New research explains when and why consumers rely on online peers versus expert reviews.

With the explosion of social media and sites such as TripAdvisor, Rotten Tomatoes and Zomato, it may be understandable to think that consumers don’t pay much attention to expert reviews anymore.

But new research from Monash Business School shows that it depends on the type of service as to which group we listen to before making our decision.

Professor Hean Tat Keh from the Department of Marketing at Monash Business School, along with his collaborator Professor Jin Sun from UIBE Business School in Beijing, China, wanted to find out whose comments consumers were more likely to rely on when consuming services.

They found that when consumers were looking to purchase an ‘experience service’, such as movies, food or a haircut, they were more favourably swayed by peer review.

“An experience service is one that you can evaluate confidently because you have done it many times, like going to a movie or restaurant,” Professor Keh says. “Thus, consumers feel comfortable relying on peer reviews who are similar to themselves before they make their decision.”

But when consumers were looking for a ‘credence service’, such as a tax accountant, lawyer, specialist doctor or financial planner, they tended to rely more on expert reviews. By definition, credence services are those that consumers have difficulty evaluating as they tend not to be knowledgeable about them or do not encounter them very often.

“Consumers tend to have difficulty evaluating credence services even after consumption,” Professor Keh says.

An illustrative example would be experiencing a severe toothache and finding a dentist. The dentist may recommend a root canal treatment, and as the consumer is in pain, he or she would go along with the treatment. But at the end of the treatment, it is still difficult for the consumer to evaluate the service, as you can’t really tell if the dentist did a good job or not.

“You can’t repeat the same experience again with another service provider, so at the end of the day, how do you know if the provider was really good or merely competent?” Professor Keh says.

Your lawyer and financial planner are other examples of credence services. In the case of a financial planner, it could be years before you know whether your retirement savings advice was sound or not.

“Education is also a credence service. A student is unlikely to take the same class with a different teacher and it’s hard to evaluate whether someone else would have done a better job of teaching that course,” Professor Keh says.

Studies in the US and China

For this research, which was recently published in the Journal of Service Research, Professor Keh and his collaborator conducted several experiments with both Chinese and US participants.

In the experiments, participants were asked to evaluate a series of experience versus credence services (that is, a hotel versus dental services, a hair salon versus an insurance agency and a restaurant versus a language class), for which the online comments were from either other consumers or experts.

They found that if it was an experience service, consumers would rely more on the peer review than on the expert review.

“If my friend likes the movie, then I am more likely to watch it and not rely so much on what the professional movie critics have to say. The study showed us that in these circumstances we will rely on our peer before we purchase a movie ticket,” Professor Keh says.

However, the opposite was true for a credence service. Consumers were more likely to rely on the expert review for services that they have less confidence in evaluating themselves.

The confidence effect

“We attribute this effect to the confidence that consumers have about evaluating the service themselves,” he says.

It seems that we judge the third-party comment based on how confident we are ourselves to making the call. The more times we have done something, like eating out at restaurants, watching movies or staying at hotels, then we are more confident that we can make a good call about the service and determine whether it’s good or bad.

But credence services often require specialised knowledge to evaluate and we tend to have less exposure to them, thus we are less confident about forming an opinion about such services.

Information convergence

Obviously, if the majority of people, both peers and movie critics, for example, said that the movie was bad, then you probably wouldn’t watch it. But if both experts and peers were positive, then you would probably go to see the movie. Professor Keh calls this ‘information convergence’.

Interestingly, if consumers find mixed reviews, with some saying it’s good and others say forget it, then it appears that the negative expert opinion carries more weight for both experience and credence services.

Thus, the extent to which consumers rely on peer reviews for experience services, and expert reviews for credence services, depend on information convergence. When the comments are mixed, then the negative expert opinion holds more sway over the positive peer review.

Business implications

So what does this mean for business?

Many service firms provide reviews from both ordinary customers and experts in their advertising and marketing communications. Some marketers even attempt to influence consumer decision-making using a personalised recommendations system.

“It’s important to understand the psychological mechanisms guiding consumers’ use of recommendations when deciding whose opinions to trust,” Professor Keh says.

The research offers valuable insight for service businesses. And it all boils down to what services consumers would have confidence in evaluating themselves that determines which reviews are more useful for businesses to display in their advertising and on websites.

“If your business provides an experience service like a restaurant, for example, then you want to focus on what your typical customers have to say about you,” Professor Keh says.

“The so-called expert reviews may not matter as much for such experience services. For example, in their TV commercials, Uber Eats engages celebrities to sell their service. While this is OK, consumers may not pay much heed to what these celebrities have to say, and will still check what other consumers say about the restaurant and the service,” Professor Keh says.

But if your business provides a credence service such as a superannuation fund, legal, dental or medical services, then you would be better off having endorsements from experts.

“The expert reviews carry more weight for credence services among consumers and are a strong endorsement for your service,” he says.

Nonetheless, Professor Keh cautions businesses that engage expert endorsers to ensure that these experts are independent. If consumers think that the expert is paid by the company or is not authentic, then they may not trust the endorsement.