Word of mouth (WOM) has always influenced consumer decision-making. Receiving the personal advice, recommendations, and suggestions of friends, family, and acquaintances before making a purchase is both reassuring and validating.
Need a new camera? Ask the brother-in-law that’s a shutter bug. A new car? Dad always has sound advice about automobiles. Great restaurant? A foodie friend is the go-to expert.
Emerging media has expanded word of mouth influence to include the objective and subjective opinions of ANYONE choosing to share their experiences electronically – hence the term, eWOM. Reading multiple five-star reviews, contributed by strangers across the globe, is now as likely to influence that camera purchase as a brother-in-law’s recommendation. If poor ratings in review sites such as Yelp or Urbanspoon contradict a friend’s restaurant suggestion, reservations will likely be made elsewhere.
Social networking has completely transformed how consumers interact with a brand. What people have to say about a brand is now as important as whatever the brand has to say about itself. Consumers, en masse, are eager to share the role of Chief Marketing Officer. Of course, this challenges corporate traditions. The comfort zone of a top-down, tightly controlled commercial communication model is now outdated; businesses need to adopt open, equal, interactive dialogues within online brand communities.
A new research study quantifies the influence of word of mouth marketing (both WOM and eWOM combined):
- 10 – 54% of the marketing impact for a brand is delivered through word of mouth, suggesting this is a key element of the consumer decision-making journey.
- Word of mouth can drive nearly as much organic search as traditional marketing activities on their own, when marketing activities are also present.
- A 10% increase in word of mouth resulted in sales lift of 0.2% – 1.5%.
Both WOM and eWOM, play a significant role in the consumer decision journey, acting as an amplifier of all marketing activities. Marketers need to account for the pathways through which word of mouth plays an intermediary step in the journey between marketing exposure and financial results. Analyzing the overall impact on marketing will help determine optimal budget allocations.
The speed of diffusion. reach, persistence and interactivity of eWOM is both intimidating and challenging to manage operationally. Companies have less control over WOM and eWOM strategies, as the way communication spreads among consumers is more random than in advertising. Authentic, responsive and transparent communication with consumers is vital. Creating a strong brand community through regular communications inspires loyalty and motivates satisfied customers to defend a brand against negative eWOM. The tone and language used in communications must be personal and relatable emulating a real online conversation. Responding to unsatisfied customers demonstrates responsiveness and limits the potential for further dissemination of negative reviews as a form of consumer revenge.
There is no room for smoke and mirrors in today’s socially net-worked world. Corporations can connect directly, in near real-time, with customers whether locally, nationally or internationally, building and enhancing customer relationships.
In 2013 and beyond, word-of-mouth marketing is not just “nice to have,” but is a game-changing element of today’s marketing mix.