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23/09/2011 / loyaltymarketingnews

Don’t underestimate the power of Word of Mouth

Over the past few years, so much has changed about the way companies sell to, communicate with, market to, and maintain relations with their customers that comparing effectiveness of both media and message content is very little more than an academic exercise. And these are not fleeting trends but fundamental and long-term realities, according to customer loyalty expert, Michael Lowenstein.

Today, marketers must be aware that customers are so inundated and overwhelmed with messages, impressions and the availability of product and service information that they’ve gone, in large measure, to alternative, informal and less traditional methods of helping them decide what and where to buy. At the heart of seeking sources for decision input is trust.

This is an era where spam email, pop-up ads, telemarketing and other types of targeted advertising and marketing communication, and indeed most long-standing forms of electronic and print messaging and promotion, receive low trust, authenticity, and believability scores in survey after survey. Beyond permission email, supplier and brand web sites and the like, customer trust is consistently highest for word-of-mouth.

How high? While the aggregate value of print and electronic advertising as a decision-making influence has remained about the same since 1977, word-of-mouth has doubled in leveraging power to the point where it is the dominant communication device in our society. Through public studies, it has been learned that more than 90% of customers identify word-of-mouth as the best, most reliable and relevant source of ideas and information about products and services. This is about the same percentage who find it the most trustworthy and objective source.

As a result, no matter how well suppliers believe they understand their customers’ needs and their behaviours on an individual basis, they must have both a strategy and array of tactics which will help customers convey messages, create influence and personal leverage, peer-to-peer and situation-by-situation. What this means as an end goal is creation of active advocacy, a state of elective, personal, often deep-rooted and emotional engagement between a customer and supplier that goes beyond satisfaction, beyond delight, and even beyond loyalty.

Advocacy represents the highest level of customer involvement and commitment achievable; interaction with suppliers on an individual and emotional level well past the typical functional, rational, passive relationship between supplier and customer; and having them proactively and voluntarily communicate their experiences to friends, relatives and colleagues. Advocacy is not merely a different spin on gaining insight about post-experience customer purchase, referral and communication behaviour. Arguably, because the name of the game is rational and emotional value optimisation, learning about how customers perceive suppliers, brands, products or services and then having them carry their experiences and resulting commitment forward as active advocates is, or will become, perhaps the best way to think about them.

Responding to the new complexities and realities of customer decision-making, marketers are zeroed-in on finding methods of creating bonds – through trust, commitment and advocacy – among customers well beyond traditional advertising and editorial material, ‘pushed’ in formal electronic and print channels to generate awareness and interest. The currency for meeting these objectives is, collectively, called ‘consumer generated media’, which consists of any method of personal, neural communication, including casual conversation (and text messaging) between peers online or off-line (which dominates WOM, by the way), blogging, forums, email, private and public communities, chat rooms, and portals online.

Although word of mouth appears inexpensive, simple, and relatively painless to implement, one of the things marketers must be prepared for in this brave new communications world is giving up the full control they are used to having in both the message and the medium. The rewards, however, can be substantial.

Two books, Malcolm Gladwell’s ‘The Tipping Point’ and Ed Keller and Jon Berry’s ‘The Influentials’, considered together, provide an effective reference point for understanding the behavioural impact of commitment, word-of-mouth and social networks (also known as neural, peer-to-peer, informal, and viral communication). The significant increase in available information about alternative suppliers, combined with how customers now make supplier product and service selections, have put word-of-mouth front and center in the minds of marketers and organisations

When the effectiveness and trust levels of traditional sources of supplier information – print and electronic advertising, print and electronic editorial, and word-of-mouth – are compared over time, word-of-mouth has emerged as the dominant communication vehicle for impacting customer decision-making and supplier selection. Customers use words like trust, relevance, objectivity, integrity, authenticity and honesty to describe why informal communication, i.e. word-of-mouth, is the most reliable, behaviourally leveraging information source.

At the macro level, word-of-mouth produces ‘societal influentials’: those individuals (about 10% of the population, as identified by Keller and Berry) who impact, lead or guide the behaviour of the rest of society. On a category influence basis, Gladwell has identified members of social networks who are mavens, connectors, and salesmen. Everyone knows people like these. They are product or service category experience experts in subjects like wine, sports, food, entertainment, computers, finance, cars and travel to whom others often defer, and listen to, when making decisions in these areas.

Finally, there are ‘brand experience influentials’, or advocates. Advocacy, simply defined, occurs when customers select, and commit to, a single supplier from among all those they have used and might consider in the future, giving that supplier the highest share of spend possible, and telling others about how positive the relationship is and how much value and benefit they derive from it. Advocates, who actively express their commitment, are the golden prize for any brand or supplier organisation because these are customers who have minimized their consideration set, are extremely favourable toward ‘their’ supplier, will often recommend, and are active, vocal, frequent, and positive communicators on behalf of that supplier.

Advocacy incorporates opinions formed from customers’ product, service, transactional and other contact experiences, but it is built on a foundation of commitment behaviour and strategic, positive purchase and communication on behalf of that supplier. So, having positive word-of-mouth is essential to generating true advocacy; and, similarly, negative word-of-mouth can contribute to customer disaffection and, in some notable cases, even brand sabotage.

Advocacy considers not only the likelihood to have an exclusive purchasing relationship, but it also incorporates both strong emotional kinship and alignment, and active, positive, and voluntary communication about the supplier. Advocates are fully committed, and actively express their commitment. These are the people who ‘live’ the brands they use. They are the customers with the highest level of brand or supplier involvement – influential and proud.

This article is an extract from the 30 chapters of detailed coverage in ‘The Loyalty Guide 4’, which is The Wise Marketer’s latest 1,000+ page global guide to customer loyalty and engagement techniques, best practices, models, metrics, practical advice, market data and research. The report provides hundreds of detailed case studies, forecasts, trends, tables and visual materials to support new initiatives, presentations and proposals. See how customer data can increase profits, reduce churn, and increase frequency, spending, and share of wallet, and find out where your competitors are succeeding or failing, and why.

For only 1,095 the electronic (PDF) edition of The Loyalty Guide 4 gives you a complete, portable reference library of customer loyalty, engagement and marketing strategy. A free 50-page Executive Summary, chapter samples, table of contents, text searching, licensing and ordering details are online now at


(via The Wise Marketer)


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