Editor’s note: This guest post is written by Aileen Lee, Partner at venture firm Kleiner Perkins Caufield & Byers, where she focuses on investing in consumer internet ventures. Full disclosure: some of the companies mentioned below are KPCB-backed companies, including One Kings Lane, Klout and Plum District (both of which count Lee as a board member). You can read more about Lee at KPCB.com and follow her on twitter at @aileenlee.
As I’ve written about before, we’re in an amazing period of the consumer Internet. Despite a shaky economy, many web companies are in hypergrowth. This is reminiscent of the five-year period over a decade ago when companies like Amazon, Netscape, eBay, Yahoo, Google and PayPal were built.
One challenge, which isn’t new, is the battle for consumer attention. If you’re looking to grow your user base, is there a best way to cost-effectively attract valuable users? I’m increasingly convinced the best way is by harnessing a concept called social proof, a relatively untapped gold mine in the age of the social web.
What is social proof? Put simply, it’s the positive influence created when someone finds out that others are doing something. It’s also known as informational social influence.
Wikipedia describes social proof as “a psychological phenomenon where people assume the actions of others reflect the correct behavior for a given situation… driven by the assumption that the surrounding people possess more information about the situation.” In other words, people are wired to learn from the actions of others, and this can be a huge driver of consumer behavior.
Consider the social proof of a line of people standing behind a velvet rope, waiting to get into a club. The line makes most people walking by want to find out what’s worth the wait. The digital equivalent of the velvet rope helped build viral growth for initially invite-only launches like Gmail, Gilt Groupe, Spotify, and Turntable.fm.
Professor Robert Cialdini, a thought leader in social psychology, has many examples. In one study, his team tested messages to influence reusing towels in hotel rooms. The social proof message – “Almost 75% of other guests help by using their towels more than once” had 25% better results than all other messages. And adding the words “of other guests that stayed in this room” had even more impact (also an example of how A/B testing of small details matters).
In another study, a restaurant increased sales of specific dishes by 13-20% just by highlighting them as “our most popular items”. SP also works on your subconscious – it’s the reason why comedy shows often use a laugh track or audience; people actually laugh more when they can hear other people laughing.
Five Types of Social Proof
If you’re a digital startup, building and highlighting your social proof is the best way for new users to learn about you. And engineering your product to generate social proof, and to be shared through social networks like Facebook, Twitter, Google+, Tumblr, YouTube, Pinterest and others, can multiply the discovery of your product and its influence. Think of it as building the foundation for massively scalable word-of-mouth. Here’s a “teardown” on various forms of social proof, and how some savvy digital companies are starting to measure its impact.
1) Expert social proof – Approval from a credible expert, like a magazine or blogger, can have incredible digital influence. Examples:
2) Celebrity social proof – Up to 25% of U.S. TV commercials have used celebrities to great effect, but only a handful of web startups have to date. Some results:
3) User social proof – Direct TV marketers are masters at sharing user success stories. (fascination with this was actually the inspiration for this blog post). Companies mastering this digitally include:
4) Wisdom of the crowds social proof – Ray Kroc started using social proof in 1955 by hanging an “Over 1 Million Served” sign at the first McDonald’s. Highlighting popularity or large numbers of users implies “a million people can’t be wrong.” Some digital examples:
5) Wisdom of your friends social proof – Learning from friends thru the social web is likely the killer app of social proof in terms of 1:1 impact, and the potential to grow virally. Some examples:
Building Your Social Proof
Will one form of social proof work best for your company? Maybe, but companies like LegalZoom have found that a “mixed salad” of various types of social proof is most effective. The beauty of the web is you can test, learn and iterate quickly to find what works best.
To note, I don’t think a social proof strategy will be effective if you don’t start with a great product that delights customers, and that people like well enough to recommend. How do you know if you have a great product? Track organic traffic growth, reviews, ratings and repeat rates. And measure your viral coefficient – if your site includes the ability to share, what percentage of your daily visitors and users share with others? How is the good word about your product being shared outside your site on the social web? Do you know your Net Promoter Score, and your Klout score?
In the age of the social web, social proof is the new marketing. If you have a great product waiting to be discovered, figure out how to build social proof around it by putting it in front of the right early influencers. And, engineer your product to share the love. Social proof is the best way for new users to learn why your product is great, and to remind existing users why they made a smart choice.
P.S. FOMO, or the psychological phenomenon known as “Fear Of Missing Out,” is also a form of social proof. As people are wired to learn from others, they are also wired to want things in short supply. FOMO is a great forcing function on decision-making, as evidenced by the incredible growth of ecommerce flash sales. A friend at another venture firm has posted on his office wall “Is it FOMO, or is it real?” because it also happens in venture financings. Maybe a topic for a future post.
Photo credit: Flickr/anasolinap.
Aileen Lee is founder of Cowboy Ventures, a digital seed-stage focused fund founded in 2012. She is also a partner at Kleiner Perkins Caufield & Byers, which she joined in 1999. Aileen has been the lead or supporting partner working with KPCB-backed companies such as Bloom Energy, Blue Nile (NASDAQ: Nile), Callaway Digital Arts, Friendster (acquired by MOL Global), Good Technology (acquired by MOT), One Kings Lane, Plum District, Rent the Runway, ShopKick, Tellme (Acquired by...
Kleiner Perkins Caufield & Byers (KPCB) is a well known Silicon Valley venture capital firm, due in large part to their past success. They were early investors in many significant companies, including Amazon, AOL, Compaq, Electronic Arts, Google, Intuit, Macromedia, Netscape, Segway, and Sun Microsystems. The name of the firm comes from the four founding partners: Eugene Kleiner, Tom Perkins, Frank J. Caufield, and Brook Byers. In March 2008, KPCB announced the iFund, a $100M investment initiative focused on ideas...