There is an insatiable curiosity associated with social networks. I encounter it everyday. As more and more companies attempt to harness and capitalize on the power of social media, this topic continues to surface at almost every meeting I have with clients and marketing and business development experts alike. Sites like myspace.com and linkedin.com have made social networking mainstream, but social networking signifies different definitions to different people. Sometimes it is hard to understand what people really mean when they discuss this topic….Is myspace.com social networking? Yes. Is Flickr.com social networking? Yes. Is the local chamber of commerce social networking? Yes. Over the next six weeks, I will concentrate on a variety of concepts and philosophies related to social networking.
Part I ~ Social Networks and Buying Decisions
Part one of this series will focus on how social networks affect how people make purchasing decisions. For the purposes of this blog, we will examine the way human beings behave when they need to get advice about making a decision or purchase. In other words, when faced with a choice and there is uncertainty as to what course of action to take, how do people use social networks for information and advice. These peer groups have often been referred to as our personal and business networks.
None of this is really new to us. Everyone has asked a peer for advice at some point in their lives…. What is a good Italian restaurant? Where do you take your dry cleaning? Can you recommend an insurance agent? The element that is interesting and also the focus of this blog is ~ When and who we ask for advice depends on the type of decision we are making.
It is all about Risk.
When humans make decisions our first instinct is to understand and assess the risk of that decision. Once the risk has been determined we then reach out to our networks of peers for advice. This advice lowers the risk and helps us make a better or less risky decision. There are two networks operating within each of our personal worlds. The first network is the trust and admiration network. This network is called upon when the decision is low risk, like seeking a recommendation on a good movie or downloading a new song on i-tunes.
As decisions get more difficult and more risky, the trust and admiration network breaks down. People now rely on a different network for advice, the technical network. This network includes professionals that are experts in specific fields/subjects. A CTO trying to determine the best software for his company is more likely to turn to other technology professionals for advice, as opposed to asking a friend who is not in the field.
So how do we use this knowledge for our social media strategy? When developing your plan, it is important to examine your product offering and then assign a risk profile. The risk profile will determine which network has the most impact on your product or service and will therefore help you understand how you should allocate resources. Here are the real lessons we can conclude:
- People use networks to lower risk when making a decision.
- There are two types of networks- trust and admiration and technical.
- Business to business decisions with higher risks are often made using the technical network.
- Consumer product decisions or low risk decisions are often made using the trust and admiration network.
- You cannot rely on the trust and admiration network to generate referrals or credible testimonials if your product offering is complex.