Study: Customer Recommendations on Social Sites Boost Sales Activity

Is there anything as powerful as a recommendation from a friend or colleague? New research shows that Facebook “likes” could be a veritable goldmine. A joint study by academics at Johannes Gutenberg University Mainz (JGU) and the Technische Universität (TU) Darmstadt showed that customer recommendations can greatly influence buying behavior. The study was conducted with an ecommerce site in early 2013. In an A/B test, one group of users was directed to a version of the site that showed product recommendation data in the form of Facebook “Likes” and Google+ “+1s,” while a control group was directed to a version of the site without recommendation data.

The results of the study confirmed that recommendation data has a powerful effect on sales behavior. After a 4-week test, the shop registered a 13% increase in sales for the group that saw the recommendation data over the control group.

According to Dr. Jörn Grahl, Assistant Professor at Johannes Gutenberg University Mainz, “By displaying social recommendations such as ‘Likes’ companies acquire more new customers. It appears that recommendations actually counteract some of the uncertainty that new customers initially experience when visiting a site.”

Placing “Likes” from a peers on an ecommerce page can add value to brands and customers, first of all it can bring new customers into the sales pipeline. Secondly, once customers are there it can help them to prioritize which products to purchase based on the products that receive the most recommendations. These recommendations are an excellent example of the fact that when Big Data from social media sites is delivered in the right context it can help bolster sales.

This has led to the question of how much a “Like” is worth. Even if the answer is only cents, the billions of “Likes” that Facebook gathers each day add up pretty quickly.

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