Business Growth & Strategy

Why Digital Word-of-Mouth Marketing is Important for Business

How to build a Customers at a Glance document

If you could choose to get more sales leads through any one channel, what channel would you choose?

Most sales and marketing professionals, perhaps after some thought, will say “Word-of-Mouth”.  It’s easy to understand why:  word-of-mouth marketing is not a channel for which we incur direct expense, and it’s highly credible.  Who doesn’t prefer to hear and take the recommendation of a friend over the advertising of a vendor?

Achieving and sustaining a meaningful level of word-of-mouth communications is the holy grail of marketing.  If we are successful creating it, no other form of promotion is necessary.

How does word-of-mouth marketing rank in the pantheon of marketing strategies?

In the 21st century, it seems logical to expect that digital marketing methods are most effective, but it’s always good to look at the data before jumping to conclusions.

Demand Metric has researched the effectiveness of various marketing mediums.  In a recent survey, marketing professionals and their CEOs were asked to indicate which marketing mediums have been most effective.  The top three responses were:

  1. Email marketing
  2. Social media
  3. Word-of-Mouth

Email and social media fall neatly into the digital marketing category, but I submit that word-of-mouth does as well.  It does encompass the chance meeting at the grocery store where friends exchange product information and recommendations, or that chat during a round of golf about which movie to see.  Increasingly, these conversations are going online – social media and word-of -mouth communication are almost one and the same.  If you don’t have a social media plan, then you aren’t doing all you can to promote word-of-mouth marketing.

It’s worth stepping back and defining what we mean by word-of-mouth:  it is direct, customer-to-customer communication that is not influenced by an economic reward.

The key ingredient of this kind of communication is trust: recommendations, pro or con, are valued far more when they come from someone we trust.  We’re always going to like when brand loyalists gush about the products and companies they love to anyone who will listen.  We have to realize that the positive communications are just one side of the word-of-mouth coin.  What scares us are the all out assaults from a dissatisfied customer.  You don’t get just one or the other; it’s a package deal.

This fear has caused more than a few companies to stay away from social media – the fear that disgruntled customers will rant over company-curated social media channels.  Not having a corporate Facebook page is not a prevention strategy for negative feedback.    Disgruntled customers will rant anyway, they’ll just do it through someone else’s social media properties, including their own.  Companies are far better off maintaining a presence, actively monitoring and responding quickly.

I would do you no favor if I didn’t bust a myth about word-of-mouth marketing: while there are no direct costs to it, it isn’t free.  You can certainly generate some favorable buzz about your great products or service.

Your investment in people, training and infrastructure to create the buzz was probably substantial.  It’s important to understand this connection, because there are firms who claim not to engage in marketing, as measured by the zero dollar allocation for it in their budgets.  What they do instead is strive for excellence, hoping to translate product or service quality into favorable word-of-mouth.  Call it what you will – it’s a legitimate marketing strategy, but there’s a real cost to it.

The concept of word-of-mouth marketing is conceptually simple, but often complex in execution.  Most of the time the barrier to doing this well, is company culture.

When upper management empowers frontline staff to delight customers and handle complaint situations, the fruit is positive word-of-mouth communications.  Many of these communications will occur through social media, so it’s quite possible – and even recommended – to actively monitor social media to hear both the praise and criticisms.  The faster you respond to either, the more loyalty you will experience.

Generating more word-of-mouth starts with trust on which you build a service quality culture.  It extends to your complaint handling process, where every issue is an opportunity for recovery that delights a customer.

Favorable word-of-mouth communications thrive around companies with an empowerment culture, which takes training to build.  You can’t just sprinkle some magic empowerment dust on your staff and expect them to feel and act empowered.

When you have an empowered, customer-facing team, you’ll see evidence of it in social media.  The result is a fan base of customers that shout your praises online, providing you with a significant and sustainable competitive advantage.

Category: Business Growth & Strategy Customer Engagement Leadership Marketing


About the Author: Jerry Rackley

Jerry Rackley is Chief Analyst for Demand Metric, a professional community of 22,000+ marketing professionals and consultants. His 29 year career allows him to advise from a rich base of experience. Rackley also serves as an adjunct faculty …

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