Dive Brief:
- Consumers’ confidence in their knowledge about a product category, such as wine, is a key driver of customer loyalty, according to a study published in the Journal of Marketing Research. Researchers at Arizona State University, Northeastern University and the University of Pennsylvania used natural language processing and machine learning to analyze 3.7 million online reviews from more than 100,000 consumers over 30 years across product categories, including beer, wine and cosmetics.
- But the path of consumer confidence isn’t linear, the researchers found. It follows a U-shaped curve, with consumer confidence starting high and falling as they gain more experience before rebounding. When their confidence is low, consumers are more likely to choose a different product or service, reducing loyalty.
- Brands, however, can boost loyalty by helping consumers gain confidence in their product knowledge, the study found.
Dive Insight:
Brands have attempted to counter declining loyalty with new pricing strategies, retooled loyalty programs, improved customer service and support, and more.
But simply providing customers more confidence can encourage customers to keep coming back.
Better recommendations, for example, can further increase loyalty by boosting consumers’ confidence in their product knowledge, co-author Jonah Berger, associate professor of marketing at the University of Pennsylvania, told Knowledge at Wharton.
“Uncertainty can be aversive,” Berger said. “The uncertainty is rubbing off a little bit on the product, but it’s also rubbing off on the brand.”
Unlike most studies of online reviews, the researchers were able to track reviews by the same individuals over time, allowing them to understand how specific consumers’ product knowledge and loyalty changed. The researchers also conducted field studies to validate their findings.
“There’s been a lot of research leveraging online reviews. But there’s been less work taking the same person and looking at how their language changes over time,” Berger said. “It’s almost an ongoing stream of information about how they feel about a brand, or a political candidate, or whatever it may be.”
The implications for customer experience are two-fold:
- Mining customer reviews or other communications can provide brands with insight into customers who have expressed doubt, helping them deliver better product recommendations and prevent customers from shopping elsewhere.
- Brands should change how they communicate with customers based on their confidence in product knowledge. When customers express uncertainty, for instance, brands may want to make recommendations that highlight the differences between products. But confident consumers may benefit more from understanding the similarities between products.
Additionally, while many brands lack granular data on how their customers feel, the study’s findings can still inform how brands communicate with customers, as the U-shaped remained consistent across product categories.
“It’s thinking about where people are in that journey,” Berger said. “You want to make sure they don’t just like something, they feel certain about it.”
