Do the purchases made by your online friends influence what you buy?
This is a critical question for marketers to solve. If they know that Sally’s shoe buying preferences are noticed and copied by eight of her friends on social networking sites, then a program targeting Sally (rather than her friends) can pay off in many highly leveraged ways.
New research by Harvard Business School professor Sunil Gupta and colleagues report that a certain type of friend can be influenced on social sites such as Facebook, but others not at all.
“The fact that people are influenced by their friends is not new,” Gupta tells HBS Working Knowledge. “However, by understanding the social network of users, firms can better understand and influence consumers’ behavior.”
Here’s the gist of the research.
- “High-status” users — the 12% of onliners who are well connected and active –are unlikely to be swayed by the purchase decisions of friends. Why? They want to set trends, not copy them.
- Likewise, the 48 percent of users who are not very active, or “low-status”, are also unaffected by the purchases that others make.
- It’s the “middle-status” cohort you want to target, the 40 percent of users who are moderately connected. There is a strong and positive effect due to friends’ purchases, the researchers say, a keeping up with the Joneses effect. Reaching this group can increase sales by 5%.
Ah, but how to reach them. Forget online advertising. “The advertising-based business model has had only limited success on social networking sites,” says Gupta. Instead, a viral campaign is the way to go.
Fore more details on the research, read Social Network Marketing: What Works, in HBS Working Knowledge.
Does this research agree with what you have observed in social networking?
