“Woman-owned” businesses seem more competent

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📝 Context

Topics: Brand & Strategy  | Messaging & Copy
For: B2C. Can be tested for B2B
Research date: August 2024
Universities: University of Kentucky. Dartmouth College.

38% of US businesses are owned by women (US Census, 2024).

Yet they face uphill struggles that men don’t face. For example, only 2% of VC funding goes to women founders (Pitchbook, 2016) - in part because investors prefer pitches that come from men (even when it’s the same pitch) and they ask women more pessimistic questions (e.g. “How are you going to not lose?”).

At the same time, several platforms (e.g. Google Maps, Yelp) have introduced the option for business owners to add descriptive labels to their businesses. One of those is “women-owned”.

So, in the context of the additional difficulties women business owners face, how will this label be perceived? Will choosing to show this label be the equivalent of shooting oneself in the foot? Or - maybe - something good can come out of it?

P.S.: Another description gaining in popularity in company messaging is that it’s a minority-owned business (e.g. Black-owned). Use it to unlock the “Minority Underdog Effect”.

P.P.S.: If you are a family-owned business and wondering whether to say that in your messaging, we recently covered a case study about the pros and cons of saying your business “family-owned” (note: to access this and all previous insights, you need to be a paid Platform member).

📈 Recommendation

If you’re a female business owner, highlight it. Use “woman-owned” in your messaging and labels describing your business. Add this label even if it seems obvious that your business is owned by a woman (e.g. Alice Smith Consulting).

People, regardless of their gender, will perceive you as more competent and higher quality, increasing purchase interest.

🎓 Findings

• Businesses that highlight a “woman-owned” label receive better ratings for competence and the quality of their service compared to those without such a label.

• As part of a series of 5 experiments with 2,585 people, researchers found that:

  • A finance business was rated 8.6% more competent when it was labelled as “woman-owned” compared to when people were told it was started by a woman but the label wasn’t included

  • The same business was rated 10.9% higher in service quality and interest in buying from them compared to an unlabelled business

• The effect:

  • Is strongest, 26.8% higher perceived quality, when people don’t know the level of the owner’s business experience

  • Is stronger in very competitive industries or in male-dominated industries with high barriers for women to succeed

  • Works the same regardless of the race or gender of customers

🧠 Why it works

• We stereotypically see women as warmer but less competent than men in business.

• However, when a female business owner deliberately chooses to highlight her gender, we see this as a signal of the owner’s confidence.

• This makes us believe that the owner must be competent and their product high quality.

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✋ Limitations

• The study looked primarily at businesses where people knew the owner was a woman. It wasn’t tested if the label would be more or less effective compared to when an owner’s gender wasn’t known.

• The research looked at how a company was perceived, it did not look at actual purchases.

• The experiments did not compare woman-owned business labels with other ownership types (e.g. Black-owned, family-owned, employee-owned).

👀 Real-life example

HCP National Insurance Services is a woman-owned health insurance firm in a traditionally male-dominated industry.

❌ Issue: HCP mentions their female ownership on the About page of their website, but doesn’t use a “woman-owned” label or badge on their homepage or Yelp listing.

✅ Solution: HCP can tweak their messaging to:

• Include a badge or other visual on their homepage clearly highlighting that they’re a woman-owned business.

• They could also incorporate their Founder’s name into the company’s name itself, or highlight her story, to help humanize the company, differentiate it from other (male-owned) brokerages and make their service seem more authentic and trustworthy.

• Their website focuses on purple tones, usually associated with sophistication and luxury. Using a blue color scheme could further reinforce the subliminal message of competence.

🔍 Study type

Lab and online experiments, and field experiment (distributing flyers for a dessert shop to 400 apartments on a US college campus).

📖 Research

“Woman-Owned Business” Labels Enhance Perceived Competence. Journal of Consumer Research (August 2024)

🏫 Researchers

• Nicole Davis, University of Kentucky

• Tami Kim, Dartmouth College

Remember: This is a new scientific discovery. In the future it will probably be better understood and could even be proven wrong (that’s how science works). It may also not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.

🎁 Bonus mini-insight

Check your knowledge from previous insights (for paid Platform members only). Read the full insight here if you are already a member.

🎓 Insight: Show off that you’re a small company

📈 Recommendation: If you’re a small company, showcase this on your website and marketing materials. People will think your products are higher quality than those made by larger competitors, making them more likely to buy from you.

✋ Careful: If you make high-tech or innovative products, this backfires. People prefer these products from larger companies.

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🎓 It took me, a PhD analyst, and a marketing pro, 13 hours to accurately turn this 20-page research paper into this 3min insight. 

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