“WHY do people say what they say? Why do people rant about their contractor? Why do they take the time to write a restaurant review? Focusing on consumers’ word-of-mouth, Dr. Andrea shares her research and insights to help us understand the 4 main reasons why people talk. (Here’s a hint: It’s not just all about being helpful!) You’ll learn a few tips to help you diagnose why people are talking – and how to elicit unbiased recommendations from your friends!”
SHOWNOTES Contents
• 3 Key Learnings • References & Links • Dr. Andrea’s Research & Commentary • Conclusion
3 Key Learnings
1. Defining Word-of-Mouth Word-of-Mouth is defined as conversations amongst consumers that:
• focuses on products, services, or the marketplace; • takes place across any medium, online or IRL; • is not paid-for or compensated in any way; and • can be a random comment, an answer to a question, or a formal review.
2. The four main motivations for WOM - Why we talk: 1. We talk to be helpful; 2. We talk to be social; 3. We talk to establish balance; and 4. We talk to serve their own self interest
3. One tip to avoid a biased answer when asking your friends for purchase advice
• Consumers tend to validate their own purchase decisions, even when they are trying to be helpful.
• Instead of asking: Try asking: - “what school should I go to?” “If your school didn’t exist, what school
would you go to?” - “what car should I buy?” “If your car didn’t exist, what car would you
drive? - “what neighbourhood should I live in?” “If your neighbourhood didn’t exist, what
neighbourhood would you live in?”
References & Links Dr. Andrea Wojnicki
• Bio - https://www.linkedin.com/in/andreawojnicki/ • Dissertation Research – https://link.springer.com/article/10.1007/s40547-017-0077-8 • WOM & Social Capital paper with Professor Mengze Shi -
http://www.journalofadvertisingresearch.com/content/54/1/81 Co-authors and collaborators
• Professor Gerald Zaltman - https://www.hbs.edu/faculty/Pages/profile.aspx?facId=6579& and http://olsonzaltman.com/
• Professor David B. Godes - https://www.rhsmith.umd.edu/directory/david-godes • Professor Mengze Shi -
Consumer Psychology and Word of Mouth (Academic & Non-Academic Research) • WOM:
o https://www.getambassador.com/blog/word-of-mouth-marketing-statistics o http://www.nielsen.com/us/en/insights/news/2013/under-the-influence-consumer-trust-
As a consumer, you may ask your friends for recommendations about what laptop to buy, what restaurant to go to, or what car to buy. Or you may use rating websites like TripAdvisor , or Yelp or Homestars to help you decide where to dine or what contractor to hire. If you’re like me, you may have wondered “what possessed these people to write these reviews?” OK – you’re probably not like me. It turns out I am obsessed with this Q. I’m always wondering why people say what they say – whether online or IRL. SO obsessed, in fact, that I spent years studying the question.
In this episode I first define WOM, then I describe 4 different psychological motivations that consumers have to generate WOM - in other words, WHY they talk. I’ll define these motivations, tell you stories about them, even share quotes from real consumers about how they relate to WOM.
Why you should Listen (or read!) The learnings from this episode will help you understand the motivations and the biases of people when they talk – when they generate word-of-mouth. This can be helpful for at least 3 reasons:
1. First, the learnings from this podcast may be helpful to you in general. In other words, this might just be interesting to you in and of itself. You will learn insights regarding unconscious biases that people are communicating to you. Not to mention diagnosing what reasons you yourself might have for talking. It’s ALWAYS fun to understand what’s going on between people’s ears, right? Never mind what comes out of their mouth!
2. Second, as a consumer, you can better assess the advice you are receiving from other consumers if you understand their motivations and biases. Spoiler alert: given these motivations and biases, you can adjust the questions that you ask your friends when you are seeking advice about what to buy or what restaurant to go to (more on that later).
3. Last, as a marketer, you can leverage these insights to inspire your customers to “tell a friend” about your product or service.
WORD OF MOUTH DEFINED
WOM is not just ANY talk, it’s CONSUMER talk. • That means it is talk about products or services, or about the marketplace. It could be products
or services that you have purchased, or maybe ones that you’re just curious about. • WOM is also known as C2C communication, = Inter-consumer communication = Buzz.
WOM can be face-to-face IRL, it can be over the phone, online, or over any communication medium. • That said, I should note (and you would probably guess) that face-to-face WOM is more effective or
impactful than online WOM. Research conducted by the Word-of-Mouth Marketing Association (WOMMA) suggests that face to face WOM has about twice the impact of online WOM. That’s not surprising, right? We know from several of our TalkAboutTalk podcast guests that face to face communication is more complete, because we see facial expressions and body language and we hear their tone of voice. However, while online WOM may be less impactful, the quantity of online WOM has exploded over time as people spend more and more time in front of their screens.
WOM is not paid-for or compensated in any way. This is critically important. • That’s why WOM is powerful. SO powerful, in fact, that WOM influences at least 2/3 of all
consumer product sales in the US. It is non-promoted, credible, PURE communication. On the contrary, some marketplace messages are paid for or compensated. When we see messages from advertisers, we know they have something to gain. Therefore we often dismiss their advertising message.
• There’s a whole line of research in marketing about PERSUASION KNOWLEDGE. o Persuasion knowledge considers the factors associated with consumers’ expertise (or
knowledge) about how advertisers and other influencers may try to influence (or persuade) them - unduly. Consider our commonly shared negative stereotypes of appliance and car salespeople and the tactics they employ. Our knowledge of these tactics is just one example of persuasion knowledge. In contrast, when we hear a message from another consumer, we believe they have nothing to gain. If you received a recommendation from a friend, it would probably be more persuasive than seeing an ad for the same product. The reason is simply that your friend was not tangibly compensated.
• It’s not surprising that research indicates 84% of consumers say they completely or somewhat trust recommendations from their friends and family. I’m wondering about the other 16%! And recommendations from friends and family are trusted more than recommendations from any other source.
• When people or companies are sponsored to talk about something, that’s called ADVERTISING. If they hide the fact that they are paid, that’s called SHILLING or ASTROTURFING. Have you heard of shilling or astroturfing? Well, that is not WOM and that is NOT COOL. When people or companies get caught shilling, there is often a backlash. And I cannot stand the fact that they are making Marketing and Marketers look bad.
o Apparently the FTC agrees. In 2017, the Federal Trade Commission in the US publicly enacted cease and desist orders to online influencers who do not disclose that they are being paid to promote their sponsors products.
• You know those fashion bloggers who post links to clothing? How many of them do you think get paid to do so? Well, it’s now illegal for them to not declare they are being compensated to promote products. The FTC also created formal guidelines. Instagram has been encouraging SPONSOR hashtags. Maybe you’ve seen “#SPONSOR” on a social media post?
• Still, some online influencers continue to hide their revenue sources. I guess they think that if they reveal they are paid to talk, their message won’t be believable. Well, once you get caught shilling, no one will believe a word you say.
WOM can be casual or formal • It can be things that just come up in conversation. It can be a random, serendipitous comment that
just crosses someone’s mind– whether online or IRL. It can also be less random, answering a question from a friend – like what restaurant to go to or what car to buy. It can also be more formal. Have you ever sat down to write a Trip Advisor review? It’s not exactly casual and random, is it? But you aren’t paid, so it is still considered WOM.
Word-of-Mouth is defined as conversations amongst consumers that: • Focuses on products, services, or the marketplace • That takes place across any medium, online or IRL • That is not paid-for or compensated in any way • And that can be a random comment, an answer to a question, or a formal review.
Four main reasons why consumers talk about products and services:
1. To be helpful 2. To be social 3. To establish balance 4. To serve their own self interest
These 4 reasons are not mutually exclusive. But this list is meant to be exhaustive. That means that any given example of WOM can be attributed to at least one of these four motivations.
TO BE HELPFUL The first reason why consumers may talk, why they generate WOM, is to BE HELPFUL. The main psychological motivation here is altruism. • Of course, this seems like the obvious answer to WHY we provide our friends with recommendations
and warnings -- we want to be helpful. • Let me tell you an interesting story about some of the research I conducted when I was writing my
dissertation. - One of my dissertation committee members professor Jerry Zaltman, suggested that I interview
several consumers, in depth, one-on-one, to learn about their thoughts and feelings about WOM. Yes, this is the same Professor Zaltman whom I interview for another podcast episode on “Storytelling.” Jerry also invented a powerful interviewing technique called the ZMET or the Zaltman Metaphor Elicitation Technique. Thanks to him, I got trained in this method and had the opportunity to conduct 1on1 interviews with 10 different consumers, interviewing each of them for three hours. Needless to say, I learned a lot, very quickly.
- I asked each of the interviewees to prepare for the interviews by considering their “thoughts and feelings about sharing information about products and services with other consumers”. These ten people were all very different: young and old, male and female.
- They all started by telling me the exact same thing - they were trying to be helpful. Yes, some even used the term “altruism.” Listen to what they said:
easier and potentially… really make a difference for somebody.”
“It makes you feel helpful and useful.”
- None of the 10 came in with any other motivations, but interestingly, they all eventually
started to consider other motives. Some almost immediately, others after talking about their altruistic tendencies for –like two hours. Im not kidding.
- I remember one participant who, after over 2hrs, sheepishly admitted that there may be something other than altruism at play:
“Maybe it wasn’t about helping my friend at all. Maybe it was all about me. Oh Sheesh!”
- That was a WOW moment. Anyway, my point here is that WOM behaviors are often associated with a desire to help other consumers. There’s no arguing that. This is not surprising and has also been demonstrated in other academic research. Speaking of which, there was another WOM research paper from the 1980s that focused on how consumers sometimes act as vigilantes, basically “policing the market”, contributing to consumer welfare for the benefit of all consumers. That means rewarding firms that “do good” and punishing the bad firms, just by talking about them—almost like -- seeking revenge.
- I definitely heard this in the interviews I conducted. Listen to these 2 quotes, one positive and one negative – the first is from someone who is trying to help a brand stay in business by recommending it to their friends. The second is from a participant who had a brutal experience at a theatre:
The product is going to go away
if I don’t do something. … disappear somehow
if I don’t do something.”
“Maybe the theatre will close
because of what I said. It’s probably very selfish but I felt better.
I really did. I felt better.”
- This second quote in particular revealed that the consumer understood that this negative WOM
could have a significant effect on this theatre. But the consumer was more interested in trying to help other consumers avoid the same negative experience that he had.
• So there you have it. Consumers attribute their WOM behaviours to their desire to help – whether it be helping a friend make a good decision, or helping the marketplace in general, by sharing information and acting as a consumer vigilante. Altruism is an obvious reason why consumers talk.
TO BE SOCIAL Consumers also talk is to BE SOCIAL. The psychological motives here are to establish connection and to express oneself. • Sometimes consumers talk about products and services simply to make conversation. Maybe even
just to fill the silence! This could be what we call “Water cooler conversation” at work. Or online, when people feel compelled to post something – ANYTHING. Sometimes people just want to connect with others—so, they start a conversation. Maybe about a movie or a restaurant that they recommend.
• It must be newsworthy. - Just like marketers need to say something novel and compelling in their advertising, consumers
don’t just start rambling about a so-so experience at a restaurant. Think about it: we rarely hear people talking about average or so-so experiences. Have you ever noticed that?
- There is research that demonstrates an asymmetrical u-shaped relationship between the satisfaction that consumers experienced and their propensity to generate WOM. This is just a fancy way of saying that most of the WOM is focused on extremely positive or extremely negative experiences, and particularly negative ones. So consumers are using these extremely positive and extremely negative stories to establish connection with other consumers.
• Consumers are also generating WOM as a means to express themselves. You could say that when consumers generate WOM, they are not just explicitly talking about products and services, but they are also implicitly talking about themselves
- An aside – this idea happens to be the title of my dissertation: “Talking About Products, Talking about Me”. And I certainly heard this from the people I interviewed:
“You are what you wear. You know, you are the things you use.
And what you talk about says a LOT about you.”
• In addition to talking about themselves, consumers may also be implicitly talking about their relationship with the receiver of the information:
“It lets me show that the person is important to me, too. You know, that it’s not just the product or the service;
it’s actually nothing about the product or service. I’m revealing my feelings about these things because I care about you.”
• So you see from these examples, consumers also generate WOM to BE SOCIAL, that is, to establish connection, or to express something about themselves.
TO ESTABLISH BALANCE (equilibrium) Consumers may generate WOM is to ESTABLISH BALANCE. The psychological motives here include cognitive dissonance, overcoming scarcity, and the need to reciprocate. • This idea of establishing balance is based on our innate need to make sense of things, and to create
equilibrium in our minds. • You’ve probably heard of Cognitive Dissonance (Leon Festinger 1957), and some of you may be well-
versed in this. - To simplify though, think of the term COGNITIVE – which means the mind, and DISSONANCE,
which means discomfort or imbalance. - So cognitive dissonance is the uncomfortable mental state we experience when things are out
of whack. We feel motivated to do something to reinforce consistency or balance -- and to avoid stress. It could be changing an attitude, or maybe changing how much we care about it.
- You may have heard people declaring that they DON’T CARE about something when it isn’t going their way? --and then you wonder --WOULD they care if things were going their way? Well, THAT is cognitive dissonance.
- We all seek to achieve equilibrium or balance—be it in our minds, be it in a social context, or whatever. And we act in ways to reinforce this balance.
• Do you remember Transitivity Theory from your school days? It’s the same with electrical currents.
(+) x (+) = (+)
(-) x (-) = (+)
(+) x (-) = (-)
- Well, this relates to consumers and their judgements too. Consumers may assume that their
friends will like the same things as them. It’s like a validation. - I noticed when I was interviewing consumers that they often experienced some stress about
sharing their recommendations & warnings with others. So, for example, they REALLY hoped that their friends would agree with their recommendations. (+ x + = +) It just makes sense, right?
- They also talked about how they used WOM as an implicit tool to reduce uncertainty or to validate judgment of a product or even to validate a relationship:
“…if they have similar interests to you the chances are higher than someone you don’t know very well that they too will enjoy the
product or have the same experience.”
• Personally, I find cognitive dissonance has such an effect on WOM, that sometimes what consumers
are saying –what they are recommending can be biased. That is NOT HELPFUL! - Let me give you an example: When I ask my friends for their suggestions regarding
SIGNIFICANT decisions, they often--maybe USUALLY-- recommend what they have chosen. § So it could be what car I should buy or what neighborhood I should live in. My
friends very often answer with the car they drive or the neighborhood they live in. - Try it! It’s fascinating. Of course, most of the time these consumers aren’t out-and-out lying,
but it seems that there is a bias. - This can be explained by cognitive dissonance—they are reinforcing their own decisions. - So, my new Q, the Q I try to ask people when I am seeking their input, is:
§ “If the car you are driving didn’t exist, what would you drive?” Or “If your neighborhood didn’t exist in this city, where would you live?”
§ That’s when you get some amazing insights. Try it – you’ll see! • Still focusing on the motivation to create BALANCE, in addition to Cognitive Dissonance, we also have
Scarcity and Reciprocity as significant factors influencing WOM behaviors. - According to The Scarcity Principle: consumers place higher value on products that are scarce,
and less value on products that are in abundance. So, scarcity increases the value of a product. § In the context of WOM, scarcity may also increase the value of information that is
being shared. Suddenly, word of mouth – a simple recommendation – becomes like a currency. Or even a gift.
§ Consider a secret for how to get a reservation at a coveted restaurant, or a whisper about an unadvertised sale. These are examples of when consumers understand the scarcity principle and the value of their WOM.
- Research shows that consumers decide NOT to share their insider information about things like restaurant reservations and unadvertised sales, especially with people who they don’t know as well.
§ On the other hand, they may fully understand the high value of their message when it relates to scarcity. And they may be hoping that the receiver of the information, their friend, will feel obliged to reciprocate. Again, we can conceive of WOM as “currency”. Or even as a gift.
• Also related to balance - Consumers feel compelled to reciprocate with WOM when they themselves feel indebted to a potential receiver of information …or maybe they decide to share information because they seek to similarly obligate the receiver of the message. Listen to this:
“The person can be grateful. And then I feel useful or—I feel like that was a worthwhile
expenditure of my time and energy for them.”
“Now that I shared this,
I wonder what I might find out maybe in return.”
So people also generate WOM to create balance. Balance-related concepts including cognitive dissonance, transitivity theory, scarcity and reciprocity, all provide some explanation of this need for balance.
TO SERVE ONE’s OWN INTERESTS
• Let me start by noting something. You could argue that simply being motivated to do something is, in fact, serving your own self-interest. It’s almost tautological, right?
• Economist Milton Friedman argued decades ago that rational self-interest motivates all human behavior. Of course, since then, economists and psychologists have proven that there’s much more to human behavior than rational self-interest!
• Remember at the beginning I told you about the research I did as a doctoral student, interviewing all those consumers one-on-one about how and why they tell their friends about products and services? And how 100% of them started by telling me it was bc they are helpful -- or even altruistic? Well, 100% of those interviewees also told me that they also had SELF-SERVING reasons for talking. Isn’t that just fascinating? Maybe even ironic? Think about it. We assume our friends are just being helpful.
SELF-interest is one of the main motivations that drives people to share recommendations. Two theories help inform this phenomenon: Social Capital and Self-Enhancement. • First, let me tell you about Social Capital. A very simple way to conceptualize Social Capital is to think
of it as your reputation. - Social Capital can be earned and lost based on what you do and what you say. And certainly, we
all seek to elevate our social capital. - There’s a great book by Jonah Berger called “Contagious” that highlights the significance of
social capital in the context of WOM. Berger lists six main reasons why things catch on—why things become popular. These six reasons are not all motivations, per se, but there is some overlap. According to Berger, one of the main reasons why things are contagious (or why they catch on), is due to Social Currency.
- Social currency is represented in the reputation derived from the exchange of social objects: clothing, videos, reactions, links, and yes, WOM. So if sharing a recommendation for a product will improve your reputation (say, as a helpful person, or as an expert in that area), then the WOM has social currency.
- Simply put, we share what makes us look good. • You may have heard of opinion leaders – those consumers who are experts and talk a lot--provide
advice--regarding some product category. - You may know someone who knows a lot about cars and talks about cars and provides
recommendations about which car to buy. That person is an opinion leader. You may also know someone who knows which restaurants to go to. That is a restaurant opinion leader.
- In research that I conducted with Professor Mengze Shi at the Rotman School at the University of Toronto, we investigated how tangible rewards offered to consumers for making recommendations may affect opinion leaders and non-opinion leaders differently.
- I’m sure you have seen those programs – “get a free t-shirt if you bring a friend to the gym” or “receive a $5 credit on your next purchase if you refer a friend.”
- Before I go any further, YES, I know I originally defined WOM as non-compensated recommendations. When WOM is compensated, the receiver of the information may discount the message, right? Well, that is actually the point. Listen to what we found! o We used a huge database of research from a project I did when I was student. I collected
data from surveys and then also from online behavior of the same survey respondents (with their permission, of course).
o Anyway, Professor Shi and I predicted and demonstrated that the social capital earned by these opinion leaders may actually shield them from any negative implications associated with receiving tangible benefit (like MONEY) for making recommendations.
• In other words, Opinion leaders may have developed a reputation of intrinsically motivated referrals across their social networks, shielding them from a potential loss of social capital associated with extrinsic rewards.
• This is an aside, but it illustrates how consumers earn social capital, improve their reputation, thorough WOM.
• Self-Enhancement is a related topic here. Self-enhancement is about maintaining and improving
one’s self-esteem or self-worth. - I have a mental exercise for you.
o Consider, for simplicity’s sake, that there are two kinds of people: experts and novices. So, say for restaurants, you have people who are experts at choosing restaurants, and you have people who are non-experts or novices. Now, consider that these two types of people--experts and novices--can have either satisfying or dissatisfying experiences.
o Now imagine 4 scenarios or conditions to consider. Imagine a bunch of consumers went to a restaurant. There could be:
1. Experts who are satisfied with the experience; 2. Experts who are dissatisfied; 3. Novices who are satisfied; and 4. Novices who are dissatisfied.
CONSUMER EXPERTISE Experts Novices
SATI
SFAC
TIO
N
Satisfied
1 3
Dissatisfied
2 4
o Now, my Q for you is: who talks the most? • For my doctoral dissertation, I examined this question in excruciating detail.
Thank you to my professor David Godes for all his work with me on this! Over the course of many years, Professor Godes and I conducted controlled experiments and used real online WOM data to demonstrate this effect of self-enhancement on consumers’ WOM behaviors.
• When I finally got to the job market, I had to give formal academic presentations to the faculty at various schools. When I drew this 2x2 matrix on the board and asked the audiences: who generated the most WOM?-- I could immediately tell who had pre-read my research. Many people think it would be the dissatisfied experts. We have all heard experts telling dramatic stories about their disappointments, right?
• Well, no. It turns out that SATISFIED EXERTS generate significantly more WOM than any of the other conditions. They do so because WOM regarding their positive, successful experiences can serve as an indicator, or signal, of their expertise. In other words, they are self-enhancing. Yes, they are generating WOM in their own self-interest.
- Remember those ten 1on1 interviews that I conducted, where all ten of them came in, telling me they were just trying to be helpful when they generated WOM? Well, all of them eventually declared that they also shared WOM recommendations to serve their own self-interest. Listen to these quotes from the research participants:
information to share that makes you feel kind of powerful and confident,
like you have information to, you know, make good decisions.”
“There’s some products that I feel I’m a know-it-all about and that I could just talk anyone under the table… I can be respected when I am talking about it
because of my background in it.”
“I have the privilege of purchasing really cool/expensive/scarce products”
“I am a successful consumer –
I am an expert”
“I am ‘In the know’. I am up-to-date on all the latest stuff you wish you knew about.”
So the next time you receive a recommendation from someone about a GREAT restaurant or a GREAT vacation destination, ask yourself “are they trying to be helpful? Or are they self-enhancing?” Most people assume they are just trying to be helpful. But research indicates otherwise. WOM can be very ego-motivated.
WOM can provide an implicit opportunity to improve consumers’ reputation, power, status, and self-worth.
The four main motivations for WOM - Why we talk :
1. We talk to be helpful; 2. We talk to be social; 3. We talk to establish balance; and 4. We talk to serve our own self interest
I hope you found this interesting. And I hope this will encourage you to think about why you provide recommendations to your friends and why others are sharing WOM with you. Whether you’re chatting at work, skimming your Instagram or FB feed, or reading reviews online, ask yourself:
- Are they just purely being helpful? - Or are they being social - trying to make conversation? - Maybe they are seeking to establish balance or to tell me something about themselves? - Maybe that is their ego talking – they are purely self-interested? - OR – maybe it’s a combination of these?
Phew, that’s a lot of information to digest. I would LOVE to hear from you about any of this. Do you have any examples? Suggestions for things to add to this list?
And of course I would be foolish at this point if I didn’t ask you to tell all your friends about TalkAboutTalk! One last thing, if you have a moment, please go to Apple iTunes or whatever podcast platform you are using and rate this podcast. It helps us a lot to get some traction in this wonderful podcast universe.
https://itunes.apple.com/ca/podcast/talkabouttalk/id1447267503?mt=2 (click on an episode, then “Ratings & Reviews”)
THANK YOU for listening! And READING!
And TALK soon!
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