Sunday, December 03, 2006
Of Focus Groups, Marketing and Social Influence in B2B
I recently re-read a post on Paul Dunlay's Buzz Marketing for Technology blog about social media's impact on marketing. He cited a study in Science magazine by Columbia University1 on how 'social influence' — people reacting to the recommendations of others — can drive consumer demand. And the study suggests what you might expect — the most recommended products (in this case certain music bands and songs) continue to accumulate positive reviews to a degree because readers see the positive reviews of others and are influenced to skew their own perceptions to the positive as well.
On the business side this reminds me of the "group think" mentality that can creep into focus groups and cause their purpose to be corrupted: in group situations people tend to want to agree with the group, to get along, and may (consciously or un) change their responses to be more in line with what the group is saying. As a participant in focus groups in the past, and despite my desire to keep my responses as genuine as possible, I became aware that I, too, was falling into that trap. Perhaps it's just human nature as social animals to try not to "rock the boat." As far as focus groups go, though, it makes accepting group "conclusions" as rock-solid guidance potentially dangerous.
But the Columbia study was basically about consumer related social response. Does any of this apply in the business-to-business world? Maybe. But consider this: if I drop $US 17.00 (okay $9.99 on the iTunes Store) and get a crummy album because I believed a deluge of positive reviews, it's no life shattering event. In B2B, however, the stakes are higher. According to some studies "the average B2C transaction value is $75 [$US]; the average B2B transaction value is $75,000,"2 and in some industries reaches into the millions — especially IT services. Following bad advice could cost me and others their jobs. While I don't think this reality cuts social media and the phenomenon of social influence entirely out of the B2B world, I do think it will blunt its effect.
If social influence is to play any role in business-to-business purchasing, I think it will be in a controlled, step-by-step manner: the decision making process would begin with individual research into the available solutions to meet the business challenge at hand. Ideally, following this would be an outreach to known and trusted colleagues. Only later would the process expand outward to gather a wider perspective in potentially riskier waters, tapping business networks of unknown individuals such as connections through LinkedIn and other forms of social media with a business focus. And in many companies where big money is involved, once a short list of recommended solutions providers is completed, the final decision is not left to one individual anyway — it's up to a committee review (in 2005 an average of 3.5 people were required to make a typical purchasing decision3). Uh-oh. Now that sounds a lot like the makings of a focus group!
1 Matthew J. Salganik, Peter Sheridan Dodds, Duncan J. Watts. "Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market." SCIENCE. Feb 10, 2006. Vol. 311. no. 5762, pp. 854 - 856
2 Jalal Feghhi. "Trust in Business-to-Business Marketplaces." Addison Wesley Professional. Mar 30, 2001.
3 Allison Enright. "It Takes a Committee to Buy into B-to-B." Marketing News. Feb 15, 2006 p.11. Study by Sirius Decisions 2005.
Photo reproduced from the Encyclopaedia of Informal Education www.infed.org
1 Comments:
In the first emotional step, the universe of available offerings is cut down to a short(ish) list by emotional factors - brand, reputation, etc. Social media have a strong part to play here in getting onto the shortlist.
In the rational step, the actual capabilities of the competing offerings are compared in a fairly empirical way. This may or may not reveal a clear 'winner'. This is the step most often skipped, even in large purchasing decisions. Usually it generates a final shortlist of two options.
In the final emotional step, the decision between the final two is made on emotional grounds - now, rather than brand, this is things like how nice the sales guy was, and whether other customers have nice things to say about the company/product. It's common for the 'rational' winner from the previous step to be overturned at this stage, just because someone 'liked the other guys better'. This may not be as irrational as it seems - in high-touch vendor/client relationships, being able to get on with your vendor is of critical importance.
Ian Thomas
http://www.liesdamnedlies.com
