Social Proof as it Relates to Business

Social proof is a psychological phenomenon that occurs in social situations where people do not know how to act or respond to something. The phenomenon was put to the test in 2007, when the Washington Post sent famous virtuoso Joshua Bell to play violin in the Washington DC subway during the morning rush hour. Joshua stood in the subway and played his $3.5 million Stradivarius violin, but almost nobody noticed or stopped to listen to him. At the end of an hour of playing, he had collected a total of $32 (not counting a $20 bill left by someone who recognized him).

How could anyone pass up a free concert from the famous violinist? Social proof. Most of the people who walked past did not know quite what to make of Joshua Bell, so they took their cues from everyone around them. Since everyone else was waiting for a cue, no one stopped to listen. Some of the same people would no doubt appreciate the quality of his music when surrounded by the trappings they expect of a virtuoso violinist: cushy seats, a polished stage and pricey tickets.

So, how does Social Proof Apply to Business?

Social proof applies to business as well as social situations. On a low level, your local coffee shop has a tip jar with a dollar already in it so you know to tip them, because someone else already did. As you move up the scale, consumers think they should spend the most money they can on something, because society tells them you get what you pay for. If you ask too low of a price for something, consumers will wonder what is wrong with your product and pass it up for a more expensive version. However, double the price and mark it at 50% off, and you will not be able to keep it on the shelves.

Social proof can have an effect your business's reputation. If you appear to be successful with a thriving business, customers will flock to you because they want to be one of the many people who patronize you?after all, if you are that popular, you must be the best, right? A classic example of this is nightclubs and restaurants. The more exclusive they are and the longer you have to wait in line to get in (if you get in at all), the more you want to go there.

You can make social proof work for you by following these examples. Let your potential customers know that they are just one of the many people who think you are the greatest company out there. They will want to be a part of the excitement, which will further fuel others to join them. That is social proof in action in the business world.

About Strategic Profits:

Strategic Profits is a privately held company headquartered in Delray Beach, Fla. Strategic Profits exists to help business and entrepreneurs online and offline with business coaching advice and tools that they need to succeed in the Attention Age. Visit the corporate Web site www.strategicprofits.com for more information or leave your questions and/or comments on Rich Schefren's blog at www.strategicprofits.com/blog. To download, the free report this article is referencing visit, http://www.strategicprofits.com/newrules.