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Building Brands through Recommendations

It’s been known for decades that consumers value recommendations about products from their friends far more than reviews by industry experts but what may still be surprising to some marketers is that online consumers highly value recommendations from strangers too. Perhaps one of the reasons is that so much information is available online that a recommendation from a stranger can be investigated quickly to dig up supporting evidence or people can simply check out the recommendation among their friends through instant messaging, blogging or sharing services. For people interested in reading more about the power of recommendations and maintaining brand trust, I recommend a few good reads:

Harvard’s Berkman Center for Internet and Society and Gartner collaborated on a study that researches the phenomenon of playlist sharing. The study suggests that consumer recommendations influence music sales. For more information, you can download the report : Consumer Taste Sharing is Driving the Online Music Business and Democratizing Culture

Fred Reichheld of Bain & Company is writing a book to be published soon about the importance of recommendations across all categories of products. He believes that many companies are not asking themselves the ultimate question: Would I recommend my product to a friend of colleague? Instead, they are focusing on bad profits vs. good profits, chasing quick dollars over the long-term value of a satisfied customer. The first chapter is available for free on Womma’s blog.

Even if your product is highly recommended, you need to be careful that you maintain high standards for quality, innovation, safety or whatever brand attributes are most important to your audience. This is especially true for brands that are built on a trust relationship with consumers. Stanford University Business School Professor Jennifer Aaker and her colleagues Susan Fournier and S. Adam Brasel researched the affects of a transgression on relationships with sincere brands (i.e. Coca Cola or Hallmark) vs. exciting brands (i.e. Yahoo! or MTV). Their findings suggest that sincere brands suffered more after a transgression while exciting brands ‘evinced a trajectory characteristic of short-lived flings’ according to their abstract. In a nutshell, I guess they are saying that it may hurt just as bad initially to be let down by an exciting brand as it does for a trusted brand, but you were sort of expecting that weren't you? So you are more likely to give it another try. The impact of being hurt by a sincere brand is far more damaging. Sounds a lot like human relationships. For more on this interesting topic, take a look at the study: When Good Brands Do Bad

Posted by Julie Woods on December 21, 2005 at 08:56 PM | Email this post Permalink

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