Fostering the Crafty Art of Word-of-Mouth Marketing

Dr B K Mukhopadhyay

(The author is a Professor of Management and Economics, formerly at IIBM (RBI) Guwahati. He can be contacted at m.bibhas@gmail.com)

Dr. Boidurjo Rick Mukhopadhyay

(The author, international award-winning development and management economist, formerly a Gold Medalist in Economics at Gauhati University)

The digital transformation involved putting more resources and focus on consumer targets and insights. Marketing transformation involved shifting from the broader goal of satisfying customers to fundamentally delighting them by using improved data analysis to better understand (current and future) the needs and wants of customers. Instead of getting most of their insights from retailers as they did earlier, companies have now shifted to listening to customers.

Research shows that 92% of consumers will believe a word from a friend or trusted individual over advertising, 20%-50% of purchases are the result of a word-of-mouth recommendation, and 81% of consumers are influenced by their friends' social media posts. Only about 10% of consumers trust brands. Not that hard to imagine, 70% of consumers read online customer reviews when considering a brand.

A) Understanding word-of-mouth

It all comes down to trust. Word-of-mouth recommendations and virtual marketing have taken over traditional billboards and monotonic frames of adverts. Both above-the-line and below-the-line marketing have evolved simultaneously. "Click here for sellers' ratings" or "see what other customers have said about this product" or "rate your product/service experience" are frequently used activities for online shoppers and smartphone window shoppers. People, social animals, tend to trust and judge what others have to say, which means when they hear about something from a friend or a previous consumer, they're more likely to buy.

Word-of-mouth marketing (or simply, WOMM) is a process of influencing and encouraging organic discussions about a brand, organization, resource, or event. It can make or break a business that is further amplified by the toxic use of social media. If word-of-mouth marketing is done right, the business may not need to keep an exorbitant Ad budget; customers will share their stories (good or otherwise) across their social media and connections if they are happy with the customer service, quality of products or services, quick and hassle-free delivery. Customers spreading the word about a business, particularly if good, is better than the stubborn, lifeless and overpaid billboard. This works heavily in E-Tails and online streaming platforms (e.g., NetFlix, Hulu, Prime, Disney, etc., when people share their favourite shows with friends and others in their conversations, and in the process 'recommend' them, which indirectly reduces the marketing budget for the companies.

In effect, it instils (a) brand loyalty, where businesses quickly realise that loyal customers lead to positive word of mouth about their product. To make the most of it, they focus more on building customer loyalty, (b) cost-effectiveness, since word-of-mouth marketing is an inexpensive method of promoting products and services compared to paying for TV or online marketing campaigns, instead, the companies can spend the time and resources on building quality products and extended range of options available to customers; and finally, (c) to build an army of brand advocates, for example, you might struggle to decide whether to go with Prime or Netflix or Hulu, but WOM might help you realise that your preferred genre offers a lot more in one of the choices from the three, and so you go with that one.

(B) Engage. Equip. Empower

Unlike the cliché Marketing 4Ps, the power of marketing today instead lies in 3E - Engage, Equip, and Empower. Firstly, companies learning to directly engage with customers (current and prospective) by asking them to leave a #yesahashtag or tweet or post on Facebook to share a link with others, are some of the many ways how to target customers could be engaged. It is hard to come up with an advertisement of a company that is not on the popular social media platforms, in a rather toxic way.

Secondly, equipping customers with a voice or a platform to share what they think and how they feel about a product or service. From travel sites, massage and flotation centres to restaurants, leaving feedback online on a company's site – make customers the King. Previous customer reviews could surely guide potential ones to know if there is a likelihood to be treated like a King (of good or bad times!) Most companies, certainly not all, make use of this feedback to develop their products and services along with using the data to provide 360-degree employee feedback when necessary.

Finally, empowering customers in different ways to express and share their opinion and immediate reaction. Companies like Starbucks, for example, run in-store promotions on new beverages and ask visiting customers to try it for half-price (or for free, even) and leave feedback that would determine whether the product would ultimately go to the menu next week. Similarly, there is power in customer ratings while ordering online food delivery or ride-hailing services.

(C) How the WOM science works?

The global marketing landscape is constantly shifting and evolving – in response to consumer demand, rapid technological innovation and a deluge of content and platforms. Capturing the attention of the customer is one thing, but to what extent the initial novelty lasts is the immediate after. For example, you are waiting for your favourite song to start playing on YouTube, but there is at least a 29 seconds compulsory advert that you must watch before your song, chances are you'll close the tab. If it's however skippable in 5 secs, you may wait until that point where you can 'skip ad'. Several research studies suggest that these are not the best marketing investments by companies.

Microsoft has found that, since 2000, the average person's attention span has dropped from 12 seconds to eight seconds. Research supports the so-called 'goldfish effect' of social media – 33 per cent of viewers stop watching a video after 30 seconds, 45 per cent by one minute and 60 per cent by two minutes. Another distraction – 85 per cent of Facebook videos are watched without sound, suggesting consumers prefer muted ads.

Consumer products giant P&G – one of the world's largest advertisers – increasingly uses 5-6 second formats to quickly convey the brand and the benefit, while Heineken has recognised the need for videos to have 'thumb-stopping power' by telling their stories within 6 secs on Facebook.

Word-of-mouth is the organic sharing of information or opinions about a product, company, or brand, from one consumer to the other. For the hospitality sector, getting customers to write reviews is one powerful way to facilitate the spread of word-of-mouth marketing. With various E-Tail (i.e., electronic retail) platforms in India and the giant Amazon, they build customer trust by showing them that a verified customer offers their endorsement of your brand. Therefore, looking ahead, leveraging consumer-generated media for a company or brand's marketing significantly boosts word-of-mouth marketing.

IMC [Integrated Marketing Communication] keeps track of the everyday changes. Posting a video, for example, no doubt promotes brand awareness, increases consumer understanding as well as enhances conversion rates. Though a picture is worth a thousand words, yet, according to Forrester, one minute of video is worth 1.8 million words. What's so good about the video is that it can convey the equivalent of 3,600 pages of text in 60 seconds? Of course: businesses should use whatever resources are at their disposal to contribute to society constructively. This has to be kept in mind in as much as, according to a recent corporate social responsibility (CSR) survey, 96 per cent of people believe that it is important for companies to have good social and environmental policies.

Cut to credits - bad word of mouth marketing spreads like wildfire, but if your business has a good reputation then you may not need to advertise repeatedly except informing customers about your new initiatives from time to time. Think when was the last time you saw an advert from Rolls Royce or IBM. Equally important is the use of easy-to-relate slogans, 'HSBC. The World's Local Bank', slogans such as these impresses the importance of speaking 'Glocal' (global firms with consideration for local markets) language. On the other hand, a company like Nike never really talks about their product in their Ads, instead, they focus entirely on athletes and the achievements of great sportsmen. Language, Color (Coca-Colastill dominates with its logo), Values (Tom Shoes, 'one of one' offering one free pair of shoes to a poor child in a developing country when you pay for your pair) and Leadership (socially responsible and ethical) are all determinants to successful brand building and establishing a strong image that customers can trust.