Word-of-Mouth Builds Trust… Still

Marketers have more tools at their disposal than ever before to influence and persuade people. But perhaps the oldest form of persuasion still is prominent today: word-of-mouth communication.Messages spread from person to person have a level of trust and personalization that is virtually impossible to replicate using paid mass media communication. According to a recent Nielsen study, word-of-mouth messages from trusted friends and family members rose above all other message channels in terms of trust.

The WOM Advantage
Among the findings concerning trust with different communication channels were:

  • 84% of respondents said they trusted WOM messages from family or friends
  • 69% trust content marketing messages
  • 68% trust user reviews and recommendations
  • 62% trust TV advertising
  • 60% trust magazine advertising
  • 56% trust e-mail messages
Results of the Nielsen study send a clear message on two fronts: 1) the death of traditional media advertising has bee greatly exaggerated and 2) word-of-mouth communication is as effective as ever. The toolkit analogy for marketing communication strategy is very relevant today. A wide mix of communication channels are needed to reach customers and prospects- no one channel is potent enough to build and nurture customer relationships.
WOM Works But…
The power of word-of-mouth communication is undeniable. The challenge for marketers is how to harness the power of WOM to take advantage of the high level of trust it enjoys. Here are two simple ways to let your customers be marketers on your behalf- one is old, one is new:
  1. Reward referral behavior – Do you encourage referrals, I mean really encourage referrals by giving customers incentives to tell others about their experiences with your business? Don’t just give referrals lip service; reward customers for bringing new business to you. The ROI will likely eclipse any advertising campaign that you could run.
  2. Encourage social sharing – Make it easy for people to advocate for you via social media. Sadly, many of the efforts in this area are quite lame. “Please like us on Facebook” has all the appeal of a trip to the dentist. Facilitate sharing in social media as well as e-mail. Your fans can help build your e-mail list by sharing their permission-based messages with people in their networks. In turn, they might come to you and become a customer. Create excitement about social sharing by campaigns or even contests that call on your fans to spread the word on your behalf.
You know the old saying “the more things change, the more they stay the same.” That adage holds true in marketing. New media channels give us more ways to connect with audiences, but the gold standard of person-to-person influence remains as one of the most powerful ways to build customer relationships.

Marketing Daily – Nielsen: Consumers Trust WOM Over Other Messaging

Word-of-Mouth Marketing: What’s in it for me?

The credibility and authenticity of word-of-mouth communications (WOM) is undeniable. When people tell friends and others about their experiences with a company, product, or service, recipients of the messages know that it is not a sales tactic; it is a first-hand account of one’s interaction with a business. Best of all, WOM is viewed as “free advertising.” The messages are not only coming from credible sources, but they are delivered at no charge! Channels for WOM are plentiful today. Email, Facebook, and Twitter are like office water cooler talk on steroids. Messages can spread quickly and extensively.

Note in the previous sentence the use of “can be” as fewer people are engaging in WOM today compared to just two years ago. A study by Colloquy found that 58% of people surveyed have conversations often with others about products and services they have used, a drop from 73% in 2008. An even more troubling statistic for marketers is that the percentage of people who have recommended a product or service to others has declined from 75% in 2008 to 57% today. It seems that consumers are more reluctant today to share their consumption experiences with other people at a time when engaging in WOM is easier than ever before.

Have consumers suddenly become bashful about sharing information with other people on products and services they use? While there has been some evidence of less conspicuous consumption (which includes talking about brands purchased) following the onset of the economic recession in 2008, that trend was not so widespread that it would create a downward shift in WOM communications. The ease of engaging in WOM online may also be contributing to the caution people are exercising in making recommendations to others. In some cases, people may not want others to know every brand that is in their cabinets and cupboard and thus are reluctant to engage in WOM.

In other situations, WOM may not occur because of a lack of developing brand advocates. People may need to be encouraged to tell others about brands. Merely having a link to a Facebook fan page or Twitter feed is not powerful enough to enlist people to spread the word. Encourage customers to engage in online WOM and reward them for their advocacy. Channels for WOM have evolved, but human nature has not. The age-old question “what’s in it for me?” is being asked still. Coupons, discounts, prizes, or other incentives can be used to promote WOM among a brand’s customer base.

Marketing Daily – “People Close-Lipped on Companies, Products”

Your Customers, Your Sales Reps

Wouldn’t it be nice to generate additional revenues without paying salespeople a dime? Simple, recruit customers to sell for you. Clothing retailer Men’s Wearhouse has done just that as it prepares for the busy prom season. The company has created a Prom Reps program in which prom customers are transformed into word-of-mouth marketers. Their job is to promote Men’s Wearhouse as the place to rent tuxes for prom. The payoff? If a rep is responsible for 10 tux rentals, his tux is free. Men’s Wearhouse even provides reps the capability to track their performance online.

This idea is outstanding! Word-of-mouth can be a powerful channel for reaching teenage boys, particularly for a purchase that many of them may have never made before. In the absence of prior experience, prospective renters are likely to place heavy weight on recommendations for tux rental outlets from people whom they know. Can you think of ways to enlist your customers to help promote your company? If you explore this approach, be prepared to answer the question that your customers would almost certainly ask: What’s in it for me? In the case of Men’s Wearhouse, the prom reps are typically going to be high school students who may be thrilled if they are spared the outlay for tux rental.

If one of my sons was attending prom this year, I would strongly encourage him to go to work for Men’s Wearhouse… at least for prom season!

DMNews – Men’s Wearhouse launches tuxedo campaign for prom season –

Personal Recommendation Still the Power Source of Influence

The growth of user generated media via blogs, podcasts, and user forums has led to a rush by marketers to gain influence among active content creators. Bloggers and other social media creators have a potentially wide reach, so it is fitting that efforts are made to get buzz generated through this medium about brands and companies. It is like traditional word-of-mouth communication on steroids.

Now, we learn that the influence of social media tools on buyer behavior is not as strong as assumed. A study by Mintel found that only 5% of consumers surveyed indicated they had made a purchase based on a recommendation from a blogger or chat room. Personal sources of influence continue to dominate buying behavior as friend/relative (34%) or spouse/partner (25%) were cited many times more than social media sources.

Before marketers abandon their social media strategies, let’s consider the study’s findings more carefully. Granted, people within our own networks carry more sway than impersonal sources (that seems comforting to know). But, social media tools enable greater access to our networks, allowing us to gather information about brands or companies that we might not have otherwise. For example, a quick glance at my Facebook friends list reveals that I have 48 friends from my hometown. Only two of those people live in the same geographic area as me, and were it not for Facebook I would not have known they were nearby. The point is I have access to personal sources of information, and the online channel expands access to my network significantly.

Brand recommendations from bloggers or other sources with whom we have no personal connection (i.e., friends), may carry influence similar to a celebrity endorsement in an advertisement. Some people will take notice that may not otherwise, some people will make a buying decision based on the recommendation, and many others will take it for what it is: an attempt to sell them something. That level of skepticism does not exist when recommendations are shared within a personal network. Nothing has changed- personal networks still hold the power. Social networks provide a means to harness the power.

Marketing Daily – “People Prefer Offline Recommendations, Study Finds”

New FTC Regulations for Word-of-Mouth Marketing?

Word-of-mouth marketing has been elevated from a side benefit of owning a great brand to an important piece in many firms’ marketing strategies. The explosion of blogging and social media makes it easier than ever for person-to-person communications about anything and everything, including consumption experiences. As a result, proactive companies have sought out bloggers and enlisted “buzz agents” to try and review products.

The Federal Trade Commission is considering guidelines to regulate viral and word-of-mouth marketing. Current rules pertaining to these practices were developed long before word-of-mouth as practiced today came into existence. The main piece of the FTC’s proposed guidelines is to create transparency in product reviews and other communications. Someone who was compensated by a company, whether it be in cash or free product, would have to disclose his or her relationship with that company.

Some practitioners cringe at the thought of government regulation, but the FTC’s intent in this case appears to be bringing regulation of social media communications in line with media advertising. If someone is paid to make claims about a product in a TV commercial, that relationship has to be disclosed. It should be no different for a blogger. The aim is transparency. Why would a company want to have its relationships with influencers called into question?

The proposed FTC guidelines are aimed at the unethical players; companies that value how customers perceive them are likely to operate above board when it comes to disclosing relationships in word-of-mouth marketing channels.
Link: Ad Age – “Bloggers Be Warned: FTC May Monitor What You Say”