It’s good business to be among the best. Both B2C and B2B buyers consult rankings before making purchase decisions. Sources such as Consumer Reports, HomeAdvisor, Kelly Blue Book, TripAdvisor, and Yelp help consumers buy personal goods and services. Meanwhile, business enterprises proudly tout rankings on various Fortune and Forbes lists. For example, 78 percent of companies in the Fortune 100 reference their rankings on their primary websites.
Rankings burnish company credentials, are easily digestible, and facilitate brand and product comparisons, thus streamlining consumer decision making. But is it better to be ranked in the top 5 or the top 10 percent of 50 competitive organizations or products? Rank claims are presented both ways, but companies don’t understand how consumers consider different formats.
A new study in the Journal of Marketing sheds insight into how consumers judge, interpret, and evaluate these rankings. The results may surprise marketers and change how they present this important information.
“Our research team conducted five different experiments to explore how consumers consider numerical format claims versus equivalent percentage claims,” said Julio Sevilla, an assistant professor in the Marketing Department. “We studied how subjects used rankings to form evaluations of Amazon products, brands, mutual funds, libraries, and even cheeses!
“We hypothesized that consumers view numerical claims more positively when the set size is small and percentage claims more positively when the set size is large, due to format neglect,” he said.
Format neglect is a novel bias that posits that consumers fail to fully account for claim format because they infer that nominal value (e.g., the numerical value used in the claim) is more important to their evaluations than set size, when both should be considered.
“Our experiments found that consumers neglect format when assessing ranking information,” he said. “As a result, they overweight nominal information and underweight set size. Thus, even when an item’s objective rank is unchanged, the use of a percentage claim format versus a numerical claim format can dramatically alter consumer evaluations.”
Key findings include:
“Marketers can use our research to create best practices for how to present ranking information, thereby increasing the likelihood that customers will view their firms more favorably and choose their products and services. Policy makers can use this information to reduce biases in how to present information. Finally, consumers can use this information to challenge their own decision-making before making high-cost purchase decisions,” he said.
“Format Neglect: How the Use of Numerical Versus Percentage Rank Claims Influences Consumer Judgments” was published in the Journal of Marketing (November 2018) and co-authored by Sevilla, Mathew S. Isaac and Rajesh Bagchi.
This original version of this story appeared on the American Marketing Association website.