What motivates millions of users every day to take time out of their busy schedules to write reviews of apps?
And how can companies use the resulting huge amounts of data to better position themselves in a competitive environment?
Both questions can be answered with the same behavioral economic concept: loss aversion.
Kahneman and Tversky described this effect in their 1979 work “Prospect Theory”. In numerous game theory laboratory experiments they showed that people feel losses about twice as strongly as comparable gains. Loss aversion has since been repeatedly confirmed in subsequent scientific studies.
Although conceptually it seems quite simple, its effect is considerable due to its versatile application. On the one hand, loss aversion can explain simple behavior. For example, why it bothers us all day long if, due to a long meeting, we don’t get a bite of our colleague’s birthday cake, while we hardly think about it when we are allowed to eat a piece.
On the other hand, loss aversion can also explain more complex relationships. Putler (2002) showed that a price increase on the egg market led to a greater change in demand than an equally large price reduction. By which factor higher? About twice as high – exactly as described by the loss aversion.
Back to the original questions. What motivates the flood of reviews that we experience daily on rating platforms? If you look at the reviews in detail, you will quickly notice that elaborate reviews usually come out negative. This phenomenon can be explained by loss aversion.
Once customers have decided on a product, they establish a special relationship even with digital goods, in which they feel they actually own the product (see endowment effect). If they are then disappointed by the product, they feel particularly annoyed by the negative experience. An annoyance that is felt about twice as much as the joy of a positive experience.
Due to the high degree of resentment, the urge to vent is particularly strong. Evaluation portals are the perfect place for this. Because they are public by nature and shared suffering is known to be half suffering. Thus, purely mathematically, the doubling due to loss aversion is eliminated.
Now to our second question: How does a company use the rating data to put itself in a better position than its competitors? This question is two-part, but here again the answer lies in the loss aversion.
On the one hand, there is the question of the effectiveness of the analysis, because the amount of reviews is enormous. Even with the in-house apps it is difficult to keep track of the situation. However, the research of our “Beyond Experiences” team shows: a large part of the ratings consists of five or four-star ratings that offer little or no substance. The users are evidently not at all or only slightly annoyed. Due to the lack of annoyance, these reviews are less elaborate. It makes more sense to take a closer look at the more extensive, bad ratings with one, two or three stars.
On the other hand, there is the question of how reviews by competitors can be of any benefit to one’s own company. Depending on the industry, there are a number of areas of application for this, all of which have one thing in common: avoiding negative experiences among your own users by learning from the mistakes of others. A kind of ” Worst Practice” observation.
Avoiding negative experiences, also called Pain Points, should be the top priority in CX optimization. This is because these experiences lead to distance and rejection of the users and are thus crassly opposed to positive emotionalization. In our previous articles we have already pointed out how important the generation of emotions is for the design of the CX. Only through emotions can the actual willingness of customers to recommend the product be increased.
For these reasons, the Beyond Experiences Team at SWI has developed the Pain Index. The index is derived from panel data of customer ratings in various app stores. On this basis, the measurement method enables us to detect changes in the level of user displeasure within a very short time. We combine these findings with our comprehensive observation of competitors within the framework of a benchmarking analysis. This enables us not only to identify changes in competitors, but also to qualitatively investigate how these changes have affected, where problems have arisen and how these can be prevented.
If you are interested in an exact breakdown of the Pain Index or would like to learn more in another way, we will be happy to provide you with more detailed information. Simply contact us by phone, e-mail or via contact form.