What Entrepreneurs Must Know About Social Influence

Business owners must know how to effectively reach, acquire and maintain customers because loyal customers lead to sustainable businesses. To achieve this, entrepreneurs must understand what influences consumers' behaviours. Notably, consumers do not buy products or services in isolation. This week, I review Jennifer A Argo's research and suggest a few practical tips entrepreneurs can implement based on her findings. Jennifer's research focused on how different types of social entities influence consumers' behaviours.

What is a Social Presence?

Argo defines a social presence as "another person, or group of people who are physically present and influence a consumer, intentionally or not." Based on this definition, a social presence is not limited to consumer behaviour within an 'in-store shopping experience'. For instance, someone shopping online with friends can still be influenced by his/her friends. Social presence can be passive (person/s is present but does not interact with the main consumer) or active (person/s is present and interacts with the main consumer).

Three Types of Social Influence

There are three types of social influence; utilitarian, value expressive, and informational.

• Utilitarian influence: This is when 'an individual is motivated to obtain rewards or avoid punishment from a social presence.' For instance, imagine you are shopping and your friend says he/she likes a particular product, your intention to buy that product will increase because you want to make your friend happy (reward). Research suggests that a consumer's need for belonging influences his/her shopping behaviour. The opposite is also true, if a consumer feels a certain behaviour will lead to a punishment they are less likely to behave in a certain way. For instance, security is positioned in malls/stores to discourage shoplifting.

• Value Expressive Influence: This refers to when people behave in ways that enhance or support their self-concept. The most common way this impacts consumer behaviour is when consumers buy products/services to express or signal their identity to another social presence. For instance, consumers may buy luxury goods to express they have money and status to their friends.

• Informational influence: This pertains to accepting information from others to serve as evidence about reality. Research states that consumers get informational cues from the number of social entities adopting a certain behaviour, the appearance of social entities, and choices made by others. For instance, the number of people holding a certain brand at a store might make another customer think the brand is of high quality or on sale and thus they could go look for that brand; if your employees do not look friendly, customers may not enter your store; and customers regularly base their actions on other people's choices.

Steps to Take

There are three simple steps entrepreneurs can take based on these findings:

• Determine how you want your customers to behave.

• Create environments to cultivate positive customer experiences.

• Ask for feedback from your customers after each transaction.

How can we help you

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