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Is Your Business Contagious?

Why are some products extremely popular, while others don't get anywhere at all? What makes some internet content go viral, while other posts or sites hardly get read at all?

Jonah Berger, a professor at the Wharton School at the University of Pennsylvania, wrote about the power of word of mouth and how to make products more popular and successful in his best-selling book Contagious: Why Things Catch On. I recently interviewed Professor Berger on my radio show, Goldstein on Gelt, where he explained his insights on social behavior and what drives consumer preferences and popularity.

Below is the transcript from this interview, which you can also watch on YouTube.

Douglas Goldstein: What inspired you to get started on this project?

Jonah Berger: I think everyone realizes the power of word of mouth and if you think about the last restaurant you tried, or the last book you read, we know that our friends and colleagues at work and social ties have a big impact on our own behavior. Social media has only made that even easier to see, but while it's good that word of mouth matters, there wasn't a lot of research out there on why people share word of mouth, why people talk about some things rather than others, why some content goes viral on the internet, and why certain rumors and urban legends get passed on. I spent the last 10 years doing research in this space and I thought it was a great opportunity to share some of that research with the population at large.

Douglas Goldstein: When people make decisions based on word of mouth, it seems to me that a lot of times people make really poor decisions because their friends did. Is that true?

Jonah Berger: We tend to follow our friends for both better and worse. There's an old adage - "Monkey see, monkey do," and that's not entirely correct. But a lot of times, the fact that other people are doing something provides information that maybe we should do the same thing. You may say, "Hey I don't know which stock to choose. What's somebody else choosing? I don't know which retirement plan to choose. What did my friend choose?" or even just which restaurant to go to. If it is full, then we assume it's pretty good. We use other people as a shortcut, a heuristic judgment making it easier for us and faster for us to make decisions. Sometimes that leads us to the right places, it leads us to good restaurants and good choices, and other times that leads to making bad decisions, such as cases where we make bad stock picks or pick the wrong retirement plan.

Douglas Goldstein: You talk in your book about a method to make things go viral. Can you explain first about the basis of this concept of going viral and tell us some of those steps?

Jonah Berger: Sometimes, when we look at content that gets shared on the web or brands that get a lot of word of mouth, you might think it's random or it's a locker, it's chance, you got a bolt of lightning or something like that. But I've worked with all sorts of companies and organizations to help them apply these ideas with some amazing results. There are some key principles that drive people to share all sorts of things, and in the book Contagious: Why Things Catch On? I talk about what I call the six key STEPPS. STEPPS is an acronym and it actually has two Ps. I wasn't clever enough to come up with an acronym that was a perfect word. It stands for Social Currency Triggers Emotion, Public, Practical Value and Stories, and each of those is a research-based principle, an evidence-based principle that we've seen again and again across industries, driving people to talk, share, and drive all sorts of products, ideas, and even behaviors to catch on and become popular.

Douglas Goldstein: Your book is filled with stories. The one that I showed my wife was about the most expensive sandwich. Can you tell us that story, because it's such a great story to get people on board?

Jonah Berger: In Philadelphia, on the side of one of the most high-end little parks in the city is a restaurant called Barclay Prime. Barclay Prime is a high-end steakhouse, so you can think about whatever high-end steakhouse you have near you, and Barclay Prime is sort of like that. It's a little more of a nouveau take on old traditions but still high-end - different types of steaks, high-end sides, cream of spinach, and the like, and all sorts of champagne. There are a lot of restaurants like Barclay Prime. Even in the city of Philadelphia, there are dozens of other steakhouses, and restaurants, like most other businesses, tend to close. There is a lot of competition. Having good food, having a good brand, is not enough. But Barclay Prime has actually stuck around for 10 years and it has done extremely well. If you talk to people, the one thing that people talk about when they leave that restaurant is the $100 cheese stick. Cheese sticks are usually something that are $5 or $6. You get them on the corner. They have a little bit of chopped beef, some cheese on top, maybe some grilled onions on a hoagie or sandwich roll. A $100 cheese stick is extremely decadent, and this thing comes with Kobe beef, a little bit of truffles on top, lobster, Taleggio cheese, and with a half bottle of champagne. Most people don't even order this. When you look at the number that they sell on a daily basis, it's not actually that high, but whenever people talk about that restaurant, that's what they talk about. They share word or mouth about the $100 cheese stick even if they haven't been. They tell people, "Can you believe this place has a cheese stick that is $100?" and so that word of mouth really helped the restaurant to catch on. It got picked up by the business press, but even just through person-to-person word of mouth, people know the restaurant for its $100 cheese stick. They come even if they don't get it to check the thing out. So because of that Barclay Prime has succeeded.

Douglas Goldstein: I think the point of the book maybe is for companies to learn how to make their ideas catch on and go viral. I would like to drill in on this for two reasons. One is for people who are listening who might own companies and want to take advantage of that, but the other thing is just as consumers or as investors, to be able to realize what's going on. It seems that what you're saying is that success in advertising is not at all random, but if people follow the six steps then there's really a science behind it. Is that true?

Jonah Berger: Definitely. I've worked with all sorts of companies and organizations. Most recently, I did a big social media audit for Samsung, analyzing thousands of pieces of their social media content to look at what was successful and what wasn't. I have worked with all sorts of companies and organizations, from Google and Coca Cola to General Mills and General Motors, and even small brands and small companies and organizations, and again and again, you see that these principles just work. It's not just in business, it's not just like we flipped a switch when we're talking about products and brands. We do these things in our everyday lives. We tell stories all the time because it's the way we share information. Social currency is all about the fact that we talk about things that make us look smarter or in the know. We do that whether we're talking about products or whether we're talking about our kids. The more proud we are of something, the better something makes us look, the more likely we are to share it. So these principles are really at the heart of human behavior and they can be applied to help all sorts of companies and organizations become more successful.

Douglas Goldstein: One of the points I think that you made in the book is that there might be this illusion today that social media has simply taken over the way we all interact, but that's not really the case. Physical word of mouth, which is actually talking to your friends, is moving markets much more than social media. Is that the case, and are we changing?

Jonah Berger: Word of mouth is extremely important and social media is definitely a new way that people talk and share. It's allowed people to share information faster and more broadly than ever before. But if you look at the data, you actually look at how much word of mouth is online, most people think it's like 50% or 60%. If you look closer, it's actually 7%. Seven percent of word of mouth is online, which is much smaller than people might think. What that means is that online is just one channel through which people talk and share. We still have breakfast face to face with our family, lunch with our colleagues at work, and we grab a drink after work with our friends. Those face-to-face interactions are the original social media.

Social media is a new technology, but rather than focusing on the technology, we need to think about the psychology, why do people talk and share? Just because you have a lot of friends or a lot of followers, it doesn't mean they'll pass on your content. Sometimes things go viral or things get highly shared from brands that don't have that many followers. So if you understand why people share, you can get people to share all sorts of information.

Douglas Goldstein: I think a lot of times people want to share an investment they have done because it makes them feel as though they must have done something smart. "I bought such-and-such a mutual fund, so I'll tell my friends and they'll buy it too. It's going to prove to myself that I've made a good decision," which of course is not necessarily always true. Is that one of the reasons people like to talk about their moves?

Jonah Berger: I would describe that in some ways as social currency. Think about which type of transactions people talk about. They talk about the ones where they did well, "Hey I bought the stock before everybody else bought the stock, two months before everybody else." I tell the story, and I know nothing about financial markets, but I bought Apple when Apple was at $19 a share. I don't talk and tell people about the time I bought a stock that tanked and lost half of its value. I tell that Apple story because it makes me look good. It makes me look smart and in the know. So people are more likely to talk about their wins than their losses. It not only makes them feel good and look smart, but it helps them, as you talked about, to bolster the notion that they made a good decision.

People think about humans as economic calculators. If I just add up these things and weigh exactly the cost and the balances, that's how we make decisions, but that's really not the way it works. We're behavioral animals. We're social animals. We look to what others are doing as information for what we should do. Sometimes we're biased and sometimes we make bad decisions, but those same things often lead us to make good decisions. Imagine if you didn't rely on word of mouth, or imagine if you didn't look to what others are doing. Imagine if every decision you made, you had to do all the research on it yourself. Life would be overwhelming. We would barely be able to get past choosing what to have for breakfast before it was time for dinner, and then another day it would happen. So relying on others is often a useful strategy for making good choices, though in some cases it does lead us astray.

Douglas Goldstein: How can people continue to follow your work?

Jonah Berger: Contagious: Why Things Catch On? is available on Amazon or wherever books are sold. It just came out on its 34th language, so whatever you like it in it is available. You can also find me at www.jonahberger.com. There's a bunch of free resources up there, as well as a workbook that you can use to apply the framework from Contagious.