[The Underdog Effect] Why Customers Prefer Small Businesses & Hustlers

Imagine you are visiting a new country and are invited to a local sport event.

2 teams are competing against each other.
Here’s the only thing you know about them:
Team A has a 70% chance of winning
Team B has a 30% chance of winning

Who would you root for?

Team A right?
They’re probably going to win and you’ll get to celebrate. Makes sense!

Well…
not really.

 

Why customers prefer small businesses and hustlers

 

A study from the Personality and Social Psychology Bulletin found that 66% of people chose to root for the “low-expectations” team (Team B).

What’s even more interesting is how people reacted when they added a concrete disadvantage (lower payroll).
In the same study, another group had to choose between:
Team A: 70% chance of winning + low payroll
Team B: 30% chance of winning + high payroll

Do you know who the participants rooted for?
67% of them rooted for team A!

 

The Underdog Effect in Sports

 

A low payroll is viewed as an unfair disadvantage which makes it fair for Team A to win the game.
People root for underdogs because it would be fair for them to win.

 

That’s all good, but what does it mean for your business?

About a month ago, I read an amazing article by Belle Beth Cooper called “Turn Your Startup’s Shortcomings into the Reasons Your Customers Love You”.

It got me thinking…
Could our startup struggles help us sell more?

So I turned to science and found an awesome research published in the Journal Of Consumer Research.
If you have a startup or small business, you need to read it!
I mean that!

 


Customers Prefer Underdog Brands When Buying For Themselves


 

A tale of 2 brands of high-end chocolate

In the study, participants where asked to choose between 2 fictive brands of chocolate:
– one with an underdog story
– one with a top dog story

They had to decide which brand they’d buy for themselves after reading these 2 descriptions (both brand names were assigned to each description randomly):

 

Description 1: Underdog Back Story

“Scharffen Berger [Dagoba] is a relatively small and new premium chocolate maker that has had to compete against longtime powerful producers like Lindt and Godiva. Even though they had smaller marketing and distribution budgets, the founders always believed that their dedication and passion for gourmet chocolate would help them overcome the odds and bring their high-quality chocolate to market. Though still relatively less known compared to powerful competitors, they are regarded by gourmet critics to be a very high-quality premium chocolate.”

 

Description 2: Topdog Back Story

“Scharffen Berger [Dagoba] is a premium chocolate maker that is well-resourced and has done well in the chocolate industry. The founders have significant experience in the gourmet food industry and are known to maintain quality in every step of the production process. They are now owned by an international food corporation who was able to build the brand with a large public relations budget, without compromising quality. Because of this heavy financial support they are now a trendy and well-known brand served in the finest restaurants and gourmet food shops.”

 

73% of them chose the underdog brand.

 

Most customers prefer buying from underdog brands for themselves

 

Good to note:
The number went down to 63% when they were asked to buy for a friend as people had a lower identification factor with the purchase.

 

Business tip: Target decision makers

You are thinking about using your underdog status to promote your product?
You’ll need to sell directly to decision makers.

When purchasing for someone else or a group, people tend to tone done the emotional side of decision making.

They look for a product that reflects what they think the others represent and will be more likely to play it safe.

 


Want To Sell Even More? Put Customers In An “Underdog Mood”


 

What happens when participants read about Harry Potter before making a choice

Before choosing the chocolate they wanted to purchase, a group of participants was asked to read short summaries of movies centered around underdog characters (Harry Potter, Rocky…).

Here’s what happened:

– Participants buying the chocolate for themselves became even more likely to choose the underdog brand (89%).

– There was almost no difference for participants buying the chocolate as a gift (62%)

 

customers more likely to choose underdog after reading about harry potter

 

Business tip: Tell stories on your blog and target underdog communities

How can you put buyers in an “underdog mood”?
Easier said than done, am I right?

Well the first thing you can do is:
Using “underdog” stories in your content marketing.

Let’s say you wrote a blog post about how you bootstrapped your way to where you are now.
Other founders read it.
They identify with it.
Even if you don’t mention your product, when they visit your homepage they will be more willing to support a small guy (you).

 

 

If you’re not much of a “writing about yourself” type of founder, here’s another way you can operate:
Publish on “underdog” websites.

Tumblr is one of my favorite underdog networks.
If you spend hours immersed in the Tumblr community, you will quickly notice how members identify as outcasts.

If you are selling to teenagers and your brand has a good underdog story to tell.
Tumblr is the place to be!

Let’s put it this way:
Members are looking at posts about outcasts the whole day.
If you manage to get your message out there, they will be more likely to feel like underdogs when they see it and will therefore be more likely to buy your product.

 


Don’t Be Scared To Mention Topdog Competitors


 

People prefer underdog brand stories because they have topdog brands to compare them to.

That’s what a study for the Journal of Marketing Research suggests.

 

An small bookstore. A coupon. And its competitors.

In a first experiment, participants were given a coupon after entering a local book store.

A small description of the store was printed on the coupon in 3 different versions:

Version 1: Big competitors

“The [name] Book Store was founded by the [name] family, native of [the local city], in [year]. As a locally owned small business, it is known for its selection of new, used, and bargain books. (The [name] Book Store’s main competitors are large multibillion dollar corporations. With significantly higher market power, these large corporations have the ability to put small businesses, such as this bookstore, out of business.)”

 

Version 2: Small competitors

“The [name] Book Store was founded by the [name] family, native of [the local city], in [year]. As a locally owned small business, it is known for its selection of new, used, and bargain books. (The [name] Book Store’s main competitors are other locally-owned small bookstores in the [the local city] area)”

 

Version 3: No mention of competitors

“The [name] Book Store was founded by the [name] family, native of [the local city], in [year]. As a locally owned small business, it is known for its selection of new, used, and bargain books.”

 

People with the version mentioning big competitors redeemed the coupon at a much higher rate.

 

Influence of the size of competitors on purchase

 

That’s not all.

They also spent more money than their counterparts:
$22 against $18 for the 2 other versions.

 

Business tip: Mention your competitors on your website

What if mentioning your big competitors could increase your conversion rate?

ProfitWell recently published an interesting article where they explain why they linked to their competitors on their pricing page.

 

Profit Well puts competitors on pricing page

 

They found that:
– most users who click competitors’ logos end up coming back to their website
– a lot of people scroll down the the competitors section, scroll back up and sign up
– people surveyed about it called them “gutsy” and said that they didn’t even bother to check out the competition as they “have to have a better product” to be confident enough to link to competitors.

They are not the only ones to refer to competitors in the startup world.
Groove advertise themselves as the simple alternative to Zendesk.

 

If you are competing against a big box store or popular software, it might be a good idea to invite your customers to “join your team”.

Just be careful to not piss anyone off.
Moz wrote an excellent article on the subject: Comparative Advertising: Can I Talk About My Competitor On My Website?

 


Why You Should Set Up Your Small Coffee Shop Right Across The Street From Starbucks


 

Starbucks or Joe’s Java?

In another part of the study, participants were asked to choose between a local coffee shop called Joe’s Java and Starbucks.

They were divided into 2 groups.
Here’s what they were told:

Group 1: Not Direct Competitors

“They are equidistant from your house but are in different neighborhoods, so they are not in direct competition”

 

Group 2: Direct Competitors

“They are located directly across the street and are in direct competition with each other.”

 

What happened?
Participants were significantly more likely to choose Joe’s Java when it was situated right across the street from Starbucks.

 

How big brands can help your small brand sell more

 

Once again customers want to do what’s fair:
In the second situation, Starbucks has an unfair advantage both monetary and regarding their well known brand.

The fact that they are directly competing against the smaller coffee shop makes customers more willing to support the small guy.
They are not choosing coffee quality, they are making a statement!

 

Business tip: Keep your partners close and your big competitors closer

Location on the web is a lot more abstract that in a brick and mortar situation.

There are still few ways you can set up your store “right across the street” from the giants of your industry:
– advertise in the same places as they do
– run google ads for the same keywords (make sure your copy has an underdog feeling to it)
– use them to sell your products (This one is tricky and won’t work for everyone. Take the example of Airbnb: they used Craigslist listings to grow their own customer base)

 

 

Your big competitors aren’t perfect.
Instead of focusing on what they have that you don’t, use their flaws to make your small brand shine.

 


The One Thing Big Dog Businesses Can’t Compete With


 

I just throw a snippet of wisdom out there telling you to use your big competitors’ flaws.

Wanna know what their number 1 flaw is?
They are not approachable (or at least customers see things that way).

Emarketer gathered results of 2 very interesting studies about why customers favor small businesses.
The results are definitely worth a look!

 

Customers choose small businesses because they are more human

The first study by AYTM Market Research focused on why customers prefer small businesses over large companies.

53% of them quote “personal service” as one of the reasons!

 

5 reasons customers choose small businesses

 

Now let’s take a look at the second study from Web.com and Toluna.
They looked at what customers consider important when doing business with a smaller brand.

Here’s what they found:

 

5 reasons why customers choose to do business with small businesses

 

The 3 most important factors are about customer service and how approachable and human small business are!

 

Business tip: Be approachable, really!

You wanted to have a Knowledge Base as your main customer service channel?
Think again!

The thing we love about underdogs is that we can identify with them.
The fact that they aren’t rich and famous makes them more accessible.

You have a natural advantage over your big competitors.
Don’t throw it away by playing hard to get!

So, what can you do to be more accessible:
– make it super easy to find your contact info (phone, email…)
– give live chat a try (We’ve found that live chat works quite well with small businesses because it makes you more accessible. The window is always there, you are just one click away, it’s more casual…)
– Drop the no-follow email address
– Encourage people to reply to your automated emails (event based or newsletters)
– Use a basic email template for customer service communications
– DO NOT use canned responses or scripts (they might save you time but they make you sound robotic and fake)
– Be flexible (if a customer comes in with an unusual request, think about ways you could help them even if it is out of your typical range of services)

 


To Sum It All Up: Wear Your Underdog Status With Pride!


 

While doing some research for the article, I stumbled upon a lot of articles like this one:
6 Ways to Make Your Small Business Look Big

I’m sure it’s something we’ve all thought about.
It’s never feels good to say that you can count your customers on the fingers of one hand. Or that you have no revenue.

 

 

If anything, I hope this article helps you realize that being small is not always a disadvantage.

Since it was a pretty long article, here’s a quick summary of how you can make your smallness shine:

1. Talk directly to decision makers, you’ll have more chance of selling your underdog story

2. Put them in an “underdog mood” with masterful blogposts or pick them up from underdog communities

3. Mention top dog competitors on your website (just be careful not to piss them off)

4. Hang out in the same places as your bigger competitors so customers have someone to compare you to

5. Be approachable and deliver rock star customer service to all your customers

 

Now tell me…

What’s your underdog story? Do you advertise the fact that you are small?

 

 

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Aurelie Chazal

Inbound Marketing Manager at Customericare
New technologies and content marketing enthusiast, Aurelie takes care of Customericare's online identity. She loves meeting people from all over the world and trying all kinds of strange foods. Nothing makes her happier than a day at an amusement park.
  • http://www.donnamerrilltribe.com/ Donna Merrill

    Hi Aurelie,

    What an impressive article! I had to read it twice to absorb all the details and I’ve learned so much. I love the underdog myself and would purchase something from them because they are more approachable. A larger business or “guru” in the marketing world is not.

    I am quite the “underdog” and do that approach myself. Sharing parts of my journey, struggle, and how I’ve overcome it. When it comes to my own products and services, Yes, I am approachable.

    As I’m on this journey, and people are coming into my business I do believe it is because of the communication online, and they know I will always give them at least 15 minutes of a one to one service with any product I put out there.

    It works so well!

    -Donna

    • http://customericare.com Aurelie Chazal

      Hi Donna,

      As small businesses, customer service is definitely our strong point. I love your blog and it definitely makes you look more approachable. It’s crazy what a huge difference it makes in the online world to get a little personal and let people know they can reach out to you any time.

      You have a good point with the Gurus. I focused on businesses in the article but it is true for online marketing gurus / influencers as well. I read popular blogs but I always feel more comfortable commenting on smaller blogs where the owner is engaging with readers.

      Thank you so much for the comment 😀

      Aurelie

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