The research in this post was conducted for our new report, The Conversation Index.
The fact that macro-level economic trends impact our personal purchasing decisions is not new news. But like no other time in history, we have unprecedented access to the conversations that express and influence consumer decision-making. We don’t have to rely on asking consumers how they’re feeling anymore; they’re already telling each other.
My team decided to take a look at the extent to which the ocean of context-rich consumer data that we handle every day reflects the national economic events that affect consumer spending habits.
In particular, we looked for mentions of the word “price” in review text. Then we compared the word’s trending to the US Consumer Confidence Index and the Dow Jones closing index.
In light of the recent market tumult, we examined the time range of the “Great Recession” and its aftermath: July 2007 – August 2011. We narrowed our sample to English-language reviews for US clients. Here’s what we found:
When comparing price references to the Consumer Confidence Index, we found an overall correlation of -.66. The CCI sank to its lowest in February 2009. In this very month, mentions of price hit a new high – 11.5% of all US reviews explicitly mentioned price (click for full-size chart).
When comparing references to price in reviews to the Dow closing index, we found a slightly stronger correlation of -.68:
The pattern is nearly the same: starting in September 2008, conversation around price skyrockets as the Dow continues its fall. One can see a second pattern starting in January 2010 and continuing until October 2010, with the Dow index and price references reflecting each other, a correlation of -.72 (click for full-size chart).
So we can see economic trends reflected in the voice of the customer; what more can we see in our data?
Of the reviews in this data set that collected gender-contextual information (roughly 50%), 45% of the respondents were male and 55% were female. That said, there’s a large discrepancy between genders when it comes to amount of conversation about price.
12% of all reviews written by males in this timeframe mentioned the word price, whereas only 7% of those written by women did. Is there anything at a fundamental level driving the discrepancy here? At a 1,000-foot view, males have a slightly lower average rating than females in general – 4.03 vs. 4.25. Yet when price is discussed, in general, the ratings are even higher—4.23 vs. 4.30.
Wait a second; the ratings are higher when price is mentioned in the review? That’s right – in accordance with the J-curve pattern in online ratings, references to price occur most frequently in 5-star reviews – but that hasn’t always been the case (click for full-size chart).
At the bottom of the stock market dip, price mentions in 4-star reviews overtook those in 5 stars for only a brief moment in time. One could infer here that discussion around price becomes a little more critical as times get tougher – we see a rise in 2, 3, and 4-star reviews discussing price as the Dow takes a fall. Could it be that a critical statement about the price of a product becomes the difference between a 5 and a 4 star rating when the chips are down? Or could it be that as the economy sinks, product marketing focuses on price as a differentiator, and in turn it becomes a focal point of the reviewer as well?
Maybe. We’re making no attempts to extract cause from correlation in this analysis, but given that consumer language reflects economic uncertainty in this way, what should brands do? When uncertainty is high, brands should create and highlight content that focuses on the value of their products. They can do this in a variety of ways, including:
- Focusing product copy on value
- Showcasing reviews that praise a product’s high quality for its price
- Using value-themed UGC in offline campaigns (print ads, packaging, TV spots, etc.)
For the latest and most actionable customer insights, drawn from millions of customer conversations, be sure to read The Conversation Index.