How Confidence Changes Consumer Loyalty

New research from Wharton’s Jonah Berger explores how experience in a category shapes how confident consumers feel, which has important consequences for brands.

The road to customer loyalty is U-shaped.

Consumers are constantly gaining experience in all sorts of different product categories. As people try more wines, for example, they gain experience with different varietals, and as they use different apps, they learn about what’s possible in the space. But how does their experience change how confident (i.e., certain) they feel about their opinions, and might this have important implications for brands?

New research from Wharton marketing professor Jonah Berger reveals that rather than a smooth, upward trajectory, the link between experience and confidence is more complex. Specifically, it follows a U-shaped curve: Customers often start with an inflated sense of confidence, but that soon decreases as they realize they know less than they think. As they gain more knowledge and experience in the category, however, their confidence rebounds.

Brands need to understand the trajectory, Berger said, because it shapes the choices consumers make. When they feel less confident, for example, they tend to avoid products or brands associated with that uncertainty, selecting different options and waiting longer to buy from those brands again. The more uncertain consumers felt, the less brand loyal they were.

“One of the points of this paper is to encourage marketers to think more about confidence. Both how it changes, and about its impact,” he said. “It’s not only important to understand, it’s important to effectively manage.”

The study, “The Trajectory of Confidence: Experience, Certainty, and Consumer Choice,” appears in the Journal of Marketing Research. It is co-authored by Matthew D. Rocklage, marketing professor at Northeastern University’s D’Amore-McKim School of Business, and Reihane Boghrati, information systems professor at Arizona State University.

The professors analyzed 3.7 million online reviews from more than 100,000 consumers over 30 years in product categories as varied as wine, beer, and cosmetics. Even across these different categories, the results were surprisingly similar. Confidence started high, followed by a dip, and then a rebound.

“We are constantly accumulating experience in almost every domain of life. We were wondering how experience changes someone’s confidence,” Berger said. “You could imagine it simply increases, but it turns out the answer is quite different.”

“The uncertainty is rubbing off a little bit on the product, but it’s also rubbing off on the brand.”— Jonah Berger

Measuring Confidence

It’s challenging to obtain years of accurate data to measure long-term change. That’s where online reviews come in. Berger specializes in using natural language processing and machine learning to parse millions of data points that would be nearly impossible to examine via traditional methods. In this paper, he and his colleagues analyzed online reviews from specific platforms to understand how consumer confidence evolves with experience.

With wine drinkers, for example, the team examined more than 1 million “tasting notes” written by 30,000 consumers on the platform CellarTracker.com from 2003 to 2012. Phrases such as “I really don’t know” and “but it seems” were scored against phrases that indicated greater certainty, such as “without a doubt.” Following the U-shape, confidence started out strong, slid as the consumers realized they needed to learn more about the varietals, then soared as they acquired experience.

The same pattern repeated with 2 million reviews by 50,000 consumers over 16 years on BeerAdvocate.com, and with 218,000 reviews by 12,000 customers over 14 years on Sephora.com.

“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. We found a consistent pattern across multiple domains in this U shape.”

The team also validated the results of the field studies through an experiment. Participants who were asked to judge photographs also exhibited a U-shaped confidence curve.

“You want to make sure they don’t just like something, they feel certain about it.”— Jonah Berger

How Brands Can Build Confidence

The results of the study have several implications for brands, Berger said. First, it reveals the importance of mining reviews or other communications for insight. If a customer is voicing doubt about whether they like something, that’s an opportune time for the company to recommend another product. Doing so can help keep the customer from abandoning the brand altogether.

“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.”

Second, the results provide insight into how companies should frame their communication. If the customer expresses uncertainty, and thus may tend to choose something different, the company can make a recommendation using language that highlights an offering’s differences. If the customer seems more certain, however, the company can highlight similarities.

Berger said even if companies don’t have the data that gives them direct access to how their customers feel, they can still use the study findings to understand the customer journey. The U shape suggests that novice consumers lose confidence, which makes them open to trying new things. It also suggests that customer loyalty happens when experience and confidence are high. Both phases require the right kind of communication from the brand, he said.

“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.”

Source: View the original article at Knowledge@Wharton.