The wisdom of the crowd is the phrase used to describe how we can expect better decisions from a large group of people than from just a few individuals. In theory, a thousand people from a diverse range of backgrounds should make better choices than just one or two experts, but how do businesses use this idea effectively?
Product Ratings and Recommendations
There’s something reassuring about seeing a large number of positive reviews on a product you’re about to buy or a service you want to use. While a smaller number of reviews from experts might seem to carry more weight, people like to see many different reviews from others who have tried it and are happy to pass on their own experiences.
The same theory can also be applied to the product recommendations that pop up on the screen on ecommerce sites like eBay and Amazon. While the ideal approach is to provide a range of suggestions based on the customer’s own search history and previous purchases, if this isn’t yet available then it makes sense to let them see the products that others are interested in, especially those with a similar profile.
Copy Trading Investments
Investing used to be a deeply personal experience, with decisions made based on the person’s own research and instincts. Yet, as online investing has made it more accessible to more people, a need has arisen for easy access to recommended products and assets that anyone can use without any fuss. This is where social trading and copy trading have become popular, as they offer investors a way to look at what others have done.
In this way, a new investor can look for patterns across a large number of experienced users, to see what might suit them. In this eToro review, we see that this is one of the biggest social trading communities in the investing world. Investors can copy the trades of the existing users, or else they can look to make money by letting other people access their own accounts and choose whether to copy the moves that they make.
Generating New Product Ideas
Coming up with an idea for a new product is one of the most challenging aspects of any business, as they want to provide something fresh and exciting that will appeal to new and existing clients. Yet, there have been many disastrous product launches over the years, from Google Glass to Cheetos lip balm and the various versions of famous soft drinks that no one wanted or asked for.
This is why Procter & Gamble launched an Indiegogo crowdfunding campaign for their new Gillette razor, designed with a warming bar to heat the cartridge. They didn’t need to raise money to produce it, but they wanted to gauge the public’s reaction to the prototype before putting it into mass production. Lego has also famously used the wisdom of the crowd to discuss new product ideas with over 1.5 million fans of the building blocks.
Businesses will continue to look for useful ways of finding out what large groups of people think and then using this information for different purposes, which should benefit us all in the long run.