Study: Friends increase chances of buying something by 60%


    Study: Friends increase chances of buying something by 60%

  • 1 60% increase in buying because of friends

    A study showed how friends' influence produces a 60% higher chance of buying an online service in a person if those friends bought it earlier.

  • 2 The results were published in a study

    The study 'Do Your Online Friends Make You Pay? A Randomized Field Experiment on Peer Influence in Online Social Networks' was done at the Institute for Operations Research and the Management Sciences (INFORMS) and published in Management Science in 2015.

  • 3 'Demonstrating peer-to-peer (P2P) influence became the Holy Grail of modern research in online social networks'

    Researchers Ravi Bapna and Akhmed Umyarov said, 'Demonstrating the existence and strength of P2P influence has become the Holy Grail of modern research in online social networks. In social networks, it has been consistently demonstrated that user characteristics and behavior tend to cluster.'

  • 4 Average Joe exerts influence to pay for premium subscriptions

    Bapna said, 'While the received wisdom focuses on using influential users to spread ideas and behavior in social networks, our research establishes that even the average 'John Doe' type users exert influence on their friends to pay for premium subscriptions.'

  • 5 The experiment used data from the freemium site Last.fm

    The authors used data from the freemium site Last.fm, a community with a large number of free users and a small number of premium subscribers. As with many freemium services, premium subscribers bring in a disproportionately large share of profits.

  • 6 Users with fewer friends are more susceptible to influence

    The study also found that users with fewer friends experienced a stronger increase in the likelihood of taking a premium subscription compared to users with many friends.

  • 7 The study tried to find a way to convert users to paying members

    The study noted how a major problem for the long-term viability of services like Last.fm is converting free users into paying members.

  • 8 Paying members are more likely to be connected to other paying members

    The study also found that paying members, although small in numbers, are significantly more likely to be socially connected to other paying members.

  • 9 Freemium services usually operate on a 2-tier business model

    The study described freemium services as usually operating on a 2-tier business model: free basic features and commercials vs. all features without commercials.

  • 10 Subscribers were 3 times more valuable

    Based on the data used in the study, paying members (subscribers) were 3 times more valuable ($3) than free users (12 cents).

  • 11 The study used publicly available data and self-reported information

    The data used was publicly available information on Last.fm's 3.8 million users from 2009. In addition, tracked self-reported demographic information and website-reported social activity information was used.