The Kind of Authenticity Customers Will Pay More For
We seem to care about authenticity a lot these days. But how do people respond to authenticity when they see it? Do they pay more for it? Do they review it positively? New research shows that how people react depends on what kind of authenticity is being evoked. For example, something can be authentic because it’s representative of a particular social category (think New York pizzeria), or something can be authentic because it expresses core values or beliefs (a sustainable farm-to-table ethos, for example). Findings from four studies suggests that consumers recognize and distinguish among these meanings of authenticity in organizations, and that they ascribe unique types of value to each. Authenticity that conveys fitting within a social category might lead to higher star ratings but not an increase in consumers’ willingness to pay more. Meanwhile, authenticity that conveys adhering to one’s core beliefs might persuade consumers to pay more for those products but not necessarily rate them any higher.
We seem to care about authenticity a lot these days. When it comes to our work, our leaders, our experiences, even our products, we increasingly value what’s real, genuine, or true.
But how do people respond to authenticity when they see it? Do they pay more for it? Do they review it positively? New research shows that how people react depends on what kind of authenticity is being evoked.
Even though the term authenticity has grown in popularity, the meaning it conveys for an organization and its products, say, a restaurant and its food, can fundamentally differ.
For example, consider the food scene in New York. Critics and consumers laud two landmark establishments – DiFara’s Pizza in Brooklyn and Blue Hill in Greenwich Village – as “authentic.” Yet, what “authenticity” means for DiFara’s is different from what it means for Blue Hill.
Visitors looking for the most authentic pizza in New York can read hundreds of reviews online calling DiFara’s Pizza in Brooklyn as “authentic as they come.” Authentic here means that it is representative of a particular social category or genre – in this case, New York pizzeria. The pizzaiolo, Domenico DeMarco, immigrated to the U.S. from a small town near Naples and has been making traditional thin-crust pizzas since 1964.
On the other end stands Blue Hill at Stone Barn. Forbes Travel Guide calls it “an authentic Hudson Valley culinary experience,” focusing on farm-to-table ingredients with a focus on creating “a more sustainable food system.” This meaning of authenticity derives from values, and its roots can be found in existential philosophy as well as social psychology. Values-based authenticity relates to whether or not someone or something offers a true expression of core beliefs.
The distinction between these meanings of authenticity has long been recognized, but few studies have considered whether consumers might react differently depending on which meaning is evoked. Findings from our four studies suggest that they do.
We first set out to measure what people mean when they call an organization authentic. We developed two authenticity scales, asking consumers one set of questions about how much an organization fits within a specific social category and another set about how much it expresses its core beliefs. We then took these surveys to 24 restaurants participating in Charlottesville’s Restaurant Week event, asking hundreds of diners to rate their restaurant experience on these two interpretations of authenticity and then to report whether they would revisit the restaurant. We measured how much they valued the experience through their online ratings (i.e., “What was your overall impression of the restaurant?” from 1 Star = Poor to 5 Stars = Excellent) and their willingness-to-pay (i.e., “How much would you be willing to pay for this exact same meal if it were outside of Restaurant Week?). In total, we analyzed completed survey responses from 172 diners.
Both meanings of authenticity predicted a unique form of value for the restaurant. When diners evaluated a restaurant as more authentic because it fit within a specific category (e.g., “Italian” or “Barbecue”), they were also more likely to give it a higher star rating – but they were not necessarily willing to pay more for the meal at the restaurant. On the other hand, when diners evaluated a restaurant as more authentic because it was true to its values, they expressed an increased willingness to pay more for a meal there – but, interestingly, they were not necessarily more willing to give it a higher star rating. (In all of these analyses, we statistically controlled for several factors, including price as well as the diner’s perceptions of the quality of the restaurant, party size, prior experiences at the restaurant, age, gender, average number of times they eat out per month, and the typical price of meal when they dined out.)
We replicated these findings in three additional experiments with 631 respondents, including one study of value and authenticity in the context of music. Consistent with our earlier findings, we found that people associated bands and musicians who fit within a musical genre with higher star ratings, and bands or musicians who expressed their true beliefs or core values with a willingness to pay more for an album or concert experience – but not vice versa.
Across all four studies, the evidence suggests that consumers recognize and distinguish among different meanings of authenticity in organizations, and that they ascribe unique types of value to each. Authenticity that conveys fitting within a category might lead to higher social evaluations like star ratings but not an increase in consumers’ willingness to pay more. Meanwhile, authenticity that conveys adhering to one’s core beliefs might persuade consumers to pay more for those products but not necessarily rate them any higher.
Why might this be? One theory is that being true to a social category leads to more social praise – in this case high star ratings online; whereas, adhering to core values taps into consumers own personal values and leads them to pay more. Another theory is that online ratings serve as an attempt to persuade others or to share information in order to reinforce authenticity within a social category, while higher willingness to pay rewards producers who uphold values despite potentially higher costs. We did not test these specific mechanisms in our studies, so future research should help to clarify which explanations play a role.
Managers should consider these patterns as they attempt to appeal to customers. Rather than assume that any mention of authenticity leads to a better reputation or more revenue (or both), managers might do well to think carefully about what kind of authenticity their organization expresses. For organizations that convey authenticity because they exemplify a specific category or genre, they might focus on generating value by winning higher star ratings – which can increase sales traffic – rather than attempting to charge more for products or services. (For example, research has found that a 1-star increase in Yelp reviews corresponds to a 5-9% increase in revenues for some producers). Organizations that evoke authenticity by adhering to their core beliefs might benefit more from charging a premium for products and services to a more selective set of customers.
Of course, other research by our team has shown that consumers tend to punish organizations that simply tout their own authenticity. Claiming to be authentic seems akin to claiming to be humble or wise – merely making the claim suggests a lack of understanding of what it means to be authentic in the first place. So managers face a bit of a paradox: Consumers demand authenticity but managers must be careful in crafting an authentic image because efforts to do so can easily backfire.
Kieran O’Connor is an assistant professor in the management area at the McIntire School of Commerce, University of Virginia. He received his PhD from Stanford University. He studies the social and cognitive psychological processes of organizational behavior, including judgments of authenticity, hypocrisy, climate change, and moral rebels.
David W. Lehman is an Associate Professor of Management at the McIntire School of Commerce, University of Virginia. He received his PhD from Purdue University. He studies how organizations make authenticity claims as well as how audiences respond to authenticity when they encounter it.
Glenn R. Carroll is the The Adams Distinguished Professor of Management at the Stanford Graduate School of Business. His research addresses questions about organizations, strategic management, and industrial evolution. His most recent project studies socially constructed authenticity – how consumers and others value authenticity, how consumers search for authenticity in products and services, and how consumers interpret organizational behavior and structure as reflecting authenticity.
The Kind of Authenticity Customers Will Pay More For
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