April 11, 2008
Friends and Family Seal the Deal
If you want to influence a consumer’s purchasing decisions, then it’s almost always best to get to their family and friends first. If you can convince family and friends to recommend a product or service, then you’re a long way down the road to making the sale. But how, just exactly, do you get friends and family to make a recommendation? That is the grail that most marketers seek and few find.
According to ZenithOptimedia, word-of-mouth (WOM), specifically those recommendations from family and friends, ranked highest in purchasing influences in the firm’s Touchpoints ROI Tracker study.
Scored on a grade of one to 100, recommendations graded out to an average of 84. The next closest influencers were TV ads (69) and internet searches (67). Magazine (60) and newspaper ads (55) were next followed by outdoor (45), radio ads (42) and banner ads online (41).
Bruce Goerlich, ZenithOptimedia’s president of strategic resources, North America, told AdAge.com that marketers understand the importance of WOM but haven’t figured out to make it scalable.
“Word of mouth is incredibly powerful, but we as an industry are not doing as good a job as we could do in generating it,” he said.
Lawrence Feick, professor of business administration in the University of Pittsburgh’s Katz Graduate School of Business, told BizReport, “The sea change is that for 40 years marketers knew that word of mouth was important, influential, pervasive. But they saw it as something to be described and hoped for.”
“It is only in the last 10 or 15 [years] that they have thought about it as a communication tool that can (at least in part) be managed,” he added.
Discussion Questions: How do brands that generate positive word-of-mouth and personal references do it? How is it that (any brand you’d like to identify) is able to generate recommendations from family and friends when others do not?
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Word of mouth recommendation from someone you respect and trust is the best source of new customers. Now isn’t that a remarkable finding?
We have known for years, on the human resource side of the business, that new employees who come from referral are the best source of great talent. They produce more, fit into the culture better and last longer and there is lot of hard data to back this up. In fact, one of the best indicators of a great place to work is the percentage of new employees that come by way of referral from your present employees. In many great companies, this number well exceeds 50% of all new hires.
The same principles that affect employee engagement also affect customer engagement.
This is simple. Brands and companies can’t and shouldn’t worry about generating word of mouth for their products. If companies force or try to generate word of mouth, it will most likely backfire on the brand. It is okay for them to ENABLE the word of mouth opportunity, and provide tools to do so (widgets on web sites, friends and family coupon programs, etc.), but if they try and implement a WOM strategy that starts with the company being the first communicator, consumers will see right through it.
One should remember that the reverse is also true; if a family member has a bad experience, they will more readily go on the offensive to share the bad experience with family.
For the under 40 demographic, and really more like under 30, the new age of social networking on sites like MySpace and tools like YouTube and blogs have been somewhat effective. The concept of “friends” in the network at MySpace is delicate though.
It doesn’t work for major, impersonal brands like Coke or Nike, but when done correctly, it can be good.
But it is a brutal two-edged sword as well. Deliver a “Wow” experience and you’re a rock star. Screw it up and you get massively hammered in front of everyone.
The only way to generate positive word-of-mouth and personal references is by having a great product/service delivered in a manner that exceeds customer expectations. Companies cannot manufacture referrals and positive comments. When they try, it is usually disastrous. The way to have engaged customers is through engaged employees. If companies want positive word-of-mouth and referrals, they must start by focusing on their employees.
That said, there are tools that companies can use to analyze, if not influence, the dialogue. The growing influence of social media outlets like Facebook, YouTube and others provides companies with both a way to analyze current word-of-mouth opinions and a means to react to any negative perceptions. Used wisely and sincerely, communication through these portals can provide a company with good intelligence and a platform for customers to speak out.
I was checking out at a Safeway grocery counter when the young man behind me in line gestured toward one of my purchases and asked, “You like those?” (Frozen eggrolls for the curious.) At my curmudgeonly best I replied, “Why would I be buying them if I didn’t like them?” Does that qualify as word-of-mouth? Mebbe so. Good eggrolls.
Tell-a-friend programs have been around for many decades, contrary to the observations of Professor Feick that merchants have been actively employing word-of-mouth “only in the last 10 or 15 [years].” And in spite of how new some of we older folks believe the internet is, product references and reviews have been found there for more than twenty years.
But allow me a grass-roots observation which applies most, probably, to the supermarket bidness: Merchants must first convince their own employees that their product or service is the best. Nothing is more demoralizing than learning your employees are shopping elsewhere, and it’s the most powerful anti-business testimony extant. This happens all the time among grocery store employees, and their employers rarely if ever take steps to stop it. It would be so easy, simply providing employee discounts. But retailers often cannot manage to get out of their own way. So, it occurs to me that the first step in any successful WOM effort should be reversing off-the-reservation purchase behavior among employees. Everything else flows from that.
Probably the best (and I guess first) word of mouth campaign on the Internet that I remember was for the movie “The Blair Witch Project.” Obviously that one was a huge success (look it up), turning a novice film maker’s four year project into a huge money maker.
The challenge you face is that many of the efforts to generate “buzz” can become so transparent that they have an opposite effect. When the word gets out that something is all hype, it can either generate the desired results or cause so much backlash that no one wants to get involved. I know many firms will walk the streets of Manhattan to introduce new products and even Kroger hired actors to introduce the shopping cart, but when people feel they have been “tricked” the reaction can be devastating, just ask the “Target Rounders.”
Word of mouth campaigns are effective and important for promoting products and services. In an ever more fragmented society, with people watching TV, visiting thousands of different websites, and forming ad hoc communities for everything from bird watching to ultimate fighting, it can be both economical and effective to “plant a seed” as opposed to trying to contact each consumer individually. Just be careful.
The best way to generate word of mouth recommendations is to exceed consumer expectations. Happy consumers tell their family and friends about the experience. Whether it is a brand or a retailer, the customer must come first. This must be the mantra and practice inside the company from the top down.
It boils down to quality and service. If the shopping experience was positive and the product worked, there is a greater chance of word of mouth referral. If either of those is missing, the buyer may not recall the product as being worthy of a rec. Customers highly value their own reputations when it comes to word of mouth. So the entire experience must be positive. Vendors should make more of a connection with floor staff by providing product in services and allowing feedback.
Retailers continue to look for that magic ‘pill’ to solve this issue. They spend and spend on consultants, advertising, programs and, worst of all, cards to try to drive loyalty. That’s what this is really all about–loyalty. Consumers own it, retailers don’t.
You gain it by the experience you provide, above all else. If retailers spent just one quarter of the amount that they blow on all these other things and focused that on the customer experience, then they might find the end to the continuous search for the ‘pill’ to solve their problem.
Having worked with many companies that depend strongly on referrals, I can tell you that the only way to effectively build a strong referral program is by implementing some kind of compensation. In many cases, this could be a thank you card, a coupon, or a gift.
However, what separates these kinds of businesses (dentists, real-estate agents, specialty services) from general retailers and manufacturers is the fact that they have direct access to all their clients in the form of lists. The ability to cross reference combined with a manageable influx of new business allows them to manage referrals.
So is there any real way that marketers representing big brands can effectively influence word-of-mouth advertising? I don’t believe so. The fact is, regardless of how good the product actually is, a customer’s personal experience with it will dictate what they choose to share with others.
I would suggest to any company that instead of trying to leverage positive word-of-mouth advertising, they should concentrate on doing everything in their power to avoid negative word-of-mouth advertising. And this can easily be done by simply providing a premium level of customer service. And even then, it can sometimes he a hit and miss situation. Welcome to dealing with the human race.
We’ve all said it a million times: Deliver a Wow! experience.
That means having well-trained, engaged employees, in adequate numbers, available to answer questions and acquainted with where things are today, in stores that are well-stocked with merchandise that customers not only have demonstrated demand for but can actually find on the selling floor, in displays that pull such merchandise together in groups that bear some logical association to how customers might use them–beach or barbecue items, for instance, or tax-time supplies, or spring cleaning.
It also means thinking of customers and front-line employees alike as people–thinking adults, even. We tend to use expressions like ‘human resources’ or even ‘valued assets’, but those miss the point, I think, because they stray too far from the human connection. Apparently it’s too slippery a cognitive slope to go from ‘asset’ to ‘monkey’, and when we do, the Wow! customer experience is forever out of reach.
Word-of-mouth has a first cousin: great publicity. What those two have in common: both are unpaid endorsements from trusted sources. Most retailers have little or no publicity budget. Some actively shun publicity. How many retailer web sites don’t mention who’s in charge of press relations? How many folks in charge of press relations don’t answer their voice mails or e-mails?
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Word of mouth recommendation from someone you respect and trust is the best source of new customers. Now isn’t that a remarkable finding?
We have known for years, on the human resource side of the business, that new employees who come from referral are the best source of great talent. They produce more, fit into the culture better and last longer and there is lot of hard data to back this up. In fact, one of the best indicators of a great place to work is the percentage of new employees that come by way of referral from your present employees. In many great companies, this number well exceeds 50% of all new hires.
The same principles that affect employee engagement also affect customer engagement.
This is simple. Brands and companies can’t and shouldn’t worry about generating word of mouth for their products. If companies force or try to generate word of mouth, it will most likely backfire on the brand. It is okay for them to ENABLE the word of mouth opportunity, and provide tools to do so (widgets on web sites, friends and family coupon programs, etc.), but if they try and implement a WOM strategy that starts with the company being the first communicator, consumers will see right through it.
One should remember that the reverse is also true; if a family member has a bad experience, they will more readily go on the offensive to share the bad experience with family.
For the under 40 demographic, and really more like under 30, the new age of social networking on sites like MySpace and tools like YouTube and blogs have been somewhat effective. The concept of “friends” in the network at MySpace is delicate though.
It doesn’t work for major, impersonal brands like Coke or Nike, but when done correctly, it can be good.
But it is a brutal two-edged sword as well. Deliver a “Wow” experience and you’re a rock star. Screw it up and you get massively hammered in front of everyone.
The only way to generate positive word-of-mouth and personal references is by having a great product/service delivered in a manner that exceeds customer expectations. Companies cannot manufacture referrals and positive comments. When they try, it is usually disastrous. The way to have engaged customers is through engaged employees. If companies want positive word-of-mouth and referrals, they must start by focusing on their employees.
That said, there are tools that companies can use to analyze, if not influence, the dialogue. The growing influence of social media outlets like Facebook, YouTube and others provides companies with both a way to analyze current word-of-mouth opinions and a means to react to any negative perceptions. Used wisely and sincerely, communication through these portals can provide a company with good intelligence and a platform for customers to speak out.
I was checking out at a Safeway grocery counter when the young man behind me in line gestured toward one of my purchases and asked, “You like those?” (Frozen eggrolls for the curious.) At my curmudgeonly best I replied, “Why would I be buying them if I didn’t like them?” Does that qualify as word-of-mouth? Mebbe so. Good eggrolls.
Tell-a-friend programs have been around for many decades, contrary to the observations of Professor Feick that merchants have been actively employing word-of-mouth “only in the last 10 or 15 [years].” And in spite of how new some of we older folks believe the internet is, product references and reviews have been found there for more than twenty years.
But allow me a grass-roots observation which applies most, probably, to the supermarket bidness: Merchants must first convince their own employees that their product or service is the best. Nothing is more demoralizing than learning your employees are shopping elsewhere, and it’s the most powerful anti-business testimony extant. This happens all the time among grocery store employees, and their employers rarely if ever take steps to stop it. It would be so easy, simply providing employee discounts. But retailers often cannot manage to get out of their own way. So, it occurs to me that the first step in any successful WOM effort should be reversing off-the-reservation purchase behavior among employees. Everything else flows from that.
Probably the best (and I guess first) word of mouth campaign on the Internet that I remember was for the movie “The Blair Witch Project.” Obviously that one was a huge success (look it up), turning a novice film maker’s four year project into a huge money maker.
The challenge you face is that many of the efforts to generate “buzz” can become so transparent that they have an opposite effect. When the word gets out that something is all hype, it can either generate the desired results or cause so much backlash that no one wants to get involved. I know many firms will walk the streets of Manhattan to introduce new products and even Kroger hired actors to introduce the shopping cart, but when people feel they have been “tricked” the reaction can be devastating, just ask the “Target Rounders.”
Word of mouth campaigns are effective and important for promoting products and services. In an ever more fragmented society, with people watching TV, visiting thousands of different websites, and forming ad hoc communities for everything from bird watching to ultimate fighting, it can be both economical and effective to “plant a seed” as opposed to trying to contact each consumer individually. Just be careful.
The best way to generate word of mouth recommendations is to exceed consumer expectations. Happy consumers tell their family and friends about the experience. Whether it is a brand or a retailer, the customer must come first. This must be the mantra and practice inside the company from the top down.
It boils down to quality and service. If the shopping experience was positive and the product worked, there is a greater chance of word of mouth referral. If either of those is missing, the buyer may not recall the product as being worthy of a rec. Customers highly value their own reputations when it comes to word of mouth. So the entire experience must be positive. Vendors should make more of a connection with floor staff by providing product in services and allowing feedback.
Retailers continue to look for that magic ‘pill’ to solve this issue. They spend and spend on consultants, advertising, programs and, worst of all, cards to try to drive loyalty. That’s what this is really all about–loyalty. Consumers own it, retailers don’t.
You gain it by the experience you provide, above all else. If retailers spent just one quarter of the amount that they blow on all these other things and focused that on the customer experience, then they might find the end to the continuous search for the ‘pill’ to solve their problem.
Having worked with many companies that depend strongly on referrals, I can tell you that the only way to effectively build a strong referral program is by implementing some kind of compensation. In many cases, this could be a thank you card, a coupon, or a gift.
However, what separates these kinds of businesses (dentists, real-estate agents, specialty services) from general retailers and manufacturers is the fact that they have direct access to all their clients in the form of lists. The ability to cross reference combined with a manageable influx of new business allows them to manage referrals.
So is there any real way that marketers representing big brands can effectively influence word-of-mouth advertising? I don’t believe so. The fact is, regardless of how good the product actually is, a customer’s personal experience with it will dictate what they choose to share with others.
I would suggest to any company that instead of trying to leverage positive word-of-mouth advertising, they should concentrate on doing everything in their power to avoid negative word-of-mouth advertising. And this can easily be done by simply providing a premium level of customer service. And even then, it can sometimes he a hit and miss situation. Welcome to dealing with the human race.
We’ve all said it a million times: Deliver a Wow! experience.
That means having well-trained, engaged employees, in adequate numbers, available to answer questions and acquainted with where things are today, in stores that are well-stocked with merchandise that customers not only have demonstrated demand for but can actually find on the selling floor, in displays that pull such merchandise together in groups that bear some logical association to how customers might use them–beach or barbecue items, for instance, or tax-time supplies, or spring cleaning.
It also means thinking of customers and front-line employees alike as people–thinking adults, even. We tend to use expressions like ‘human resources’ or even ‘valued assets’, but those miss the point, I think, because they stray too far from the human connection. Apparently it’s too slippery a cognitive slope to go from ‘asset’ to ‘monkey’, and when we do, the Wow! customer experience is forever out of reach.
Word-of-mouth has a first cousin: great publicity. What those two have in common: both are unpaid endorsements from trusted sources. Most retailers have little or no publicity budget. Some actively shun publicity. How many retailer web sites don’t mention who’s in charge of press relations? How many folks in charge of press relations don’t answer their voice mails or e-mails?