the customer population.
Are Customers Listening?
Because opinions expressed online can influence product sales, some companies have tried to strategically manipulate product ratings and reviews by posting artificial (and favorable) product opinions themselves or through an agent. Not only have companies been disciplined by regulators for this activity, but our research suggests that these activities have a very limited effect on long-term sales.
Posted opinions result from both the underlying customer sentiment and social dynamics. While both components can have a short-term effect on product sales, the influence of social dynamics is not sustained in the long term. That is, products that receive an uncharacteristically positive (or negative) rating may see a short-term boost in subsequent ratings and sales. But unless these artificial ratings are continuously posted, posted opinions and product sales very quickly return to their baseline value. This is especially the case when diverse opinions encourage lively discussion.
Lessons for Managers Who are Listening to Social Media
1. Don’t forget about the silent majority. Many forums are dominated by a small, hardcore group of individuals who may not be representative of the broader customer base that has chosen to remain silent.
2. Social dynamics in the forum can influence who posts and who remains silent. In the face of conflicting opinions, less involved and more positive customers increasingly remain silent, letting the more critical customers steer the ratings environment.
3. Don’t overreact to negative feedback. Negative reviews don’t necessarily mean that your brand or product is uniformly disliked. More favorable customers may have chosen to remain silent rather than contradict the harsh criticism expressed by previous posters. Trying to appease your dissatisfied customers may be quite costly — and not necessarily worth it.
4. Ignore the white noise. It is important to differentiate between the white noise and the meaningful insights. Many trends and dynamics observed in online opinions are simply a result of “healthy” dynamics. A careful statistical analysis of ratings dynamics can help identify when a marketer should address an issue raised by a negative comment or modify a product in response to criticism.
Lessons for Social Media Strategists
1. Be prepared to act. Monitoring the conversations taking place online can be very beneficial for a social media strategist who knows how to interpret what he or she hears and is prepared to act on it. While product managers have been known to modify their product strategy in light of what they hear online, social media strategists can also respond to the online chatter by managing the social media environment in such a way that healthy social dynamics are fostered.
2. Encourage the less involved to post. Less involved customers tend to be more favorable, while more involved customers tend to be more critical. If you’re trying to foster a positive tone, incentives for posting reviews should be provided to the more casual customers.
3. Don’t be afraid of disagreements. While disagreement among opinions tends to attract more negative posters, it also fosters more discussion. This insulates product sales from a few uncharacteristically negative opinions.
4. Resist the temptation to try to manipulate opinions with artificially positive reviews. An online opinion forum tends to take on a life of its own. While the temptation is high to strategically manipulate expressed opinions, the benefits in terms of product sales are limited — not to mention the steep downsides associated with the legal ramifications and the potential for negative publicity.