October 10, 2007
Is the customer really in charge?
So in the past couple of years there has been a lot of talk about the democratization of media, citizen marketing, the amateur hour, and other themes & memes pointing to the fact that the customer is now in charge. He owns the message; she decides what happens to the brand, etc.
Fact is – the vendors are no longer is charge. Nobody would argue against that point anymore.
But does that automatically equate with saying that the customer is now in charge?
Academic research about democratic sites like DIGG shows that a majority of what makes it to the front page comes from a very small number of people – in fact, researchers talk about the “tyranny of the minority.” Other research, such as the one done by Jackie Huba and Ben McConnell and reported in their Citizen Marketers book, finds that the percentage of people who actually create and broadcast content is 1%.
So is the customer really in charge? Or is it a small group of non-democratically elected loudmouths who now controls the message?
This is just one of the topics that we will talk about this afternoon during the interview with Jackie Huba.
October 1, 2007
Comparing Wal-Mart and Target on Facebook
Target has over 7,000 members and mostly positive comments in a vibrant set of discussions. The Wal-Mart group on the other hand has a little over 1,200 members, no discussions are allowed, and the wall postings are mostly negative.
What is the difference do you think, except for the fact that a large portion of the population believes that one of the two companies is truly evil?
The Wal-Mart home page looks like another interactive ad.. The Target home page is more inviting and enlists the help of users to co-create the experience. Any other differences that you can think of that would result in such a difference in membership and tone of conversation?
We can take the discussion to Facebook - in fact I started a thread on the subject in the Marketing 2.0 group, where we now have more members than the Wal-Mart Facebook group.
September 25, 2007
The value of word-of-mouth
The latest issue of the Harvard Business Review has an article on how to calculate the value of customer referrals (article not online yet).
They conducted two studies - one in telecom and one in financial services. Some interesting findings from those calculations include:
- People refer way less than they say they do
- The customer referral value is higher than the customer life-cycle value
- The people with the highest customer life-cycle value are not the ones with the highest referral value
The importance of these findings are twofold. First you need to segment your customers along the customer life-cycle value axis, but also along the customer referral value axis. That will enable you to target your incentives to groups to either increase their usage or increase their referrals, or both. Second, this research shows that customers will low customer life-cycle value can in fact have a higher value to your company through referral value than those with high customer life-cycle value.
May 14, 2007
Beyond Buzz - the next generation of word-of-mouth marketing
One book which definitely should interest any marketing practitioner is a book by my good friend Lois Kelly, who also blogs on the Foghound blog.
The book - called Beyond Buzz, The Next Generation of Word-of-Mouth Marketing - is a great "how to" book with a ton of actionable ideas. The author does a great job clarifying the distinction between making meaning and making buzz. She also teaches you how to uncover interesting things about your company or product and turn them into "point of views" that people will want to talk to you about, she tells you how to organize customer listening tours, and much more. The book also provides some great frameworks and questionnaires to help you turn word-of-mouth strategies into actionable plans that will work, and not fizzle out or backfire, as many of them do.
Definitely a great book to have on your office bookshelf.
January 30, 2007
More research on viral marketing - and supporting the limited role of "influentials"
Right on the heels of learning that the influentials may in fact not be all that influential in causing trends and other social "epidemics", here comes more research (pdf) confirming the limited role of the influentials and heeding marketers that some viral marketing techniques could easily backfire on them.
Jure Leskoved from Carnegie Mellon, Lada Adamic from the University of Michigan and Bernardo Huberman from HP Labs collaborated on this research project where they looked at the dynamics of viral marketing.
Here are some of their findings:
- We find that most recommendation chains do not grow very large, often terminating with the initial purchase of a product.
- Marketers should take heed that providing excessive incentives for customers to recommend
- product purchases are not far from usual 80-20 rule (the top twenty percent of the products account for 20 percent of the sales), with the top 20% of the products contributing to about half the sales
- individuals' likelihood of purchasing a product initially increases as they receive additional recommendations for it, but a saturation point is quickly reached. Interestingly, as more recommendations are sent between the same two individuals, the likelihood that they will be heeded decreases
- Marketers should take heed that providing excessive incentives for customers to recommend products could backfire by weakening the credibility of the very same links they are trying to take advantage of.
- ...we find that the probability of purchasing a product increases with the number of recommendations received, but quickly saturates to a constant and relatively low probability. This means individuals are often impervious to the recommendations of their friends, and resist buying items that they do not want.
- we find that there are limits to how influential high degree nodes are in the recommendation network. As a person sends out more and more recommendations past a certain number for a product, the success per recommendation declines. This would seem to indicate that individuals have influence over a few of their friends, but not everybody they know.
- Finally, we presented a model which shows that smaller and more tightly knit groups tend to be more conducive to viral marketing.
This paper also exposes the potential long term negative effects of commercializing relationships on the value of personal recommendations and word of mouth in general - a practice used aggressively by some well known marketers.
January 24, 2007
Online word of mouth is much more powerful (or dangerous) than offline word of mouth
The latest issue of Revenue magazine has an article on the impact of online research on off-line purchases. Quoting from comScore Networks research they found that in the "toy and hobby" category, 42% of people who did online research bought a product directly related to that research - except that 88% of those people made their purchase off-line and only 12% made their purchase online. In the Consumer electronics space, 18% bought based on online research - but 93% of those bought off-line.
Quoting from Opinion Research, they found that "77% of people who do online research before buying a product purchase something when they went to the store the last time they did online research," with "over half (52%) purchased just the item they did research on, while another 18% purchased that item and additional items."
Another Research paper, this one from Perfomics is quoted as saying that "the majority of consumers conduct research online during his year's holiday season and 43% plan to make both online and offline purchases based on that research." It goes further to say that "the majority of consumers become more brand- sensitive after conducting online research."
That pretty much confirms that unlike what some analyst firms pretend, online word of mouth has the potential of being much more effective or dangerous than off-line word of mouth.
Take the personal example of Mercedes Benz which was well documented on this site (Mercedes - a case study on how to squander a great brand, Mercedes says that cars fail in the first 50K miles - after that it's the fault driver, Mercedes Benz does not care about its customers, and Mercedes Benz - poor customer service ROI). For a long while, those rants came out on the top of a variety of Google searches. So if half of the potential buyers do online research before buying, a disproportionate number of them will run into my online rants and at least pause, if not decide against buying this product. The online negative word of mouth reaches a much larger audience than any off-line word of mouth recommendation would have, plus it spans over a much longer period of time, and it also attracts additional negative word of mouth, which only makes the case stronger!
As an example, witness some of the comment excerpts that are still being made on those stories on a regular basis:
- "Just read your blog, Just decided not to purchase a 60K Mercedes I was looking to buy." (01/04/07)
- "I drive a C180 classic kompressor 52 plate with 35K on the clock. Since day of purchase in Feb 06 the colland warning light comes on every few days. The feeder hose has been replaced, the cap and the head gaskett and still the coolant light comes on every few days. My local MB dealership are at a loss what else to do." (11/21/06)
- "I for one will never buy a Mercedes Car again and will continue to discourage others from doing so" (11/07/06)
- "I PURCHASED MERCEDES ML 350, 2006 IN APRIL 2006. FROM DRIVER'S SEAT, THE LEFT SIDE VIEW MIRROR IS ONLY PARTIALLY VISIBLE! I SHOWED THIS TO HBL DEALERSHIP IN TYSONS CORNER VIRGINIA, AND THEY AGREED TO THIS DESIGN ISSUE, WHIC CANNOT BE FIXED, EVEN IF IT IS A SAFETY HAZARD...THE BEST REMEDY IS TO SHUT OFF THE AC DUCTS ON BOTH DRIVER AND PASSGENGER SIDE! THIS IS THE RESPONSE I GOT, FOR PAYING HIGH PRICE FOR THIS EXPENSIVE CAR " (11/03/06)
- "I like most people who feel badly let down by MB will never buy another car from them, I thought I was buying quality and reliabilty." (07/27/06)
- "Like some other people, I decided I shall never buy or even hire a Mercedes car again." (06/22/06)
- "Funny that I stumbled on your site googling MZB's home office customer service...I should have learned my lesson the first time. I will never lease/own a Mercedes again. They do not stand behind their quality, or service. I hope people read this and take notes." (05/26/06)
- "I've run an independent MB repair shop for over 20 years & believed in the quality of their cars...until now. I'm loosing customers left & right. I can't, in good concious, recommend a new merecedes to my loyal customers, some have been with me since I started & wish to keep me as their mechanic.I am seriously thinking of switching to Lexus,since Mercedes stated this is the car it will try to get as good as by 2009." (04/22/06)
There is no way that these stories could have affected that many people over such a long period of time in the off-line world.
December 5, 2006
Corante is sponsoring the WOMMA Summit this coming week
If you have anything to do with Word of Mouth Marketing, you should attend the WOMMA Summit next week!
As they say about the conference:
Have you heard of word of mouth? If you haven't yet, you will. It's the new way to market, and more and more companies are getting on board every day. Just ask the Inc. 500 (82% of their CEOs use word of mouth) and their customers (2/3 of consumer purchases are influenced by word of mouth).
Word of mouth is already happening TO you. Do you know how to make it work FOR you? Learn at the Word of Mouth Marketing Association's Word of Mouth Marketing Summit, Dec. 12-13 in Washington, D.C. It's the only conference that will give you a hands-on, advanced understanding of how to build truly deep, two-way relationships with your customers.
The Summit features:
- Lessons from 70+ experts
- Big questions, important issues, and straight answers
- Practical "how-to" instructions
- Everyone you need to know
Register today at www.womma.org/summit2.
They have a great line-up of speakers as well as many interesting people in attendance - making for great networking with!
September 7, 2006
What happens when consumers really do not like you?
This is apparently what is happening to Hummer H2 - with a few people setting up the web site FUH2.com and hundreds of others sending in their own FUH2 pictures - which led to the creation of a poster as well as the video below (via John Winsor).
Social marketing vs. social marketing
Nedra Weinreich from Spare Change and others, who had been using "social marketing" for decades to refer to the use of marketing to address health and social issues, took issue with the new usage of the terminology - especially when Forrester launched a "Social Marketing Bootcamp" and Jupiter launched a "Social Marketing" practice. Forrester backed down and renamed their bootcamp "Social Computing Boot Camp," while Jupiter refused to rename it's practice - fueling the ongoing feud over the use of the terminology.
While it is unclear to me how good a term "social marketing" is to refer to the marketing of social issues - I disliked the new usage of the terminology from the get go.
Using "social marketing" as a catch-all category for the (not-so-new) marketing techniques which include viral marketing, word-of-mouth marketing, community marketing, consumer-generated-content-based marketing, and other social media-based marketing "techniques," not only "hypes up" the value of those methods unnecessarily - it also engenders the danger for misuse, abuse and the ultimate destruction of those marketing techniques for everyone.
Many clueless and panicky marketers, who have witnessed the decline of marketing programs like email marketing and other interrupt-based marketing methods - which incidentally they destroyed in the first place - will now jump on this latest craze and screw it all up! As usual, they will throw dollars and especially technology at the issue without understanding the underlying fundamentals and ethical considerations that allow those methods work in the first place.
You don't believe it? By now, the value of word-of-mouth marketing is being threatened by the lack of disclosure by very large and respected marketers like P&G and others. And with so much "fake" consumer-generated content going around, some people are already asking for some sort of "organic labeling" before it is too late. When it comes to "community marketing," the jury is still out as it is one of the younger hot new marketing memes - but history shows that it will only take time for some clueless marketers to latch on to that one as well and potentially spoil it for the rest of us.
I really hope that Jupiter and other industry analysts and industry associations will show leadership in this space and try to create some sort of self-governance amongst their clients and members - but somehow, and based on the descriptions of those new services, I am not so sure that is part of the agenda.
Hopefully I am wrong!
August 29, 2006
What happens when you "manipulate" buzz
Pete Blackshaw over at CGM picks up on a post by the Freakonomics guys in which they argue that the fact that there was such a discrepancy between the pre-release Internet buzz for the movie "Snakes on a Plane," and the actual success of the movie at the box office, may be attributed to "manufactured buzz."
One conclusion which Steven Levitt at Freakonomics comes to when answering the question "what does or does not make Internet buzz translate into commercial success" is "One reasonable answer to that question may be that when the buzz is faked/manufactured, commercial success will not follow."
Whether intentional or not, "manufactured buzz," along with other viral "gaming-the-system" marketing strategies are just another threat to the future credibility of word of mouth marketing - another one being the lack of disclosure policy which some companies refuse to endorse.
August 17, 2006
77% of online shoppers read consumer reviews...
According to a new studies released by Jupiter Research, "77 percent of online shoppers use consumer generated product reviews/ratings and those who find them useful are more loyal to stores with reviews/ratings featured." Other research reveals that "consumers who post feedback on forums, positive or negative, spend 22 percent more online than do consumers who have not posted on forums." And somewhat surprisingly, "90 percent of large companies believe that consumer recommendations are important in influencing other consumers' purchase decisions."
The issue for many companies is how to consistently track consumer generated reviews and incorporate that voice of the customer component into their product innovation processes. There are literally hundreds of sites where people leave their feedback. Amazon provides product-specific searchable consumer generated reviews, but many other popular online stores, like NewEgg do not enable that level of searchability.
(Via Customer Listening Blog)
July 11, 2006
Fear of social networking sites like MySpace may be overblown...
According to a new study conducted by California University Psychology Professor Dr. Larry Rosen (download press release here), the MySpace sexual predator reports in the media are widely overblown/unfounded (via apophenia)
Rosen's study included interviews with 1,500 MySpacers and 250 parents and found that (partial list of findings - for full findings download pdf here):
- Only 7% of those teens interviewed were ever approached by anyone with a sexual intent and nearly all of them simply ignored the person and blocked him from their page.
- Two-thirds of the parents were sure that there were many sexual predators on MySpace, while only one-third of the teenagers shared this concern.
- Teenagers spend an average of 15 hours per week on MySpace.
- One in three admits their MySpace activity has negatively affected their schoolwork, family life, or both.
- Only one-third of the parents have seen their child’s MySpace page and only 16% check it on a regular basis.
- However, 70% of the adolescents said they would feel comfortable with their parents looking at their MySpace page.
Rosen makes an interesting point when he says "MySpace is the 13th largest country in the world. Teens live in this virtual world and parents need to pay attention. It is not a fad. It is not going away. And it is not a scary place. Teenagers can live and grow there with help from their parents.”
Meanwhile, the social networking space continues to heat up, with Bebo (a MySpace competitor especially popular in the UK) rejecting a $550M acquisition offer from British Telecom (apparently they are looking for offers north of $1b).
While there is no doubt that sites with that many users should be able to monetize their traffic, it is will be interesting to follow the emerging new marketing models that will make these sites truly scalable and predictable from a revenue point of view.
June 20, 2006
Conferences this week...
Today I am at WOMMA's 2nd WOMBAT (word of mouth marketing association). So far, and with few exceptions, the sessions have been pretty useful and interesting, and if you are interested in seeing live blogging from the sessions, check out Olivier Blanchard's blog, who is one of the few official bloggers for the conference.
Troubling was the fact that many people speak of WOM as if it were yet another department or function (some even look at it as a new medium ?) in the marketing department. Unless marketing becomes totally integrated and tied together with other company functions like sales and customer service, just to name a few, most marketing people will fail. The same is true for WOM if it is to succeed.
The metrics sessions left many people asking for more. Sure 92% of people consider wom as their best information source, and positive wom outperforms negative wom 6 to 1. And a great majority of wom happens offline instead of online. But we were not able to get an answer on how they actually measure online word of mouth. So for example, if Jeff Jarvis complains about his Dell, do they count that as one negative story, or do they count it as 100's of thousands of negative stories - which is probably the right number considering that this many people actually read the story (and continue to read it because it gets a high ranking in Google searches).
June 16, 2006
Do you believe in CGM research?
Laurent over at the customer listening blog takes exception with the views of an old-guard marketing tweak on the importance of cgm research...and is hosting an interesting discussion on the subject.
June 2, 2006
Pew: 35% of all internet users have posted content online
Pew Internet & American Life Project Report found that "35% of all Internet users have posted one or more of four types of content to the internet: having one's own blog; having one's own webpage; working on a blog or webpage for work or a group; or sharing self-created content such as a story, artwork, or video." If you only look at broadband internet users, that number becomes 42% (via ClickZNews - click here for PDF download of the report).
"Sharing a variety of creations online is among the most popular kinds of user generated content," says the report, in fact, 26% of internet users "have shared their own artwork, photos, stories, or videos on the internet." Younger people are more likely to do so, with 51% of the "under 30" home broadband users posting content online vs. 36% of older high-speed users.
Combine this with some other research - like the one that says that adults spend as much time online as watching TV - and you can start seeing, in quantifiable ways, the potential creative effects of the Internet as well as the already obvious enhanced social networking effects.
But considering that the study found a statistical correlation between broadband use and many of its other findings, it also goes to show that governments have a duty to ensure that a high-quality, high-speed Internet infrastructure is accessible to all its citizenry - not exactly a feat that many large western democracies can point to.
May 31, 2006
The debate over which type of word-of-mouth is more damaging continues
First a refresher - the Keller Fay group came out with a study that found that 92% of word of mouth (wom) happens offline and that positive wom outnumbers negative wom 6 to 1. I argued that online negative word of mouth might have a more devastating effect on buying decisions because the buyer is in a more active buying mode when searching for information than when being the recipient of positive wom at a cocktail reception.
Pete Blackshaw wrote a great piece commenting on the same study and concluding that "incidental" word of mouth - which is mostly negative and online - might indeed have a bigger impact on buying decisions than positive offline "intimate" word of mouth. Walter Carl from Northeastern university responds with a call for more research. Interestingly enough, he also lists the primary motivations for people to spread negative WOM - altruism, anxiety-reduction, advice-seeking, and vengeance.
All in all I wonder if the studies take into account that online negative word of mouth repeats itself - so while I may only have left one bad review of Mercedes online, the fact that 5,000 people read it , and that search engines keep sending 20-40 people a day to read it, is the same as if I would have told the story 5,000 times, and still tell it 20-40 times a day.
May 24, 2006
Spoof advertising - what do you do when this happens to your brand?
Caption on this one says "Nearly 50% of automobile fatalities are linked to alcohol. 10% of North Americans are alcoholics. A teenager sees 100,000 alcohol ads before reaching the legal drinking age."
Caption on this one is " "Drink provokes the desire but takes away the performance" -William Shakespeare"
And it's not just Absolute...here is another good one from Adbusters
There are some good examples of consumer generated content...
May 23, 2006
More on online vs. offline word of mouth - incidental vs. intimate WOM?
Pete Blackshaw - who also was a panelist at Beyond Blogging 2006 last Friday and got to listen to the same keynote address by Ed Keller which promted my last post - has a different alternative to differentiate between the offline word of mouth and the online word of mouth.
In his post he introduces the "2I Framework" - "Intimate" word of mouth, which happens between people who are familiar with one another, and "incidental" word of mouth, which which has no basis in an existing (or trusted) relationship and which is what happens to the vast majority of web based word of mouth. He too argues that the impact of online, search-based word of mouth may go far beyond the power of offline word of mouth, especially when it consists of negative word of mouth. And when negative comments are online - it does not matter whether they came from an "influential" or an "average Joe!"
Again, I do believe that the fundamental question is to understand what stage of the buying cycle the buyer is in when searching for information online or when looking for recommendations offline. If he or she is in the early stages of the buying cycle while surfing for information online - trying to narrow down the list of potential choices to two or three - then online negative word of mouth would have a dramatic impact on that buying decision, no matter how much offline WOM is happening about a given product. Of course, given the recent Yahoo!/OMD study "the role of online research on offline purchases" results, the answer to that question is not that easy if indeed the shape of the traditional purchase "funnel" changes into a "tumbler!"
Pete brings up another good point - that with the increased amount of artificial WOM happening offline, the "trust" part of the equation with friends and family may erode - resulting in people becoming disproportionally influenced by other consumers.
Hey, it's the "theory of weak links" for WOM!
May 22, 2006
More and more "edgy" ads released by agency/company
After a version of the Volkswagen Passat ad was released a few weeks ago on YouTube where one of the characters with ego problems says "because mine is only yeah big" instead of the official version where he says "because I am overcompensating for my shortcomings," here comes another example of a vendor/ad agency planting a seemingly unapproved ad version online. This time the Durango ad, banned for TV, has two guys in a bathroom arguing about "Mine's bigger, no, mine is" (and 7 inches makes a difference - via Adrants).
While these are fun to watch, it can be dangerous for companies to release what could be construed as consumer generated ads. Although there is of course a major difference between the two, take the Sony PSP graffiti as an example of one such campaign that backfired.
Most word-of-mouth buzz is positive and travels offline - but don't get rid of your online WOM efforts just yet!
Other findings from the research include:
- Positive mentions outnumber negative mentions 6 to 1
- 92% of brand conversations are happening offline, of which 20% happens over phone
- Only 9% of conversations are "mostly negative"
- People are more likely to pass along good mentions than bad ones - so good news travels faster than bad news!
- 41% of conversations mention advertising
- 72% of opinions about brands are shared by family members and personal friends, 13% are shared by co-workers and 7% are shared by a professional or expert on the topic
- The Internet (12%), television (7%) and newspapers (5%) are the top three media channels most frequently referenced in brand-related buzz
- Email, instant message and online chat rooms/blogs comprise 6% of word of mouth
It would have been interesting to see how this data correlates with people's buying stage. While the study shows that most brand related buzz happens offline, people may be in a more advanced buying stage when looking for brand related information using a search engine than when seeing friends and family at a reception or dinner.
When I asked Ed Keller (CEO of the Keller Fay Group and author of "The Influentials") that question at a recent conference, he said that the study did not look at the correlation between online research and face-to-face brand messaging. While the research shows that 92% of brand related buzz happens offline, it could be that the effect of online word of mouth is disproportionately more impactful on buying decisions. The "buzzer" may be in an advanced buying stage when he or she is talking up a brand offline - but the recipient of the brand message may not be as receptive as if he or she were actively looking for brand related information online.
On that very topic, Yahoo! and OMD released a study last week that shows that 62% of buyers use a combination of online and offline sources to gather information before they buy.
It would also have been interesting to see what kind of brands people talk up in different situations. If it is true that most people identify or talk "through" their brands, then the brands they talk up with friends and family would likely be different than the brands they talk up during company gatherings. In fact, people's need to identify or talk through their brands could explain why so much word of mouth happens offline!
The good news is that offline "positive news travels faster than bad news." We should not forget, however, that online "negative news stays there forever," and that the impact of a bad customer review can have long lasting effects on brand purchases (according to the same Yahoo!/OMD study, 25% of people have posted online product reviews). Take my recent bout with Mercedes - which after much deliberation I decided to blog (also here, here, and here). When I wrote the posts, thousands of readers came to view those posts. But now, almost two months later, search engines are still sending over 20 people a day to read those posts - that is 140 people a week! And every now and then, someone will share their horror stories with that same brand in the comment section, or they will comment on how they would never buy a Mercedes Benz again - or in one case, an independent garage owner who had been servicing Mercedes for 20 years shares his story of how he is switching brands because of poor product quality and horrible customer service. So over time, what started out as an individual product rant has become a collection of (mostly disgruntled) customer reviews - nevertheless, something of a real useful service to potential buyers.
So while 92% of word of mouth may travel offline - don't stop your online word-of-mouth activities just yet - at least not until we understand the true impact on buying behavior!
May 21, 2006
Business Week this week has an article on how P&G has mobilized 600,000 moms to chat up its products. Under the umbrella of Vocalpoint, which will take on assignments for P&G as well as other clients, P&G has developed the largest army of word-of-mouth agents yet.
A key requirement to becoming part of the Vocalpoint team of "buzzers" is to have a large social network. Vocalpoint mothers generally speak to 25 to 30 other women during the day, while the average mom talks just to five. In return for spreading the word about new products to friends and family, they get product samples and a sense of empowerment by being given a voice back to the manufacturer for which they are pitching products.
The results? For certain products in special test markets, they found sales to be double that of markets without Vocalpoint!
One of the main potential detractors of the program is that P&G does not require its agents to disclose their affiliation with the marketer - leading some to believe that this could result in "the commercialization of human relations and the undercutting of social trust."
May 18, 2006
New research on word of mouth marketing
Some interesting findings from the study include:
- 34.7% of study participants stated that they plan to use WOM marketing
- Nearly 64% of all survey respondents noted that WOM is either "very important" or "extremely important" to their overall marketing plans
- Interestingly enough, nearly 59% of respondents said that they had active WOM plans with an active WOM campaign in market
- Nearly 90% (89.9%) of all study participants noted that WOM was ethical
- 80% of organizations reach out to both customers and prospects
The numbers are probably a bit skewed in the positive direction, as a majority of early WOM efforts involve the the launch of a corporate blogging strategy - which fairly often does not result in any real word of mouth activity because of poor implementation.
Another interesting finding, reinforcing the need for companies to integrate their customer service into their overall brand communications strategy, is that 82.2% of respondent said that the "type of service that customers received" is what gets people talking, while 53.3% thought it was "satisfied customers." Contrast that to 35.6% who think that what gets people to talk is "advertising they've seen."
BzzAgents may have proven that you can "manage" the word of mouth channel for simple products - but can you really "manage it" for complex B2B products?
One thing is for sure - if your post-sale customer experience is not a good one, you will get a ton of negative word of mouth, and in this business, the mantra "any news is good news" clearly does not hold true.
May 3, 2006
Can word of mouth marketing be considered a "new" media "channel"?
Dave Baltar, the CEO of BzzAgent, along with the BzzAgent Director of strategy led a pretty interesting workshop on how to run a word of mouth (WOM) marketing campaign at Ad:Tech last week.
First let's look at some of the numbers that were bandied around - as some of them were quite interesting:
- 2/3 of the US economy is influenced by WOM - this is according to a McKinsey report
- 15% of all conversations contain a reference to a product - based on a recent Northeastern University research paper
- 40% of all WOM episodes include a reference to other media - according to their own research
- 80% of consumers trust WOM recommendations more than any other source - according to a Forrester report
This is all very much in-line with the research done by Everett Rogers on Diffusion of Innovation - some of which was first reported in the 60's and 70's
At BzzAgent, they now have close to 160,000 BzzAgents - volunteers who engage in conversations with friends, family, and acquaintances and make word of mouth recommendations for products in the context what happens naturally in their environment. In trying to develop and manage WOM as a real media channel, BzzAgent tries very hard not to turn their evangelists into "sales" people. In fact, the principles they adhere to include - no scripting, 100% volunteer, double opt-in, allow both positive and negative WOM, and ensure disclosure.
While WOM is not a "new" media channel, but one that has been in existence for as long as social networks have existed, if you look at BzzAgents' rate card, it looks like they have been able to turn WOM into a manageable and predictable media channel - and that maybe something new. For $65K they will deploy a 1,000 agents, which will generate 47,375 conversations over the period of 12 weeks. If you've got a little over $2M to spare, they will deploy 75,000 agents who will generate 3,553,125 conversations in a 12 week period.
If this is all working, and all indications are that it is, then there may be another hidden "lesson learned" here - one that companies should apply to their traditional sales force - have them be less scripted, and freer to improvise and create real dialogues with their prospects instead of delivering sales pitches. But that is not "new" either - David Weinberger and his co-authors of the Cluetrain Manifesto have been saying that for over a decade..
March 15, 2006
The role of advertising in startups and new product categories
Research, such as the research reported by Everett Rogers in Diffusion of Innovation, has shown that advertising works best on innovators and early adopters. It does not work as well on the early majority buyers. For majority buyers, interpersonal communications (word of mouth) from peers is the preferred mode of getting information. In fact, the same research shows that for all buyers as a whole, interpersonal communication has an effect on buying behavior that is over tenfold that of mass communication.
Furthermore, advertising works best in the awareness stage of the buying cycle. That is, if the buyer has the right predisposition to be informed by the ads. That occurs when the buyer has a need, or when some other change agent has approached the buyer about the possibilities first (i.e., expert in the press, colleague, etc.). If neither of those happen, then the buyer will not even hear or see the advertising – it will just be tuned out. In the preference stage, when the buyer starts forming an opinion about the product, most information comes from interpersonal communication. In the preference-forming stage, interpersonal communication may sometimes be substituted by expert commentaries and reviews.
Based on this, and stating the obvious, start ups who are peddling new product categories to innovators and early adopters should not waste their time and energy on brand advertising. Instead they should focus their efforts on lead generation and on influencing the influencers so that the right interpersonal conversations can get started.
March 9, 2006
Negative word of mouth hurts retailers
According to a new research study from Wharton and the Verde Group - published in the Results of The Retail Customer Dissatisfaction Study 2006 (PDF) - of those shoppers who experienced problems with a retailer, only 6% contacted the company, but 31% went on to tell friends and family. Of those, 8% told one person, 8% told two people, and 6% told six or more people. The study further found that out of 100 dissatisfied customers a retailer stands to lose between 32 and 36 current or potential customers.
While this is less than the old rule of thumb which said that you typically only hear from 1 out of 10 dissatisfied customers - the impact of negative word of mouth can be more devastating as the tools that amplify word of mouth are getting increasingly powerful.
The study truly illustrates the power of negative word of mouth and the retelling of stories. Indeed, and according to the study, "the complaints have an even greater impact on shoppers who were not directly involved as the story spreads and is embellished. Almost half those surveyed, 48%, reported they have avoided a store in the past because of someone else's negative experience."
March 8, 2006
Another "old" marketing voice bites the dust
Here is what Trout has to say about Word of Mouth Marketing:
"Now for the really bad news. There's no way to control that word-of-mouth. Do I want to give up control and let consumers take over my campaign? No way."
The amazing thing is that even in Jack Trout's heyday (a few decades ago) products were being bought because of the story about the product more so than because of the product itself. And most marketers ran into trouble when their product story was too hard to "re-tell". So in effect, he is right when he says that word-of -mouth marketing is not new - it's just surprising that he never realized the power of it.
As for the new marketing voices, the story was picked up and intelligently commented on by Olivier Blanchard at the Corante Marketing Hub as well as by
two (updated 3/9) three other Corante contributors to the Hub - Johnnie Moore, John Moore, and Mary Schmidt (and as an active Corante team member, I am off course biased).
February 8, 2006
Interesting marketing project at Bentley College
Bentley College marketing honors looks like an interesting college project - with the following mission:
"The students in the honors seminar in marketing at Bentley College have created a multiple author blog in order to complete a class assignment as well as to introduce other marketing students to cutting-edge ideas and principles by monitoring and commenting on some of the best marketing blogs in the blogosphere.
So, each student will monitor a particular blog and post a commentary on a particular blog posting every week. A few of the Corante Marketing Hub contributors got adopted as blogs to follow, and there are already interesting commentaries on posts from those blogs - including the brandbuilder, marketing to women, diva marketing, and brand autopsy.
When Melissa reviewed a post on Word of Mouth Marketing (WOM)from this blog she raised some interesting questions. Why is that when people disclose that they work for a company for which they are recommending products, the rate at which the message gets passed along is 70% higher than when the relationship is not disclosed? This is a very counter-intuitive result after all. She also says: "Francois does not offer any insight into the real significance of this finding. Rather, it just states the results of the study. It would have been helpful to see what he saw as implications from this study." - good point!
Walter Carl, the author of the original research paper, offers some possible explanations for the results of the survey. One is that the average length of time that the agent and their conversation partner knew one another in the study was 6 years. That is a long enough period to build a lot of trust so that the conversation partner feels that the agent has his or her best interest at heart - no matter what the commercial relationship is between the agent and the company for which products are being recommended. His second reason is that credibility is either unaffected or increased by the disclosure.
While these are plausible explanations for why a commercial message would get passed along after disclosure, they are not really reasons for why the pass-along rate would increase with disclosure. If the average length of time that people knew one another was indeed six years, then perhaps one reason might be the motivation of the conversation partner to help the agent out. Just like with some of the better referral incentive programs, which work on the premise that is better to give an incentive to the person who is being referred, rather than the person who is making the referral - it plays off a basic human need to "give." Another possible explanation, which Melissa alludes to in her post as well, is that the conversation partner sees the fact the the agent is willing to associate with the product/company as an extra endorsement for that product. If the agent is willing to get into a commercial relationship with the company that makes the product that is being endorsed, and is willing to disclose that relationship, that means that the agent must feel really good about himself or herself in the presence of that brand - and that is maybe what adds to the contagiousness.
While I am not so sure that there any major implications coming out of this study, I am concerned that marketers will screw up WOM marketing by trying to optimize it and by looking for measurable ROI's. It is and will remain hard to measure, and just like physicist learned a long time ago - you can dramatically disrupt the environment by measuring it.
January 20, 2006
Word of mouth marketing is not hampered by disclosure
A new study by Northeastern University and released at WOMMA's latest conference found that disclosure does not hamper word of mouth marketing (here on AdAge).
In fact the study, which included 800 word of mouth agents and the people to whom they talked up brands, found that: "More than three-quarters of respondents called the affiliation a “non-issue.”", and that "Moreover, he concluded, the rate at which messages were passed along was 70% higher when that relationship was disclosed."
if this study holds up to scrutiny, this is a pretty interesting finding. So if people know that the word of mouth message is part of an organized campaign they are more likely to pass on the message.
December 16, 2005
Word of mouth marketing - potential pitfalls
The Onion had a great spoof on paid-for word of mouth marketing that highlights some of the pitfalls of the practice.
And of course, the ever vigilant word of mouth marketing association has a response to the issues surrounding stealth word-of-mouth campaigns raised in the spoof.
December 14, 2005
Should you care about influentials?
Piaras Kelly argues that Dell should not care about Jeff Jarvis on his blog today. And he goes on to say that what's really important is not what a few key influentials are saying but what the masses are saying.
Having thought about this topic and having written about quite a bit (here and here), I agree with Piaras - but the lesson learned from the Dell saga is that by not responding they let this whole issue fester beyond control and to the point where people who had been happy with them in the past - like Shel Israel, or myself - to no longer buy Dells and switch brands. Plus, if a newbie is searching for reviews on Dell, I am sure that the results are full of negative publicity.
I think that they could have avoided much of that by being better listeners and by being more responsive.
November 23, 2005
Ads going along with the durex viral "Let the beast go..." campaign
November 22, 2005
Viral marketing embedded in social rejections
This one is too funny! NotMyNumber is a service that you can use to give a guy who asks you for your number a number, except it's not your reall number. When you dial the number ( I looked for a local number and got 617/459-4088), you get a girl telling you to go pound sand, but in the process she also praises budweiser.
[via agenda, Inc.]
November 3, 2005
How brand advocates are born
iMedia has an interesting chat with Guy Kawasaki in which he talks about consumer evangelism.
I especially like the part when he is asked about examples of innovative uses of evangelism:
"Very few companies use evangelism. Sure, they hand out business cards to employees with the title "evangelist," but "evangelist" isn't a title, it's a state of mind."As you know, I feel that way about marketing in general. He continues by saying:
"To start, the key to evangelism is a great product. Very few companies have a great product, and very few companies understand evangelism. Thus, the set of companies that have a great product and understand evangelism is tiny -- about as likely as a professional hockey player from Hawaii."I love it! This is so true. Now that word-of-mouth is the latest craze in marketing - I cannot wait to watch all those people who will try using it (or more likely abusing it) to promote crappy products.
October 3, 2005
Buzz marketing up for regulatory scrutiny?
According to the latest edition of Ad Age (print edition), word-of-mouth marketers could run afoul of longstanding advertising law.
It is indeed illegal to pay people to spread goodwill without disclosing their connection to marketers and agencies.
At issue is a potential catch-22 - that disclosure could undermine the value of buzz marketing. While some marketers may feel that way - the article quotes BzzAgent, one of the most successful players in the space, as a company that found it beneficial to have its workers reveal whom they were working for.
According to the article it is still a nascent business - putting its total revenue at around $40-$60M last year, up 100% over the previous year.
That is one way of looking at it. I am sure that there are many word-of mouth marketing campaigns that just cannot be measured because they were truly grassroots/viral.
October 2, 2005
Buzz marketing anyone?
From the most recent issue of Harvard Business Review (requires subscription)
"Instead of relying on buzz, perhaps we should just go ahead and produce something."
Cartoon by Thomas Runyan
September 29, 2005
WOM and Botox
Do you know the latest product to be sold at parties - much like Tupperware and some other products?
According to Cosmetic Enhancement (no, I am not a regular reader, my BlogBridge smartfeed finds stuff for me like that - disclosure: I am affiliated with those guys), the success of Botox has much to do with how it is marketed.
Doctors buy the stuff in bulk, and at a discount, and then organize Botox parties.
Interesting word-of-mouth marketing tactic for such a product...I wonder what's next, liposuction parties, silicone parties?
This also reminded me of the interview that Terry Gross did yesterday with writer David Rakoff - who basically listed a whole list of great actors & actresses who would never get a job today without some form of extreme makeover. I am not sure this is a good thing...but with consumer-driven health care on the horizon, I guess it is inevitable.
September 28, 2005
"Ad skippers" are more likely to respond to consumer-generated media
It's a fact - word-of-mouth (WOM) continues to grow in importance in consumer awareness, trial, and purchase of new products. In fact the study finds that "consumers are 50% more likely to be influenced by WOM from their peers than by radio/TV ads."
Interestingly enough the study also found: "important correlations between consumers who regularly skip over or delete television or online ads and those who shape, create, and absorb consumer-generated media (defined as experiences, opinions and advice posted on the Internet by consumers for others to read and share). "Active ad skippers," for example, are 25 percent more likely to create and respond to CGM on Internet message boards, forums and blogs."
Other interesting findings include:
- Teens lead all segments in overall CGM creation but remain more trusting of advertisers
- Bloggers create an enormous amount of CGM, elevating their overall inlfuence
- Negative reactions to "shill" marketing - that is when people are paid to spread WOM - no surprise here
Of course it's always fun to watch dinosaurs in the making - see what Bill O'Reilly has to say about CGM.
September 12, 2005
Marketing requires a little common sense
I am amazed to see how some companies market themselves. Sometimes it is as if nobody is thinking at the company.
We have a big french door that needs replacement, and after getting quotes from multiple vendors we selected one over a month ago. At the time, the vendor told us that it would take no longer than 2 weeks to get the new window manufactured and then a day or so to install. Well over one month later - and after a lot of increasingly angry phone calls - our door is still in manufacturing. Then this weekend I get a letter from them - explaining to me that their best sales channel is word-of-mouth - and asking me to recommend someone else in return for a $500 coupon on my next purchase.
How hard is it to tie your direct marketing efforts to your CRM system? Forget about me being ticked off - but how does the company expect me to recommend them to someone if I have not even been serviced yet? Like I said before - trying to stimulate WOM is the right idea - but unless you apply some common sense when you implement the program, you may as well flush your money down the drain.
September 6, 2005
The most powerful form of WOM (word of mouth) – rumor/whisper campaigns…
As communicators, we should learn something from the current US Administration. And when I say learn – I mean “learn” and find ways to “immunize” ourselves from these nasty practices – and definitely not copy them as best practices. And while the “lesson” for me is not a new one – it is an important enough one to pause and take a closer look at it.
The lesson I am talking about is the one teaching us that the power of whispers and rumors far outweighs communication campaigns based on facts and rational arguments (surprise, surprise…).
Remember the McCain rumors swerving around during the South Carolina primaries after he soundly defeated Bush in New Hampshire – unsolicited black child (he, unlike most of us, had enough room in his heart to adopt a girl from Bangladesh), mental problems, being gay, drug addiction issues of his wife, etc. The facts – all allegations were false. The result – a deafening defeat for the candidate who had much of the truth and credibility on his side. Then came the “swift boat” veterans’ ads against Kerry. The facts – dubious claims at best. The result – a deafening defeat for the guy who actually fought and defended our country instead of going AWOL (I am not arguing whether he did or not – just that the “facts” on that never got cleared up vs. the “rumors” on Kerry totally overshadowed his real record). Then there was the leak exposing an active, deep undercover CIA agent by a senior Bush Jr. Official – something which Bush Sr. had declared an "act of treason." Such information is not only good enough to ruin your career, but it is life threatening as well.
Another example happened just a few days ago – when the Washington Post (here - requires subscription), Newsweek and NPR incorrectly announced that the Governor of Louisiana had never declared a State of Emergency (via TPM – here). According to the Washington Post, the source of this rumor was a senior Administration official – probably the same person who should be in jail instead of Judith Miller of the New York Times.
Heck, after hearing the story on NPR - I found myself retelling the story. And needless to say, I really regret that now!
Why do rumor stories spread like wild fires? Why do they defy factual counter arguments? Why do they even fool those whose job it is to fact check information?
Part of the reason is that people have a bigger sense of ownership in those stories. They feel more “in the know” and are more likely to “retell” the story as is. Often times, these rumors are also easier to understand than the factual stories that matter – again, making them easier to “retell”.
So what do you do if such a rumor campaign hits you?
Short term, the only thing to do is to rectify the record (for posterity – as you cannot win the battle with facts in the heat of a rumor campaign) and change the playing field as quickly as possible. In order to do that, you need to find something more viral than the original rumor campaign.
[UPDATE 09/07] Here is an actual timeline of what happened (Adapted from: Katrina Timeline)
Friday, Aug. 26: Gov. Kathleen Blanco declares a state of emergency in Louisiana and requests troop assistance.
Saturday, Aug. 27: Gov. Blanco asks for federal state of emergency. A federal emergency is declared giving federal officials the authority to get involved.
Sunday, Aug. 28: Mayor Ray Nagin orders mandatory evacuation of New Orleans. President Bush warned of Levee failure by National Hurricane Center. National Weather Service predicts area will be "uninhabitable" after Hurricane arrives. First reports of water toppling over the levee appear in local paper.
Monday, Aug. 29: Levee breaches and New Orleans begins to fill with water, Bush travels to Arizona and California to discuss Medicare. FEMA chief finally responds to federal emergency, dispatching employees but giving them two days to arrive on site.
Tuesday, Aug. 30: Mass looting reported, security shortage cited in New Orleans. Pentagon says that local authorities have adequate National Guard units to handle hurricane needs despite governor's earlier request. Bush returns to Crawford for final day of vacation. TV coverage is around-the-clock Hurricane news.
Wednesday, Aug. 31: Tens of thousands trapped in New Orleans including at Convention Center and Superdome in "medieval" conditions. President Bush finally returns to Washington to establish a task force to coordinate federal response. Local authorities run out of food and water supplies.
Thursday, Sept. 1: New Orleans descends into anarchy. New Orleans Mayor issues a "Desperate SOS" to federal government. Bush claims nobody predicted the breach of the levees despite multiple warnings and his earlier briefing.
Friday, Sept. 2: Karl Rove begins Bush administration campaign to blame state and local officials—despite their repeated requests for help. Bush stages a photo-op—diverting Coast Guard helicopters and crew to act as backdrop for cameras. Levee repair work orchestrated for president's visit and White House press corps.
Saturday, Sept. 3: Bush blames state and local officials. Senior administration official (possibly Rove) caught in a lie claiming Gov. Blanco had not declared a state of emergency or asked for help.
Monday, Sept. 5: New Orleans officials begin to collect their dead.
August 15, 2005
This is an unbelievable story
Check out the Cindy Sheehan blogpulse chart vs. the President (from BlogPulse). I knew from the minute I heard that she had set up camp there that this one would take a life of its own - this is truly a fascinating buzz diffusion story.
And if you care and wonder what you can do to help - see David Weinberger's (a fiend) post on what you can do.