The power of WOM

My brother runs a small landscape gardening business and I was talking to him about how he obtains new business.  He advertises in a local newspaper and has a website but he believes that 90% of his contracts come from his existing customers referring his business to their friends and family.  His business is therefore reliant on referrals through word of mouth communication.

My Brother’s business is not alone.  Customer referral is the prime marketing communication channel for many businesses.  In 2000, Dye calculated that two-thirds of industry is driven by word of mouth communication.  The London School of Economics states that strong customer advocacy is the best predictor of top-level growth. Certainly, for small businesses, with limited marketing budgets, getting your customers to deliver your message may be the most efficient and cost-effective form of communication.

Marketers define Word of Mouth (or WOM) as oral, person to person communication between the receiver of marketing communication and the provider of that information: where the provider is not acting in a commercial role.

To develop an effective word of mouth strategy two factors are important; the richness of the message; and the strength of the provider’s advocacy.  If these two factors can be brought together, a successful WOM strategy can be developed.  Word of mouth marketing relies on people receiving information they trust, from people they trust and who they aspire to emulate.

There are two types of word of mouth communication; Input WOM – consumers seeking information – and Output WOM – consumers relating their views on their experience with a product or service.

There are three factors to the effectiveness of word of mouth communication:

  1. Direction – in relation to Input WOM, consumers may seek product recommendations prior to purchase from their friends and family. In relation to Output WOM, consumers may express their feelings about the result of a transaction.
  2. Valence – how positive or negative those feelings or recommendations are.
  3. Volume – The number of people to whom that view is expressed or the number who give the same recommendation.

Output WOM has four variables:

  • Product Involvement – people discuss things they find highly pleasurable or highly un-pleasurable.  They have emotional involvement with the experience they have with products and services and they reflect on those experiences.
  • Self-involvement – discussing their experiences with products gives consumers a sense of ownership and reduces any cognitive dissonance they may feel.
  • Other involvement – the motivation to help others and feelings of love and care.
  • Message Involvement – when marketing messages become a means of provoking discussion.  For example when adverts such as Cadbury’s drumming gorilla go viral.

Many firms simply rely on voluntary WOM; leaving consumers alone and hoping they discuss the product with others.  Voluntary WOM is natural, interpersonal communication.  However, relying on voluntary WOM is a hit and miss approach to a communication strategy. The company has little control over what consumers are saying about their products or that the expectations of those receiving the information are correctly calibrated.

To ensure WOM is communicated appropriately, you must prompt the disseminators of the information so that the correct information is passed on.  This can be achieved through targeted marketing to advocates e.g. the use of blogs, internet forums, social media and targeted PR.

Some firms attempt to influence Word of Mouth by attempting to manage the process.  Some firms attempt this by offering opinion leaders and formers incentives.  In effect they are creating paid advocates.  However, such payments can reduce the credibility and objectivity of those advocates.  For example, several sports personalities have been caught out using personal twitter accounts to promote brands without stating that they are paid to do so.  This is not only a breach of advertising standards, it reduces the effectiveness of the advocacy.

Society is made up of opinion leaders, opinion formers and opinion followers.  People belong to tribes and within those tribes there is a hierarchy.  Of course, today a single individual can belong to several different tribes at the same time.

Opinion Leaders:

  • receive information, process it and disseminate it.
  • have a higher social status within a group
  • have high self-confidence and self-reliance
  • have low confidence in political systems
  • are socially gregarious
  • have lower concerns over material gain and financial success
  • have high social responsibility
  • are civic-minded
  • are good at providing business testimonials on marketing materials

Opinion Formers:

  • have authority, education and status
  • are sought by others to provide information
  • examples include pharmacists, financial advisors and film critics

Opinion followers:

  • follow the views of opinion leaders and opinion formers.  For example some people will only go to see a film if it is given a good review by Mark Kermode.

The trick of Word of Mouth Marketing strategies is to identify appropriate opinion leaders and opinion formers and direct your message prompts to them.  Let those individuals become unpaid brand advocates for your company.

Finally, the effects of Word of Mouth marketing strategies must be measured for their effectiveness.  You must ensure that your prompts are being correctly transmitted and that they are having the intended effect.  It is important to discover how new customers decided to use your company e.g. through the use of a customer satisfaction survey.