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:

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.
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

First Person Should Take Second Position

The language of marketing has shifted dramatically in recent years. A mass marketing mindset has given way to a focus on the customer. As this shift has occurred, the vocabulary of marketing has changed as well. Instead of “I,” “we,” and “me” setting the tone of marketing messages, the attention has shifted to the customer. Today, “you” and “your” are the pronouns of choice to connect customers with brands. Does this mean that marketers should never talk about themselves and their products? No, but what must happen is marketing messages should respond to the customer’s situation rather than always being “buy me now” pleas.

Get Over Yourself
Some people might think that devoting a blog post to emphasize a customer-first mindset is a waste of time because it is a given that marketing is about satisfying customers’ needs. Perhaps it would not surprise you that not everyone has gotten the memo. Recently, a colleague showed me a draft of copy for a web page that one of his B2B clients had developed. As I began reading the copy, I was taken aback by the old-school mindset that prevailed in the text. On a single page, the tone of the conversation went as follows:
“We” was used 14 times
“Our” was used 7 times
“Us” was used 1 time
“You” was used 3 times
“Your” was used 3 times

This self-congratulatory tribute to the company left little doubt as to who it saw as the star of the show: Its product. For every time customers were referenced, the company mentioned itself almost four times. Again, I’m not suggesting that companies should never talk about themselves in marketing messages. But, instead of focusing on the company and product, emphasize how customers benefit from the company and product. We can never lose sight of the fact that customers do not buy products; they buy benefits and solutions that products provide.

A New Order
It is time to shuffle the order of pronoun usage in marketing. “You” and “your” maybe second person pronouns according to your English teacher, but they have ascended to first person status in the marketing lexicon When we adopt this new order, the customer’s story takes center stage. What are their problems? Their desires? Their dreams? That is what they are really concerned about- not how great your company is because they have solutions that might be of interest to them.

Death,Taxes, and Broken Promises

A brand is not a single-dimension concept created by a business. It serves multiple roles- it creates identity through name and logo, it projects an image through brand associations formed about it, and it connects customers and others in a relationship with the brand owner. One other valuable role that a brand serves is to make promises. Some promises are explicit, like service guarantees and product performance claims. Other promises are implicit, expectations that we form about a brand. Some of these implicit promises are suggested to us through marketing while others are formed as a result of our interactions with the brand.

A Promise Problem
A great brand excels at delivering against explicit and implicit brand promises. Consistency in actions is influential in building brand reputation. But as the saying goes, promises are made to be broken, and we are often disappointed by the experience of a broken promise made by a business with which we do business. An Accenture study of U.S. consumers found that broken promises is an all too frequent phenomenon. Among the study’s findings:

70% said a company had made a promise to them (hey, it should be 100% based on the above description of brand as promise, but we will cut the respondents some slack)
40% said they have had the experience of a broken promise made by a business
90% said they would consider switching to another company because of a broken promise

Customers of telecommunication companies were especially familiar with broken promises as this industry was cited most frequently (22%) followed by retailers (11% of customers had experienced a broken promise made by a retailer). Not surprisingly, customer service failures were chief contributors to broken promises, with having to repeat issues multiple times to a company’s personnel (45%) lack of employee knowledge to resolve problem (33%), and failure to satisfactorily resolve a problem cited as actions (or inaction) that led to a broken promise.

Forgiving Customers

The Accenture study found hope for companies struggling to overcome broken promises experienced by customers: Many people will give a business a chance to resolve a service failure and minimize the damage of a broken promise, with 80% of survey respondents saying they would complain to the company before switching to another provider and 55% saying they would give a company two chances before giving up on it. These findings on customer flexibility is a welcome reprieve for a business. Like death and taxes, service failures that lead to broken promises are inevitable.

Even the most customer-focused organizations will have a breakdown in service delivery or some aspect of the customer experience that is inconsistent with brand promises. Thus, the goal is not to strive for zero broken promises. Instead, businesses must have a clear understanding of promises as perceived by their customers. When performance falls short of promises, the response to service failure can make the difference between reinforcing customer trust or irreparably damaging it.

Marketing Daily – “The Power of Keeping a Promise”

Can Kroger Clip Coupon Value without Harming Customer Relationships?

Photo by sdc2027/Flickr
(under Creative Commons License)

Perhaps this story should be filed under the category “All Good Things Must Come to an End.” Kroger appears to be phasing out the doubling of manufacturers’ coupons. The practice gave coupon users an incentive to shop Kroger as the retailer would match a manufacturer’s coupon value, usually up to coupons with 50-cent face value. This week, Kroger’s Central Division announced it would no longer double coupons in its 136 stores, located mostly in Indiana and Illinois. It joins the Houston and Cincinnati divisions in honoring manufacturers’ coupons at face value only. Kroger officials said the reason for the change was that fewer shoppers are using manufacturers’ coupons as they get more offers online.

Not a Popular Move
As you might expect, some Kroger customers are unhappy that their purchasing power has been blunted with coupons no longer being doubled. Social media reactions to the ending of doubling coupons indicate that some customers are sad, some are mad, and some believe Kroger is making a big mistake. Kroger’s counterpoint to complaints about the end of coupon doubling is that it affects only a small percentage of their customers (about 7%). And, in place of forgoing revenue via coupon doubling the company will lower prices on “thousands of everyday grocery items.” Thus, all customers stand to benefit from Kroger’s policy shift, not just the 7% who were enjoying benefits of coupon doubling… at least that is the Kroger company line.

Overcoming Resistance to Change
A key to overcoming customer skepticism will be transparency. Kroger must make shoppers aware not only of the new lower prices, but the items with prices lowered must be communicated. One of the complaints from some shoppers in the markets in which coupon doubling has ended already in favor of lowering everyday prices is that they cannot see the impact of the new program. Perhaps most of the items with lower prices are not items these shoppers buy, but regardless Kroger must proactively show that they have permanently lowered prices on many items.

What Will Be the New Different?
Now that Kroger has decided to phase out coupon doubling in a third region and customers adjust to the new reality of no coupon doubling, what will the company focus on to differentiate itself in an increasingly competitive grocery market? Walmart and Target are aiming to take customers away from traditional supermarkets with low prices and a one-stop shopping experience. Publix has captured a position of best-in-class customer service. Kroger’s point of difference? Well, it is big and getting bigger. Kroger announced this week it is buying the Harris Teeter chain. Unfortunately, being the biggest company in any category is not a very meaningful position to those who matter most: Customers. It’s your move, Kroger. Show us the new different- how will you be remarkable?

IndyStar.com- Kroger to Quit Double Coupons

Referral Programs: A Strategy for Customer Retention

Customer referral programs have been a staple of marketing plans in many organizations for years. The axiom about the marketing cost to acquire customers relative to retaining them is well known, even if it has some variation (10 times more, 8 times more, 5 times more- others?). The exact number is not as significant as the realization that targeting current customers is essential to marketing effectiveness. Thus, it is in marketers’ best interests to figure out how to nurture relationships that exist already.

Tapping Customer Connections
One strategy used in customer relationship management is to tap the social connections of customers by devising referral programs. The task of acquiring customers can be made easier by enlisting the help of current customers to recommend a business to their family, friends, or co-workers. Customers become a part of your sales team, sharing their experiences with their contacts. Although many customers voluntarily refer brands to their contacts, referral programs often sweeten the pot by offering incentives for referring someone who eventually becomes a customer (e.g., cash or free product). Finding new customers is challenging enough; why not enlist people already convinced of the value of your brand to advocate on your behalf?

The Surprising Payoff of Retention Programs
Customer acquisition is a significant motivation to implement referral programs, but they also can be an effective means of increasing customer retention. In a study published in the July 2013 issue of the Journal of Marketing, researchers Ina Garnefeld, Andreas Eggert, Sabrina Helm, and Stephen Tax examined the effects of customer referral programs on customer loyalty. Analyzing a data set from a global telecommunications company, they found that participation in a referral program has a pronounced effect on customer retention and loyalty. Defection rates among customers participating in a referral program dropped from 19% to 7% in one year. And, not only did referral program participants hang around as customers, but they spent more, too. Average monthly revenue from these customers grew by 11% compared to a control group.

Interestingly, customer tenure was negatively related to customer loyalty. Newer customers demonstrated a more positive relationship between referral program participation and attitudinal loyalty (i.e., liking and positive psychological attachment to the brand). An explanation for this finding is that \making referrals is a way for newer customers to align their attitudes (“I feel good about my cell phone provider”) and behaviors. Customers that have had a longer relationship with a firm may have already achieved internal consistency in their feelings and behaviors toward a brand.

Customer Referrals: A Dual Focus
Findings from the Garnefeld et al. study should prompt marketing managers to re-evaluate their use of customer referral programs. A tactic with a long history of being used for customer acquisition has a dual benefit of strengthening relationships with existing customers. An additional consideration in the research was reward size. Not surprisingly, a large reward (€50) had a positive effect on the interaction between program participation and attitudinal loyalty than a small reward (€5). In other words, offer sufficient value for customers to advocate on your behalf. The money invested will not only bring in new customers, but it could be instrumental in retaining current customers. Reducing customer defections is a key to improving profitability that must not be overlooked.

A Social Media Marketing English Lesson

I am a marketing professor, not an English professor (as one can determine from reading my posts). But, I feel compelled to weigh in on a practice that makes me cringe when I see it occur. Some marketers and individuals misunderstand their role in communities. Social media has empowered the voice of the people, transforming us from “targets” to participants. Unfortunately, some people are stuck in the old mass media model of broadcasting messages. In a world in which social networking sites have elevated second and third-person pronouns to star-of-the-show status, too many brands are still communicating in “I” and “me” terms. If you want to increase the likelihood that your “target market” will tune you out, just keep doing what your are doing.

Align Pronouns with Objectives
If you are not an English professor either, no worries. Let’s demystify how to avoid falling in the narcissistic trap of a first-person voice in social media. The voice that you use should be consistent with the objectives for using social media in the first place (you do have objectives, right?). For example, if you have an objective of growing a community around your brand, you do it by focusing on the community instead of you. Think about the person you talk to at a party (or maybe better described as listen to) that only talks about himself. He complains, he brags, he jokes, but he is in control of the conversation. And, you are pretty sure he does not really care about you at all or he may have actually tried to engage you in an actual conversation.

Don’t be that guy! The tone of your content should align with your community. Talk about the problems or challenges your community members face. Celebrate their joys and accomplishments. Ask questions to learn more about what is on their minds. Lift up employee success stories. It is not about you, it is about the community. One of my favorite quotes is from John Maxwell, who says “people don’t care about how much you know until they know how much you care.” Too many social media marketing messages try to show us how much the sender knows rather than conveying care and concern for the community. Social networking is a participation sport. As a marketer you can play, but you are far from the only player in the game.

Don’t Ditch First Person
You do not have to eliminate “I” and “me” from your vocabulary. The point to remember is that when participating in communities we step back from the center of attention to be part of the circle of community members. There are times that you want to assert yourself as a resource (i.e., how much you know); just be careful to avoid that practice being the primary use of social media. Some people might disagree, but social media can be used in pursuit of sales objectives. For example, Panda Express used Facebook to distribute coupons for a free serving of orange chicken, part of a promotion touting the chain’s extended summer hours.

This pronoun dilemma is particularly challenging for individuals looking to build a personal brand. Of course, you need to persuade your audience of your knowledge, capabilities, and value. However, there is a need to stake a balance between asserting brand credibility and fitting in among the community that interacts with your brand.

Your Customers, Their Brand

Well, it has happened again. A marketing lesson taught about who owns brands. This time, the pupil was a corporate behemoth, Microsoft. The company first made a splash last week at the E3 show with its upcoming Xbox One gaming console. The splash was followed by waves that developed after Microsoft announced stringent rules on selling and sharing games and regular connection to the Internet to check for updates as well as any new games added to a user’s system. Xbox fans were not impressed, and the decision to become more controlling over gamers’ access to content could not have come at a worse time. Sony is preparing to bring the PlayStation 4 to market this fall and will compete with Xbox One for next generation console dominance. Microsoft is at a decided price disadvantage, with planned pricing for Xbox One at $499 compared to $399 for the PS4. The combination of consumer angst and price differential does not bode well for Microsoft. A poll conducted on Amazon.com to gauge preference for Xbox One versus PS4 was running 18 to 1 in favor of Sony at one point.

Same Song, Different Brand
As I prepared to write this post, I could not help but feel I had written it before… and I have- more than once. In fact, less than a month ago I wrote about how Nutella had to reverse course and give its blessing to a user-created World Nutella Day event. Why does this subject keep coming up? Because brand marketers lose sight of who the real owners of their brands are. Of course, the business legally owns the rights to the tangible brand assets- name, logo, maybe even a slogan or package design (think contour bottle of a Coca-Cola). But, that is where the seller’s control stops. Brands are images in our minds, experiences in our daily lives, and relationships that add value. Brand as image, experience, and relationship is constructed by customers and communities of people who form a connection with a brand. We ascribe meaning and significance that brands hold; those feelings are not dictated to us by marketers (though they often try). Microsoft’s stringent digital management rights policies seemed odd because they came off as rules imposed by the seller rather than a model that benefits users in some way.

A Recoverable Gaffe?
Sony was quick to pounce on Microsoft’s user-unfriendly plans for the Xbox One. However, Sony did not have to say a word as gamers torched Microsoft on social media. Below is an example of the treatment Microsoft’s planned policies received from the gaming community:

No wonder PS4 enjoyed an 18 to 1 preference in the Amazon poll mentioned earlier. Microsoft had little choice but to rethink its DRM policies for Xbox One and make them more compatible with the experience gamers are accustomed to enjoying. But, it seems that Microsoft could have saved itself from being skewered online if it had been more customer-centric in the first place. The Xbox brand sits in the enviable position of market leader in video game consoles. Even a $100 price premium might be feasible given its brand equity and consumer trust of the brand. However, that trust was eroded quickly when Microsoft forgot its customers made the Xbox brand valuable and attempted to enact policies that favored only one side of the buyer-seller relationship. There is still time for Microsoft to recover from its missteps; hopefully the company will keep the customer front and center in its marketing strategy as it brings Xbox One to market.

Tapping into Passion from the Past

“The past is never dead. It’s not even past.”

– William Faulkner, Requiem for a Nun (1950)

This quote is very poignant to me. My father clipped it from a newspaper article and taped to his lamp. I never asked him why he had done so, but in my mind I knew the answer. It spoke to him about the memory of my older sister (who died at age 6, four years before I was born) and my mother (who passed away in 1980 after a brutal bout with brain cancer). I can visualize that clipping taped to his lamp vividly even though it has been almost 15 years since I last laid eyes on it.

I was reminded of this quote last week, albeit in a very different context. A family outing to take in the musical performance Video Games Live turned out to be more than a stellar performance by the Nashville Symphony Orchestra. The performance was a multimedia entertainment experience featuring music from video games. Video game fans from children to Baby Boomers were treated to an eclectic collection of music that was a gamer’s paradise! The evening reinforced the notion that the past is not even past.

Game not Over

The sold-out symphony hall was into the show. In a way, I was surprised by the excitement and energy that I observed among the crowd. My expectations were responses to the effect of “hey, I remember that game.” Instead, each number was greeted with a raucous reaction. It was obvious that people were doing more than walking down Memory Lane; the music connected them with their experiences of playing those games. It was not a nostalgic evening as that would suggest revisiting something from the past that had lost relevance or popularity.

Connect with Emotions

So what does my experience at Video Games Live have to do with marketing? The takeaway is that emotions connect people with brands and products. Facts, figures, and statistics make for compelling rational appeals, but they are not very powerful for building liking and preference (i.e., emotion-based states). For video games, the emotions developed can link players to memories of childhood interests, hanging out with college roommates. Today, the gaming experience has broadened to making connections with strangers while playing online. The point is that video games were an important part of the self-identity of many attendees at the concert.

Marketers should look for ways to go beyond selling what products can do for customers and emphasize telling what products have done to customers. This shift is about moving marketing efforts from being about information (what the product does) to transformation (what the product does for me). I enjoyed watching the reactions of people seated around us when the orchestra began playing another song. The joy, excitement, and love of the music and games for which they were the soundtracks was very evident.

Product features and their benefits evolve as innovation occurs, but the emotional associations people have with a product’s role in their lives is more permanent. In other words, “the past is never dead, it’s not even past.” Look to find and nurture the emotional connections people have with your product.

Where in the World Are Your Customers?

Every once in a while I find myself experiencing a “wow” moment. The scope of it is usually small, but I am amazed by something I see occurring in the world around me. I had one of those “wow” moments a few days ago. I opened my Facebook feed to see what was happening. As I read the first four posts it struck me that the topics and perspectives of the posters read like they were in four very different worlds. I don’t want to quote the posters, but the tone of their posts went like this:

Empathy for other people who were experiencing disappointment
Disdain for how some people mistreat others in their personal relationships
Sarcasm toward a situation that was perceived unfair and biased against one party
Unbridled joy and love for being able to spend time with someone special

These events sound like activity occurring in four very different places, but we know too well that it is from the same world but at different moments in people’s lives. We experience these emotions… just not all at the same time!

Where Are Your Customers?
As I reflected on this snapshot of my friends’ lives, I could not help but see parallels with buyer-seller relationships in marketing. Marketers gravitate toward lumping customers together in a target market based on shared characteristics (e.g., age, gender, geographic location). There are benefits to analyzing customers to uncover similarities. However, these surface level characteristics are not complete pictures of customers. In addition to state-of-being characteristics, we must consider customers’ state of mind- what are they feeling? What are they going through in their lives? Answers to these questions move us to group customers into segments by seeing them as individuals. As an educator, I find myself asking the state-of-mind questions about my students. Sure, they have similarities in terms of age, field of study, and geography, but each one has challenges, joys, and disappointments that often do not show up in their outward conduct. I know that I can serve them better if I understand what they are up against.

Aggregate and Differentiate
The takeaway of this post is not a call to abandon traditional target marketing tactics. Aggregation creates efficiency in communicating with and serving customers. Rather, complement aggregation with individualization by listening for cues about customers’ state of mind. The most effective means of doing this is through the sales force’s contact with customers and prospects. Similarly, service employees in a call center can gather such information through their interactions with customers. Social media is another channel for listening, both what people are saying about your company and products as well as what is on their mind in general.

Marketing is about meeting the needs of customers. We cannot lose sight of the fact that needs do not exist because of our personal characteristics like how much education we have or how much money we earn (aggregate characteristics); our needs arise from our unique life situations. The challenge for marketers is to be prepared to listen as customers reveal their state of mind.

Create Unexpected Moments

Everyone likes surprises, good ones that is. They are unexpected occurrences that can lift spirits and even change lives. A surprise does not have to be the latter to have impact. Sure, if today I won the $40 million Powerball jackpot that would be a surprise and would be life changing. But, surprises that we are more likely to encounter are small in scope yet can have a significant impact on us long term. Marketers should be on the lookout for opportunities to create unexpected moments for customers by what they say and do.

Consistency Breeds Certainty
In a world where we often script our words and actions meticulously to create consistent experiences, unexpected moments can be scary because they deviate from the unified message that we believe builds brands. Consistency is valued because:

It creates control – Nothing can go wrong if we have policies, procedures, and responses for virtually any situation that arises, can it?
It reduces uncertainty – Employees and customers have a better idea of what to expect when the service encounter follows a rather rigid, scripted sequence of steps and actions.
It reinforces a brand’s promise – A scripted service experience delivered consistently over time is simply execution against we come to expect from brands. For example, one of the most anticipated moments when dining at Chick-fil-A (besides eating delicious food) is to hear two words uttered by the server when handing my order to me after I thank her: “My pleasure.” It is part of the script, but I believe that the server and Chick-fil-A feel it is their pleasure to have me as a customer.

Consistency is a valued trait for a brand to possess, but it can have a negative connotation: Boring. If customer experiences are delivered with mechanical-like precision, is there a risk of not connecting with customers on an emotional level?

The Power of the Unexpected
Scripting customer experiences to build consistency and brand promise is not a bad thing, but can it be balanced by injecting unexpected moments in the process. The most poignant unexpected moment I have had as a consumer occurred 15 years ago, but it was so memorable that I am sharing it with you today as an example of the impact an unexpected moment can have. My family was having lunch at Wendy’s in my hometown of West Point, Mississippi. The service encounter began as you would expect, following the script of placing an order, paying, and waiting for food. What happened next was unexpected- As the counter employee handed my order to me she said “Thank you. See you tomorrow.” Her statement stopped me in my tracks! It was so far off-script that I did not know what to say. I giggled, thanked her, and went on my way. I was not going to be in town “tomorrow,” but if I had been I may have gone back to Wendy’s at her suggestion.

I felt a bit strange describing this incident as the most poignant unexpected moment I have experienced as a consumer. After all, the statement “see you tomorrow” hardly stacks up against unexpected moments that companies like Zappos and Nordstrom that are renowned for their service have been known to create for customers. The effect it has had on me is that it has permeated my work as a marketer and educator. How can I create unexpected moments for those I serve to enhance the value of their interactions with me?

The Unexpected Connects
The takeaway is not that you should chuck your scripted customer experiences. They play a role in satisfying customers and defining your brand. Instead, be open to the unexpected; do something that is beyond the norm that will impact customers. Two weeks ago, I took one of our cars to a local tire store to have a leaky tire repaired. When the work was finished, I pulled out my wallet to pay only to hear “no charge.” The tires were not bought there, but there is a great chance that the next set will! I left that business feeling like they cared about me, not just my money. The expected is just that- expected. Look to create unexpected moments to strengthen connections between customers and your brand.