The Wisdom of the Social Crowd

“The wisdom of the crowds” posits that large groups can make better decisions better than a few experts.

In 1906, 800 villagers at a fair in the West of England combined their smarts to guess the weight of an ox. Mathematician Sir Francis Galton discovered that the average of their estimates was “99% accurate.” This anecdote demonstrates a persisting phenomenon known as the wisdom of the crowds, whereby unskilled people in large groups make better predictions than a few experts.

Crowdsourced data from social media help companies develop new products and entice customers.

As a modern example, look at Starbucks, which developed its pumpkin-spice caffè latte based on crowdsourced insight. 

“Because of social media, brands have increasingly easy access to some of the largest crowds available.”

According to journalist James Surowiecki, the savviest crowds are diverse, decentralized, independent and aggregated, and businesses need to interpret the large sets of data they gather in a scalable way.

Some crowds are more useful to learn from than others. Companies need to collect their data from a wide swath of demographics and locations and from people who honestly share their thoughts. Ice-cream maven Ben & Jerry’s collected more than 100,000 ideas for new flavors through its “Do the World a Flavor” drive on social media. For the sake of accuracy, it’s important to control for “external factors” that may bias people’s opinions before you interpret the data. 

“A biased audience can do more harm than good.”

A Georgetown study found that researchers could correctly predict future sales for a range of popular brands by examining positive posts from Twitter users. Accurate sales forecasting is possible by combining purchase intent information expressed via Twitter with analysis of positive sentiments made on social media.

A range of brands, including James Hardie and the US Postal Service, listen to social media to their advantage. 

Other companies that have employed this technique include James Hardie, a manufacturer of house siding and backer board. It uses social listening to spot trends among its customers and then uses those insights to ensure its business operates smoothly. The US Postal Service does similarly by monitoring social media posts to tailor its own content and operations in order to help people affected by natural disasters.