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People Favour Highly Reviewed Products, Even When They Shouldn’t

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A large number of reviews is not a reliable indicator of a product’s quality.

By MediaStreet Staff Writers

When we’re trying to decide which mobile phone case to buy or which hotel room to book, we often rely on the ratings and reviews of others to help us choose. But new research suggests that we tend to use this information in ways that can actually work to our disadvantage.

The findings, published in Psychological Science, indicate that people tend to favour a product that has more reviews, even when it has the same low rating as an alternative product.

“It’s extremely common for websites and apps to display the average score of a product along with the number of reviews. Our research suggests that, in some cases, people might take this information and make systematically bad decisions with it,” says researcher Derek Powell of Stanford University, lead author on the study.

“We found that people were biased toward choosing to purchase more popular products and that this sometimes led them to make very poor decisions,” he explains.

As opportunities to buy products and services online multiply, we have greater access than ever before to huge amounts of first-hand information about users’ experiences.

“We wanted to examine how people use this wealth of information when they make decisions, and specifically how they weigh information about other people’s decisions with information about the outcomes of those decisions,” says Powell.

Looking at actual products available on Amazon.com, Powell and colleagues Jingqi Yu (Indiana University Bloomington), Melissa DeWolf and Keith Holyoak (University of California, Los Angeles) found no relationship between the number of reviews a product had and its average rating. In other words, real-world data show that a large number of reviews is not a reliable indicator of a product’s quality.

With this in mind, the researchers wanted to see how people would actually use review and rating information when choosing a product. In one online experiment, 132 adult participants looked at a series of phone cases, presented in pairs. The participants saw an average user rating and total number of reviews for each phone case and indicated which case in each pair they would buy.

Across various combinations of average rating and number of reviews, participants routinely chose the option with more reviews. This bias was so strong that they often favoured the more-reviewed phone case even when both of the options had low ratings, effectively choosing the product that was, in statistical terms, more likely to be low quality.

A second online experiment that followed the same design and procedure produced similar results.

“By examining a large dataset of reviews from Amazon.com, we were able to build a statistical model of how people should choose products. We found that, faced with a choice between two low-scoring products, one with many reviews and one with few, the statistics say we should actually go for the product with few reviews, since there’s more of a chance it’s not really so bad,” Powell explains. “But participants in our studies did just the opposite: They went for the more popular product, despite the fact that they should’ve been even more certain it was of low quality.”

The researchers found that this pattern of results fit closely with a statistical model based on social inference. That is, people seem to use the number of reviews as shorthand for a product’s popularity, independent of the product’s average rating.

According to Powell, these findings have direct implications for both retailers and consumers:

“Consumers try to use information about other people’s experiences to make good choices, and retailers have an incentive to steer consumers toward products they will be satisfied with,” he says. “Our data suggest that retailers might need to rethink how reviews are presented and consumers might need to do more to educate themselves about how to use reviews to guide their choices.”

 

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Virtual Reality Shopping is Here — And This is What Consumers Want From it

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Customers want to use VR to design rooms, customise products and shop with friends from across the world. Retailers – get ready for v-commerce, because others are already offering it.

By MediaStreet Staff Writers

Virtual reality shopping is on the way — and now new data shows how consumers want to use it.

Early tech adopter consumers are eager to use virtual reality technology to:

-Design rooms by visualising furniture and accessories assembled together in virtual “rooms”

-“Trying on” and customising products like jeans and eyeglass frames

-Taking virtual shopping “trips” with friends from across the country or around the world.

Many people said that they would like to use virtual rooms to see how items purchased online would look in their own rooms.

Those are among the key findings of a survey of 1,000 early-adopter consumers by global management consulting firm L.E.K. Consulting. The results show that “v-commerce” – a blend of e-commerce and brick-and-mortar shopping – is nearly here.

Savvy retailers will respond by investing in virtual reality technologies and starting to plan v-commerce strategies. Some, like Alibaba, The Gap, and Sephora have already started down this route.

“V-commerce brings the potential for entirely new shopping experiences and new kinds of added value,” says Dan McKone, Managing Director at L.E.K. “But there are risks for retailers – the initial investment is significant, and there are high costs for getting it wrong. Retailers need to do what they’ve always done – look to their consumers to point the way.”

Retailers are ramping up investment in two kinds of v-commerce technology. Firstly, there is “virtual reality” (VR), where consumers use headsets to enter a completely digital world. Secondly, there is the more-accessible “augmented reality” (AR), where the customer uses their camera-equipped smartphones to get information (such as prices and colour selections) overlaid on a picture of the physical showroom or shopping space.

“For retailers, the appeal is obvious,” says L.E.K. Managing Director Rob Haslehurst. “These technologies are a new way for retailers to do what customers want them to – create compelling shopping experiences and have rich communications with them.”

The L.E.K. survey of 1,000 consumers who had already experienced VR and AR technology was conducted in in the spring of 2017. Among the findings that help point the way for retailers:

  • Eighty percent want to use AR or VR to design a room or physical space by browsing virtual or physical showrooms, getting information about furniture and décor, and “seeing” what it looks like. Retailer Wayfair uses VR showrooms where customers can see a room come together as they fill their basket with products. Lowe’s Holoroom lets customers design a virtual room and then tour the space. Alibaba’s “Buy+” VR app allows consumers to browse and buy from the aisles of a virtual store, no matter where they are in physical space.
  • Seventy percent want to use v-commerce to try on clothes and accessories and to customise them. Consumers can start with an image of themselves on their smartphones, then search for the perfect shade of makeup or an eyeglass frame that perfectly suits them. The Gap and Sephora are already offering these AR applications.
  • Seventy percent are strongly interested in virtual shopping, where consumers use VR headsets to shop in a virtual store with a friend who isn’t physically present, or with an AI “virtual shopper” similar to Alexa or Siri.

V-commerce offers retailers considerable benefits. L.E.K. Managing Director Maria Steingoltz says “It can create new, special experiences that would otherwise not be possible, and that leads to greater consumer engagement. It enables retailers to unify physical and digital channels – brick-and-mortar retailers can bring digital capabilities into the store experience, and online-only retailers can create virtual ‘stores.’ And the rich experience can generate more sales — a customer can ‘see’ a sofa in his or her own living room, and then be shown the cushions, lamps and side tables that go with it.”

Retailers that want to take advantage of the v-commerce opportunity should:

  • Act immediately to make AR and VR a part of their digital strategy. “They’re not far out on the horizon – the time to think about them is now,” says Haslehurst.
  • Establish a compelling value proposition and define the business model. “Make sure customers understand from the first encounter how the technology solves their pain,” says Steingoltz. “And make sure to define the resources, concrete goals, and metrics for the project.”
  • Consider making alliances with technology leaders. “Retailers don’t need to be technology experts,” says Haslehurst. “Look for alliances that provide access to world-class technology and give technology makers a good story to tell.

“The future of v-commerce is still developing — but it’s time for retailers to start investing in it and creating consumer experiences that fill baskets and the revenue pipeline,” Steingoltz says.

 

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In Retail? Till Receipts Can Now Be Digital – And Feature Advertising

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A South African tech company wants retailers to send receipts to their consumers’ phones directly upon purchase. These receipts can be held in the cloud, be searchable, and carry advertising.

By MediaStreet Staff Writers

The company, called EcoSlips, says it is launching the new disruptive service to forever get rid of paper-based transaction receipts.

Retailers can now link their point-of-sale systems to EcoSlips and send transaction receipts digitally from any pay point to the consumer’s mobile phone.

Paper receipt waste is reduced and a new advertising platform provides opportunities to grow any business in the retail sector.

Consumers may download the application to their mobile phone and register free of charge. The cashier scans or enters the customer’s unique pin number and a digital receipt is forwarded to their phone within seconds.

Transaction receipts are stored in the cloud from where it can be downloaded, verified, forwarded or printed at any time, from any location.

BENEFITS TO CONSUMERS

Transaction receipts do not get lost and a printer-friendly report with all transactions can be downloaded in seconds. Consumers may use it for tax purposes, corporate expense claims, medical and warranty claims.

Transaction slips can also be forwarded directly from the retailer to the user’s office for corporate expense claims. Users do not even need a cell phone to request their digital receipts at a pay point.

The system saves hours of manual labour, since transaction slips are already scanned and summarised in digital format.

Customer identities remain protected and no spam can be sent to any phone, as is the case with text or email powered systems. Messages do not get lost in spam filters because they are sent directly to the user’s phone.

BENEFITS TO POINT-OF-SALE VENDORS

Vendors can provide a value-added service to their clients at no additional cost. They have an advantage over competitors and receive free advertising exposure in the process.

Free software is provided to link any windows based POS system without backend programming to EcoSlips.

BENEFITS TO RETAILERS

EcoSlips provides an advertising platform that targets only consumers in their immediate geographic location.

Complaints and compliments can be sent directly to the retail manager from the customer’s phone and frustrations caused by waiting in line to speak to a call centre agent are completely eliminated. Service levels can improve significantly when complaints are handled in a timely fashion by the retailer.

According to Henco Schoeman, founder of EcoSlips, “consumers may use the service free of charge. Retailers can significantly reduce paper slip waste, save on printing costs and early adopters may secure an exclusive opportunity to advertise in their geographic area. It is a win-win solution for retailers and consumers.”

EcoSlips is financially supported by Mlab and the SA Technology Innovation Agency (TIA). The service can be used anywhere in the world.

So if you are a retailer, this may be food for thought.

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Identity Marketing Backfires: Don’t Tell a Consumer What they Like

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By MediaStreet Staff Writers

When choosy parents choose Folláin jam and sports fans who call themselves sports fans subscribe to SkySports, identity marketing is hard at work. But what happens when this type of advertising misses the mark?

According to a study in the Journal of Consumer Research, when a person’s sense of ownership and freedom is threatened they are less likely to respond positively to identity marketing campaigns.

“While people may be drawn to brands that fit their identity, they are also more likely to desire a sense of ownership and freedom in how they express that identity. Identity marketing that explicitly links a person’s identity with a brand purchase may actually undermine that sense of freedom and backfire,” write authors Amit Bhattacharjee (Dartmouth College), Jonah Berger (Wharton School of the University of Pennsylvania), and Geeta Menon (New York University).

The researchers ran a series of five studies that compared two types of identity marketing, messages that simply referenced consumer identity or messages that explicitly tied consumer identity to a brand purchase. Participants were first asked to answer questions about the importance of a given identity in their overall life. They then viewed an advertisement for a brand that appealed to that specific identity. The advertisement used a headline that either referenced the identity or explicitly linked it to a brand. Participants then rated their likelihood to purchase a product from within the brand.

Study results showed that explicit identity marketing messages backfired with consumers who cared about the specific identity and resulted in a lower likelihood to purchase the product. This information may help brands understand why some people react negatively to products used in important areas of their lives.

“Contrary to the traditional thinking about identity marketing, our research shows that people who care deeply about an identity are not receptive to messages that explicitly communicate how a brand fits with their lifestyle,” the authors conclude. “In fact, to restore their sense of freedom, some people may avoid purchasing a product that otherwise appeals to them and fits with who they are.”

There you go marketers. You can suggest your product to your customer using their identity, but not tell your customer that if they are a certain type of person that they will buy it for sure. Humans: we hate being told what to do.

 

 

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Unclear CEO Expectations Often Inspire Marketing Officers to Quit

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More than 40 percent of CMOs have been in their jobs for 2 years or less.

By MediaStreet Staff Writers

Nearly three-quarters of chief marketing officers believe their jobs aren’t designed to let them have the greatest impact on their companies, according to a new survey.

Chief marketing officers frequently suffer from having poorly designed jobs, accounting for why they have the highest rate of turnover among all roles in the C-suite.

The survey found that more than 40 percent of chief marketing officers have been in their roles two years or less, and 57 percent three years or less – a significantly shorter tenure than any other C-level executive.

This “revolving door of CMO short-timers” affects how consumers view the company, since new chief marketing officers often change some or all of their predecessors’ strategic direction for positioning, packaging and advertising. These changes also come at a significant financial cost.

The research was conducted by Neil A. Morgan, a professor of Marketing at Indiana University, and Kimberly Whitler of the University of Virginia. The results can be found in the Harvard Business Review article, “Why CMOs Never Last and What to Do About It.”

“We believe that a great deal of CMO turnover stems from poor job design,” Morgan and Whitler wrote. “Any company can make a bad hire, but when responsibilities, expectations and performance measures are not aligned and realistic, it sets a CMO up to fail.”

They interviewed more than 300 executive recruiters, CEOs and chief marketing officers; conducted multiple surveys of chief marketing officers; analysed 170 CMO job descriptions at large firms; and reviewed more than 500 LinkedIn profiles of CMOs. They found more disparity in how the chief marketing officer’s role was defined and much more than for any other C-level role.

Morgan and Whitler found common core CMO responsibilities. More than 90 percent of chief marketing officers were responsible for marketing strategy and implementation, and more than 80 percent controlled brand strategy and customer metrics.

“But beyond that, the range of duties – from pricing to sales management, public relations to e-commerce, product development to distribution – is mind-boggling,” they said. “Even before considering candidates for the job, a CEO must decide which kind of CMO would be best for the company.”

Their research identified three types of chief marketing officers: the strategist who makes decisions about firm positioning and products, accounting for 31 percent in their survey; the “commercialiser” who drives sales through marketing communications (46 percent); or someone who is an enterprise-wide profit-and-loss leader who handles both roles (23 percent).

The key problem is that CEOs and executive recruiters do not do a good job of identifying the type of role that the firm needs the chief marketing officer to play before they identify and evaluate candidates. Rather, they look at CMO candidates and select the one the CEO rates highest – which assumes that the CEO knows what type of chief marketing officer the firm needs.

That turns out to be a false assumption in most cases. This is much less of a problem for chief financial officers, chief information officers or even chief human resources officers, where there is much more standardisation in the role these executives play across firms and industries.

To solve the problem of identifying the type of chief marketing officer they need before looking at candidates, Morgan and Whitler said CEOs need to take into consideration:

  • The degree to which consumer insight needs to drive firm strategy.
  • How difficult it is to achieve firm-level growth.
  • The level of dynamic change in the marketplace.
  • The historical role of chief marketing officers in the organisation.
  • The firm’s structure, including whether the marketing function is centralised or dispersed throughout the organisation.

Once they have identified the type of chief marketing officer they need, CEOs must design the role to align with what the firm needs from that person before looking for candidates. This “role design” part of the process is also done badly most of the time.

“Alignment of responsibilities is the critical area where mistakes are made. It’s common for companies to describe a role in which the CMO is expected to change the overall performance of the firm,” Whitler and Morgan wrote.

“Expectations typically far exceed the actual authority given the CMO,” they added. “That problem is often compounded when CEOs are wooing candidates who already have good jobs.

“While overpromising and ‘up-selling’ are common in recruitment across many functions, our research suggests that they can be a bigger issue in marketing, because of the general confusion and lack of uniform expectations about what a CMO does and the knowledge and skill differences among marketing executives.”

Only 22 percent of the job descriptions Morgan and Whitler studied mentioned how chief marketing officers would be measured or held accountable, and only 2 percent had a specific section that clearly spelled out job expectations.

When searching for the best CMO candidate, Morgan and Whitler also point to the increased importance of experience in shaping knowledge and skills relative to other functions due to the lack of professional certifications in marketing, compared to those required of lawyers and accountants.

Only 6 percent of the chief marketing officers in their survey had degrees in marketing. Although 44 percent had MBAs, their educational backgrounds varied and included degrees in other disciplines such as engineering, philosophy and political science.

This means that most chief marketing officers learn most of their marketing “on the job,” making their prior experiences and employers of key importance in determining their knowledge and skills.

“Another stumbling point, in our analysis, is that in almost all CMO job descriptions there are significant gaps between the responsibility given and the experience required,” they added.

 

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How Did This E-Commerce Website Take Its Conversion Rate From 0.3% to 15%?

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This is a basic idea that should have occurred to all of us.

By MediaStreet Staff Writers

Saree.com is an online platform selling culturally rich fashion from the Indian sub-continent to a global audience. The company recently shot up its sales by offering a Video Calling service. This business move helped it dramatically enhance its conversion rates from 0.3-0.4% to almost 15-18%.

The Video-Chat concept centres on showcasing select merchandise live to the customers.  Saree.com’s average order size skyrocketed from around €80 to about €345 per order.

This innovative and customer-centric hybrid business approach combines the best of the both worlds – akin to shopping from a ‘real store’ with all the convenience, accessibility and ease of buying online – while also bringing in the all-important personal shopping edge.

The wedding wear focused Saree.com typically received about 20-22 web orders daily, but the overall revenues were never as high as they are now. From about 15 to 18 calls, organised daily to honour the numerous appointment requests – at least 2 to 3 are converted. Each video call order value typically exceeds €1,100.

There have been customers, who started off looking for a single ensemble – but ended up buying for their entire families. One such jackpot call fetched the company an order equivalent to €13,500 – where as many as 35 garments were sold via a series of Video Calls.

Thanks to wonders of technology, the only tools required are simple hand-held devices like iPad and modern smartphones like iPhone 6 – with any video chat application like Face time or Skype. Saree.com has now developed a dedicated eco-system to enable these services – that are akin to personal shopping facilities (albeit virtually), offered by world’s biggest fashion retailers like Harrods, Nordstrom, H&M, Zara etc.

Learning fast, today, Saree.com now has a special team of 25 personal shoppers, ensuring approval of requested appointments within a time-frame of merely 24 hours. This idea is slated to revolutionise the apparels e-commerce, especially for niche categories.

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How to Grow a Premium Brand Without Killing its Soul

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Managers of premium brands face a perennial dilemma. How do you grow a premium brand without killing its soul?

By MediaStreet Staff Writers

A unique brand cachet attracts its core high-price-paying customers. But what happens when you seek to expand sales to the masses by offering lower prices? In recent years, outlet stores located hours away from glitzy shopping districts have sprung up everywhere. They are selling off-season and lower-tier merchandise at a fraction of regular retail prices. They have become significant sources of revenues.

The conventional wisdom is that relying on revenues from outlet stores can destroy the brand’s prestige over time. But according to a forthcoming study in the journal Marketing Science, outlet stores may actually help improve the brand’s cachet.

The study, “Why outlet stores exist: averting cannibalisation in product line extensions,” was authored by Donald Ngwe of Harvard Business School.

Ngwe analysed five years of customer sales data covering over 16 million customers and 27 million transactions from a major high-end fashion firm with hundreds of regular and outlet stores around the country. He found that the brand’s core customers are picky about wanting the latest products and are willing to pay premium prices, but are unwilling to travel very far to buy the brand.

In contrast, the larger mass of customers who aspire to consume this brand, but are price sensitive, are not only willing to travel the long distances to outlet stores, but are also not very picky in their tastes for the latest products and willing to tolerate lower quality. Therefore outlet stores expand revenues with limited cannibalisation of revenues from the core high paying customer base.

Taking into account this strong negative correlation between taste for quality and new products and willingness to travel for shopping among the core and mass segments, Ngwe modelled the firm’s product introductions in regular and outlet stores. He found two key results. First, the availability of outlets for selling older products to mass consumers means that firms can take more risk and introduce more new products at faster rates at its regular stores. Second, as outlet stores absorb the customer base of price-conscious customers who need less service, the firm can invest in greater service at regular stores. New product introduction at regular stores increases by as much as 16 percent. Ngwe said, “Here is the kicker. Even as outlet stores generate significant revenues from the masses, they help the brand increase its cachet among its core customers through more new products and higher service.”

The conventional wisdom that outlet stores can be detrimental to a premium brand’s health arises from failing to recognise the positive spillovers from outlet stores on regular retail stores. Ngwe noted, “For the brand we studied, there is little cannibalisation of regular store revenues by outlet stores. Moreover, outlet stores have positive spillovers in terms of higher service and more frequent new products in regular stores. So the net effect of outlet stores is to increase brand cachet.”

However, Ngwe cautioned, “Critical to our conclusion is that core customers would not shop at outlet stores due to their aversion to traveling long distances. This may not be true for customers of other brands, particularly lower end ones. Also, pure online brands cannot use travel distances to separate their core and mass customer segments. Online premium brands will need to find other means to differentiate their upscale and mass offerings.”

The complete paper is available here.

 

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Online Sales Are Booming. But Getting Products to Customers is Proving to be Painful

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Business is booming for e-commerce retailers according to a new global market study. But getting goods to buyers is creating huge headaches. Only half of e-tailers are happy with their fulfilment operations.

By MediaStreet Staff Writers

Business is booming for e-commerce retailers according to a new global market study announced today by Peoplevox, an e-commerce Warehouse Management System (WMS) provider.

The report found sales of 82% of the e-commerce and multichannel businesses taking part had increased in 2016, with only 6% reporting a decrease in orders. While many voiced concerns over increasing competition, Brexit and currency fluctuations, the majority (88%) expected a further increase in orders during 2017.

Despite such positive results and the generally upbeat outlook for this year, only 53% of respondents said they were happy with their fulfilment and warehouse operations.

Purchasing and Forecasting was highlighted as the most common challenge overall with almost a quarter (24%) saying this was the one area requiring the most improvement in 2017.

Furthermore, many of those businesses questioned (63%) admitted to not always shipping on time with 34% citing the unavailability of stock being a key reason. When it comes to rectifying shipping errors, the majority (80%) appear accepting of the additional carriage, customer service and warehouse labour expenses as an inevitable cost of order fulfilment. 1 in 5 admitted to not knowing the cost of shipping mistakes.

A majority (78%) of businesses also found meeting the additional demand for orders at peak times an ongoing challenge in 2016, with just over half (52%) resorting to hiring temporary staff. Paying overtime to existing staff and pulling in staff from other parts of the business were other common solutions.

While 62% of respondents said their business used a WMS, 70% of those that don’t ‘will not’ or ‘may not’ implement one in 2017 for reasons such as complexity, unclear benefits, or believing their business just isn’t ready. A significant minority (30%) said they still rely on their ERP/e-commerce platform for managing the basics of warehouse management.

However, specific business challenges or key IT events appear to impact directly on a retailer’s decision to invest in a dedicated WMS platform. 40% stated that an increase in picking errors was the main reason they would or had implemented a WMS while other common reasons included sales growth, warehouse expansion, or the implementation of new e-commerce platforms or ERP systems. Just over 10% said poor online ratings had also inspired a move towards implementing a WMS.

Commented Jonathan Bellwood, CEO, Peoplevox said, “While it is encouraging to see so many survey respondents reporting continuing sales growth, which is broadly in line with figures for the online retailing sector as a whole, our report has identified a number of growing pains. These will become increasingly challenging for businesses as they continue to expand rapidly.

“First and foremost, in this super-competitive era of E-commerce Fulfilment retailers can no longer afford to paper over the cracks. With expectations of next day/same day delivery, customers just won’t accept the apparent inability of online businesses to accurately ship on time, every time, or inadvertently sell items that just aren’t available. These fundamental warehouse and fulfilment issues need to be addressed before they grow into more serious problems that may risk customer loyalty, cause increases in the number of returns, a failure to maximise available sales opportunities, and an escalation in avoidable overheads.

The full report can be downloaded by clicking here.

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It’s Time to Stop Saying that Buyers and Salespeople are in ‘Relationships’

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Captains of campanies need to stop pushing the idea that their sales staff should form relationships with people who are buying their wares. Buyers aren’t buying it.

By MediaStreet Staff Writers

According to a study in the Journal of Consumer Research, professional buyers don’t agree that they’re in “relationships” with salespeople. At least not the kind of relationship that people share with family, friends, or a romantic partner.

Christopher Blocker (Baylor University), Mark Houston (Texas Christian University), and Dan Flint (University of Tennessee) decided to study what is going on within the buyer-seller relationship. They ask, how can companies can inspire customers to love their brands? And emotionally bond in their business relationships? Are buyers’ experiences with suppliers like those of family, friend, and romantic relationships?

Modern marketing strategies tend to rely on “relationship marketing” which assumes that sellers can develop bonds with buyers. This school of thought often draws upon theories from sociology and social psychology that explain close personal ties, like marriage, friendship, and parent-child relationships.

“But in these theories of human relationships, an authentic relationship is an end unto itself, love is voluntary and given freely, whether or not it is returned,” the authors write. “Are there limits to whether an authentic relationship can be used to explain business transactions where the buyer and seller are both employees of their respective firms, with profit-and-loss responsibilities and motives?”

The authors conducted in-depth interviews with 38 business buyers and found that their “relationships” with suppliers differed in important ways from personal relationships. “Buyers speak in-depth about going through the normal ‘script’ of trying to behave as if seller interactions are ‘real’ relationships, and sustaining this activity as a ‘polite fiction’ to help them accomplish personal and corporate goals,” the authors explain.

The authors found that buyers prefer to connect (and disconnect) with suppliers as needs arise and hold low expectations for future interactions with salespeople outside of their business dealings. “This study suggests that business buyers are not actually seeking authentic relationships, and sellers’ efforts to develop them may even create negative tension for buyers.”

When it comes to flogging their wares, sellers need to stop trying to force the idea and come up with something more relaxed and authentic. Authenticity is in, polite fiction is out.

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Too Much Social Media Advertising can Hurt Sales. Yikes!

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By MediaStreet Staff Writers

Social media marketing is currently a very popular practice for businesses. But it isn’t all success and roses. A recent Temple study shows that businesses must find a proper balance in order to avoid negative results. So for businesses who currently rely on social media marketing to attract new customers, listen up.

While the potential for social media marketing seems almost limitless, a study led by Ph.D. candidate Shuting Wang and senior associate dean of research Paul Pavlou reveals the exact opposite. The Temple professionals recently conducted a study which looked to determine the specific value of social media marketing in relation to data from WeChat and a Chinese shoe retailer.

The study revealed that while social media advertising had a positive impact on increasing customer sales in the short term, it actually created a negative impact on the business in the long term.

When looking at the specific figures, the business witnessed a 5% increase in sales on the same day following a social media post. However, this same post increased the chance that customers would unfollow the business by 300%. Within five months, the retailer experienced a 5% decreased in sales paired with a 20% loss of online followers within a year.

With regard to these findings, Shuting Wang notes that people often “get annoyed” by a company’s post in the long term compared to the short term. “In that case, they will unfollow, which will lead to a long-term decrease in purchases,” Wang said.

sales, marketing, social media, online sales, social media marketing

Researcher Paul Pavlou believes this phenomenon can be contributed to the way in which companies often “over-do” social media.

“They see that the more posts they put out there, the more sales they’re going to see,” Pavlou notes. “Companies should be more careful with this and focus more on their long-term goals. Social media marketing is so quick, so immediate that companies say, ‘Well, let me leverage this as much as possible in the short term,’ and they may actually miss the big picture.”

While the study findings support the idea that too much social media advertising can hurt a company’s sales production, there are contextual factors which also play a role. Professor Paul Greenwood notes that these factors include, “What time of day it is, and where people are located.” In addition, the professor notes that people in large cities “Unfollow a lot faster…and if you post during rush hour, people unfollow a lot faster, but if you post at off-peak hours or smaller locations, that effect seems to go away.”

While the full extent of social media marketing trends have yet to be identified, Greenwood believes that future research will look to address whether dissatisfied customers go to competing firms or simply stop purchasing in general. This information will drastically help businesses fine-tune their social media strategies going forward.

While the Temple study revealed the potentially harmful effects of social media advertising, it is important to note this only took place when attempting to sell products. Businesses who have a balanced social media approach, or one which incorporates potential sales with public relations, are much more likely to create productive customer relationships in the long run.

For some interesting case studies on this topic, click here.

 

 

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