What is Social Proof & why it’s an important psychological phenomenon?
Social Proof is a social and psychological phenomenon, where
individuals copy other people’s behavior.
The effect occurs when a person is unsure of the
correct way to behave. In this situation, they will often look to others for
clues about the correct behavior. The same principle applies when someone is
unsure whether to trust something or believe someone. Social Proof can
even shape our preferences and the choices we make.
In the book, “Influence,” Robert Cialdini describes
social proof as “the tendency to see an action as more appropriate when
others are doing it.” Cialdini claims social proof is more powerful when
we’re uncertain what to do.
Wisdom of the crowds
We can relate this to lots of things we do in our life. For
example, you come across a book in Crosswords book shop and the book’s title is
interesting but you never heard about this book or the author before. Now, what
would you do? You go to Amazon or Goodreads to check the reviews for that book.
If it's good, you will decide to buy it. If the ratings are poor, you will chuck
it and start browsing other books. Why do we do that? We don’t know anyone
personally who wrote those reviews. But still, we are deciding whether to buy a
book or not based on their reviews. Because, our reasoning is if so many people
are giving 4 or 5-star reviews for this book, it must be good. That’s why
social proofing is very powerful and that’s the reason why every business tries
to get as many reviews as possible for the products listed on their site.
Wisdom of your friends
If the wisdom of the crowds is so powerful, imagine how powerful
if the recommendation comes from your friends.
Let's say, one of your friends bought a perfume from a brand you never
heard of, and if she couldn’t stop talking about how good the perfume is, you
develop a very strong positive emotion towards that brand. Next time when you
are planning to buy perfume, that brand will automatically come in your
consideration set. That’s why Word of Mouth or Viral marketing is so powerful
as customers become brand ambassadors and start promoting that brand to their
friends and family. That’s the reason, why lots of online businesses run the Referral program as it creates Viral Marketing.
When social proof misfires
Sometimes, social proofing will mislead you to make wrong
decisions. One classic example is Share markets. In the current pandemic situation,
most of the business is forecasting negative growth not for just Q1’20, but
for the entire financial year. Layoffs, salary cut, businesses shutting down
has become a norm rather than an outlier. But still, there is an upswing in share
market which might be influenced by intraday trading, Futures & Options markets,
positive sentiment due to increase in FPI limit in Corporate bonds, etc But some
of the retail investors, who doesn’t understand the fundamentals, macroeconomic
situations and invest purely based on friend’s recommendation & by reading
few articles in websites such as money control, economic times, etc, end up
investing in stocks with poor fundamentals. The reason people give themselves
is, its better to buy when there is a dip and share market is moving up, so there
must be some reason why everyone is buying so let me also buy. This is social
proofing negatively influencing our decision and make us follow a herd
mentality. In the end, it's our hard-earned money we will end up losing.
So, next time when you are planning to buy from a brand which
you never bought before or when you look at Zomato to figure out which
restaurant to go for dinner, consciously think how social proofing is
influencing your decision
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