Harness The Power of Word-of-Mouth Marketing

We all do it…. develop elaborate marketing plans that allocate thousands or millions of dollars to integrated promotional activities and forget about the one thing that is FREE and the biggest factor that influences product purchases – word of mouth marketing.

I’ll explain how marketers can use it to influence consumer behaviour to increase your competitive advantage.  These insights have been extracted from ‘A new way to measure word-of-mouth marketing’ by Bughin, Doogan and Vetvik, (2010). 

According to research WOM is the primary factor behind 20 to 50 percent of all purchase decisions. Research also shows ‘influencers’ typically generate three times more WOM impact on recipients purchasing decision; with around 1% of ‘influencers’ using digital avenues, the most notably being bloggers.

The below chart shows how WOM influences consumers at any stage of their decision journey. Compounding this is the digital revolution, which has taken WOM conversation to a new level of power.

To understand how you can use word of mouth to influence consumers you have to understand the primary drivers.

Driver 1 - volume of recommendations

The volume of word of mouth recommendations seems a relatively obvious driver of consumer behaviour - the more recommendations the better for your brand or product. But, volume really only works when the right person is sending the word of mouth message.

Driver 2 – who is making the recommendation (who)

Who the sender of the WOM message plays a big part in influencing a WOM receiver’s purchase decision.  The greater the WOM receiver trusts or believes the WOM influencer has competence in the area they are talking about, the more powerful the WOM message is on influencing their purchase decision.  

Driver 3 – the message content (what)

What the influencer says is a primary driver of the impact of word of mouth.  Research shows that the content of the message must address important product or service features if it is to influence consumer decision. Whilst advertising is often built around an emotional positioning, for WOM to have an impact the messages must address core functional needs.

Driver 4 – the network where they are talking (where)

Messages that are circulated within trusted networks have less reach but greater impact than those circulated through a dispersed community. This is why ‘old-fashioned’ kitchen table recommendations or online communities remain so important.

Harness word-of-mouth to beat your competition.

With very few companies actively managing word of mouth marketing, developing a WOM plan has the potential to deliver a sustainable and significant competitive advantage.

Here is a guide to help your business give you a competitive advantage using WOM.

Step 1 – understand which drivers (who, what or where) of word of mouth are most important to your product category. For example for health insurance category ‘who’ is most important and the skin care category it is the ‘what’. 

Step 2 - Once you understand what type of driver is the most important then you can tailor positive word of mouth in these three ways.

Experiential – is the most common and powerful form of word of mouth – it’s the experience somebody has (either positive or negative) that generates a story. Harnessing experiential word of mouth is fundamentally facilitating opportunities where people can share their positive experiences.  Things you can do to increase experiential word of mouth.

• build a buzz around a product prior to it launching
• engage ‘influences’ (that have trust and competence within your category) to blog about your product
• consistently refresh the functional product features and relaunch them using online chat forums and blogs.

To create positive word of mouth that generates a buzz the customer experience must exceed customer’s expectations on the dimensions that matter most to them – so they then feel inclined to talk about it.  

“To turn customers into an effective marketing vehicle, companies need to out perform on product and service attributes that have intrinsic word of mouth potential,” say Bughin et al.

Consequential – is the word of mouth generated from the company generated marketing activities.  This requires marketing to monitor the effects of marketing activities and the word of mouth it generates. Research shows that marketing-induced consumer-to-consumer word of mouth generates more than twice the sales of paid advertising. For low innovation categories – adopting ‘highly creative tactics’ greatly facilitates word of mouth.

This chair by Nike is a great example of developing a highly creative tactic to get people talking about their brand.

Intentional – is marketing activities driven from celebrity endorsements or key influencers who become brand or product advocates. Red Bull is a company that deploys this activity well. This below video of their sponsorship of the Wake Open Ambassador Day is a great example.  They identify key influential’s amongst different target segments and then ensures that celebrities and other opinion makers see the right messages among consumers, often through their sponsored events.

Bughin J., Doogan J., Vetvik O., (2010), ‘A new way to measure word-of-mouth marketing’, McKinsey Quarterly April 2010