Learn From Your Customers

The importance of social proof & customer engagement

Thursday, 9 April 2020
Driving Lifelong Customer Devotion

We’ve crunched the numbers, and we’ve figured out the math behind customer experience - how you can get more bang for your buck, on a per customer basis, from customers who have a positive experience - and how much you lose from customers who have a poor experience with your brand.

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The hallmark of the webinar is what we refer to as “the holy grail of customer experience” - advocacy. When customers start doing your marketing for you, your sales will compound, and compound again. The quickest sales cycle is the referral. That’s why reviews are so effective. Social proof inspires other consumers to make more purchases.

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The importance of social proof and customer engagement for scale-ups

So for those of you that don't know, Trustpilot is a leading online reviews platform. In the 13 years since we actually launched in Denmark in 2007, we're now over 700 employees across seven offices globally. What does that actually mean in numbers? So every month there are over 3 billion brand impressions on Trustpilot online. So what that means is we're actually the 29th most visited website in the UK. So globally we rank about 506. The people that are visiting Trustpilot are able to look through over 100 million customer reviews. So these are 100 million stories of other people that have done businesses with a company, and it allows people to make a better informed purchasing decision when they're looking at buying a service or buying a product or choosing which company they should invest in, for example.

Now these figures are great, but what does Trustpilot's growth look like right now? Well, every two seconds, there's a new review posted on Trustpilot. That equates to about 2 million new reviews every month. So that 1.7 million is actually interesting because over a million people each month are writing their first review on Trustpilot. So that just shows our growth. It shows the importance of reviews. It shows the importance of that social proof. And these reviews are on over 400,000 businesses.

About Seedrs

Seedrs is one of the leading equity crowdfunding platforms. They are actually the first platform with a fully functional secondary market and also an investment automation. In 2018, they were named the most trusted global equity platform globally. Interestingly, over 650 institutions have invested in Seedrs portfolio companies, which is an impressive number.

Seedrs often get asked what the difference is between crowdfunding and other platforms? So the three main types of crowdfunding, there is the reward crowdfunding where money is exchanged for perks. Then debt crowdfunding, where money is exchanged for interest returns. For example, Funding Circle is one of the platform that is doing debt crowdfunding. And then there is equity crowdfunding where capital and investments are exchanged for shares in private companies.

The second question that is also quite common coming from entrepreneurs is why are businesses considering equity crowdfunding as a revenue stream? Well, there are different reasons. Of course, the first one is capital. So businesses need capital to grow. But there are also other very interesting five reasons why business are considering crowdfunding. The first one is marketing exposure. So you might not just need capital for your business, but you want to have brand exposure so that you can acquire new customers and engage with those customers. So customer engagement is another reason.

Why customer engagement is key

Customer engagement is also key, because at the end, your goal is also to convert customers into investors. And that's where engagement and social proof and validation are key. So having mentioned validation, that means that if you go into a platform like Seedrs and your campaign is successful, you get the validation from the market, from your investors, that your business proposition is good and that it's worthy of investment.

And then finally, entrepreneurs are also looking for speed and efficiency in raising the capital, and there have been a few companies on the platform that have raised capital in the first day or two days, so they hit their target, in terms of the capital that they raised. An example is Revolut. You can see on the slide.

Now, talking about customer engagement, validation, social proof, I think really leads very well to the next section, which is the report that Trustpilot published a few weeks ago, based on a survey of over 140 startups.

The importance of social proof today

Now on that report, we actually released the report in line with London Research. So it was around the importance of social proof for startups and scale-ups. And for those of you that aren't aware, social proof is basically social influence. So it's being influenced by other people, their experiences, and in this scenario, it's ratings and reviews. So I just want to share some of the key findings from the report quickly before we go into it in a bit more detail.

So of the businesses we asked, 92% of them found that reviews or ratings were important or critical when converting new prospects into customers. Now on the other side of the fence, these same people also found that positive reviews and social proof were important or critical when generating interest from investors as well. So in this situation, it's not surprising that if 83% of the people are finding that it's important from an investment point of view, but 92% are finding that is important or critical from converting their prospects into customers, 64% of the businesses we asked had actually been asked by investors to provide customer-centricity points, proof points such as ratings or reviews, or they proactively included them within their investment deck. So investors are asking this question as well, and they're asking to see this information before their parting with that money, before they're making that investment.

Now, the next set of statistics I actually find really interesting, because we asked these same businesses what they find their biggest differentiator is. And I think the figure I like most from this report is that 46% of them found that customer experience and customer service were their USP. That was their unique identifier. That's what made them different, with only 38% of them believing it's products or innovation. Now, if customer experience and customer service is your biggest differentiator, then social proof, reviews, ratings, really allow you to leverage that to help you win more business, to help drive those conversions, or whether it's from an investor point of view, to help gain that investment.

And it really links in to the other statistics you're going to see here on the page, because you can see 7% believe brand awareness, 5% believed online reputation. Now, social proof really encapsulates all of these things, because your online reputation is what people are saying about you. It's how well-known your brand is. And all of those things really roll into the same thing there. Now, one statistic, one figure I really didn't find surprising was that 4% of people believed that price was their differentiator. And the reason it's so low is because people... I don't know whether other people on the webinar will agree listening today, but you're more likely to spend more money on a product or service from a trustworthy company, from a company that you think are going to treat you the best, give you the best service or product. And so only 4% of the businesses found price their differentiator.

Now this links back in to the key findings. So in the key findings, we found that 92% of people found that reviews were important or critical when converting business. Now this really breaks that down. So it shows you the breakdown between quite important at 10%, important at 47 and critical at 35. Now the figure I actually wanted to focus on was the 8%, because 8% of people still believed that reviews or ratings positive weren't actually influencing their prospects to become customers. Now, if 92% of businesses were saying they were, and the investors are looking for that, it begs the question of... Well, I thought that figure was quite high, to be fair, but it tends to be moving in the positive direction.

The importance of customer reviews to investors

So now I want to look at the importance of social proof customer ratings to investors. So with investors, they're really looking at you're providing a good service that people rate highly. And what we've found more and more often is that they're turning to social proof to prove this. So 83% of the businesses, of the startups and scale-ups that we actually surveyed, found that positive reviews and social proof were critically important when generating interest from investors.

And this links in quite nicely to YourParkingSpace. So YourParkingSpace use Trustpilot customer reviews on their website to help convert new businesses, and help build trust in their brand. But they also use it within their investment decks. So whenever they're going to a body to gain investment, they'll always provide their reviews or their Trustpilot score within that investment deck as well, to help add that validity to the investment they're looking for.

Now, like many people on the call, sometimes your investors can also be your customers. So I myself invested in Monzo. So I'm a Monzo customer, and also a Monzo investor. And the quote here from Richard Cook says that, "People who have backed us want to talk about our latest scores and what we are doing to move them in the right direction because they understand new customers want a good reason to sign up to a challenger bank. They don't come better than positive ratings and reviews."

Now this personally for myself is quite true, because before investing in Monzo, I was doing a lot of online research. So I'm not your typical investor. I'm just an everyday investor. And I was looking into, okay, what are people saying about Monzo? What is Monzo doing as a business? What are they trying to achieve? And ultimately, what do their customers think? Because a business only exists to provide a service or to offer something. And if that service is good, if the feedback is good, then it's a solid investment.

Conclusion: customer experience rates above innovation

To sum up, the research found that customer experience rates above innovation. It rates above brand awareness and price when it comes to winning new customers. Now, on the other side, it also helps provide compelling evidence that a company is answering a consumer need with a popular service. And in turn, that helps stand out as highly investible.

Now, based on these two statements, it comes as little surprise that nearly two in three of the companies surveyed revealed that they had been asked to provide ratings scores or they proactively decided to include these, like YourParkingSpace do, in presentations when seeking funding.

So it really just gives you the holistic overview of how social proof can help from a consumer point of view, but also from the investment point of view.

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