In this episode of Motley Fool Answers, Alison Southwick and Robert Brokamp are back with more warnings about the mind games that advertisers and retailers play on us -- and they play with extra intensity during this most profitable time of the year. Not that they're suggesting you become a Miser -- Heat or otherwise -- but they do want you to know precisely how you're being manipulated to open your wallet.
In this segment, they discuss the phenomenon of social proof: There's a common and deep-seated desire to feel like we fit in. And that means sellers can induce us to buy by offering us ways to make our purchases feel like they are validated by "the group."
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A full transcript follows the video.
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This video was recorded on Dec. 12, 2017.
Alison Southwick: The next thing we're going to talk about is social proof. Social proof is everywhere in marketing. These tactics take advantage of our need to go with the crowd. To feel validation and identify with things we aspire to. It's about fitting in. No one wants to be the first person on the dance floor unless you're Robert Brokamp.
Robert Brokamp: That may have happened at the last annual meeting.
Southwick: The most obvious example of social proof is online where you'll see reviews for products before you buy them. I don't know if Amazon (NASDAQ: AMZN) was the first to come up with this, but they were the first I noticed to have reviews. And the first thing I do when I buy something online is I look at the product. If it looks like what I'm looking for then I go straight to the reviews to see what people say.
Social proof is also at play with celebrity endorsements for products, or even just ads with pretty people. If there's an ad with a pretty person living it up with this product, then you're like, "Oh, man! That was a pretty person. I would like to be that pretty person. They look like they're having fun with that product." That's also an example of social proof.
Another example. I remember as a kid that my grandmother used to love Home Shopping Network. Such a stereotype, but whatever. Live your truth, Grandma. And they would sometimes show a counter on the screen to show how many people have bought that item. And as a little kid I would just be transfixed watching that counter, because I would be like, "Is it going to hit 2,000? Is it going to hit 2,000?"
Facebook also uses social proof. For example, they'll show you when your friends have liked something. Or when a retailer says they'll give you a discount if you refer a friend. I just took example of Kara Chambers' HelloFresh Refer a Friend discount, which was nice. I assume she got a kickback. These are all examples of social proof.
The interesting thing about product reviews is studies show that 70% of consumers say they look at product reviews before making a purchase, and that product reviews are 12 times more trusted than product descriptions from manufacturers. So, we love a good review. We love good social proof.
Brokamp: Did you read anything about whether the reviews are valid? I just read an article about a guy who was paid by a company to write reviews for restaurants that he never ate at.
Southwick: That's so funny. Adrian is the woman who sits next to me at work who suddenly was screaming about when Black Friday ends. We were talking about this episode and I was talking to her about social proof. She's like, "And what about the sponge? You'll just be on Amazon. It will be this stupid sponge, and it's got like 10,000 reviews. I'm not going to believe that! Who goes to Amazon and reviews a sponge?"
Brokamp: If it were a loofah, it would be different.
Southwick: I mean, come on. That was a deep cut, Bro. I don't know if people are going to remember that one. There are fake ones out there, and her thinking was that there's 10,000 reviews for a sponge. This has got to be fake. All of these reviews have to be fake to bump it up, and then she won't buy it. There's this window of a good number of reviews.
I've seen that before, where people will be up front about it and they'll disclose, "I was given this book to review, so I reviewed this book for them." They'll say at Amazon if they were given a free copy of the book. I guess, if you disclose someone gave it to you, and then they give an honest...
Brokamp: And then there's a whole verified purchase thing, too. This article was about how this guy was able to make his shed the top-rated restaurant on Yelp! by writing fake reviews. Taking stock pictures of food and stuff like that.
Southwick: Oh, it sounds like so much effort.
Brokamp: Yeah, but he used to be paid to do it.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Alison Southwick has no position in any of the stocks mentioned. Robert Brokamp, CFP has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Yelp. The Motley Fool has a disclosure policy.