As customers’ increasingly control the marketing messages they are exposed to through preference services and email filtering, the marketing industry has turned its focus to word-of-mouth marketing on the basis that recipients will allow content from a trusted source. Indeed, figures from research company NVision suggest that 70 per cent of people are more likely to buy a product if it has been recommended by someone they know.
While this revelation is far from new, this kind of marketing is fast becoming a science that includes more than simply generating case studies from happy customers. It is about encouraging customers to evangelise on a business’s behalf, a discipline which now has its own vocabulary and means of measurement. Fundamental to the current word-of-mouth marketing (WMM) movement has been the pioneering work of US-based management consultant Bain & Co, which looked at the relationship between customer satisfaction, recommendation rates and company growth.
The work resulted in a metric, the Net Promoter Score, which measures how likely customers are to proactively recommend a company, product or service. The beauty of the formula is its simplicity, enabling companies, however small and frugal in their marketing spend, to quickly assess the word-of-mouth impact they are having on their customer base so they can do something about it.
Companies simply ask customers on a scale of zero to 10 how likely they are to recommend the company, product or service. From the results, customers are split into three categories: detractors (those who would recommend the company because their expectations have been missed); passively satisfied (whose expectations were met, but not exceeded); and promoters (those whose expectations were exceeded and who are therefore likely to proactively recommend the brand, product or service to others).
The Net Promoter Score is arrived at by subtracting the number of ‘detractors’ from the number of ‘promoters’. This information can be used to predict how likely a business is to grow particularly valuable for small or medium-sized businesses, especially as all of this information is being gleaned from a single, simple question.
At PR and communications agency Kaizo, where WMM is now a formal service offered to clients, this is supplemented by two or three add-on questions which dig deeper, asking, ‘What is the main reason you awarded us this score?’ and, ‘What is the one thing you would recommend we do differently in future?’
This tells you what you’re doing wrong so you can fix it with clear priorities, says Kaizo director Crispin Manners, adding that when the London School of Economics replicated Bains’ research, it found that ‘detractors’ are 3.5 per cent more powerful than ‘promoters’, creating an urgency to reduce their numbers quickly. What this is saying to SMEs is, ‘ignore the text books when looking for answers on how to run your business and just ask your customers’.
Manners says, If the company has high volumes of customers, it can use a web survey, or if it has a manageable number of personal relationships it can ask clients face-to-face.
But aside from improving services so that customers turn from complaining to evangelising, how else can marketers influence the statistics? Proactive WMM involves turning ‘passive satisfied’ customers into ‘promoters’, and encouraging promoters to evangelise more widely through a system of incentives.
Many large companies already do this with case studies customers are offered a discount if they agree to be a reference customer and take part in press releases, press comment and formally written testimonials.
Other research has found that certain people within a business are more likely to be advocates (proactive promoters) than others, based on the kind of person they are we’ve all worked with people who are considered to be the ‘fountain of all knowledge’. The job of marketers is to find and influence these people.
Analysts have determined that the right advocate can stimulate conversations with up to 40 different people about a brand or service they recommend; they in turn will pass the information on to a further 26 people, who will each tell another 14. As this is multiplied, it’s possible to reach a situation where 1000 advocates are spreading a company’s marketing message to an audience of 80,000.
For Andy Green, a partner at brand communications agency Green Communications, word-of-mouth marketing begins much earlier in the process. He argues that WMM is as much about non-customers spreading marketing messages as it is about satisfied clients providing spontaneous recommendations based on their experience. The key here, he says, is the ‘stickiness’ of the original message and the effectiveness of the networks through which these are being passed on.
Jesus didn’t have Saatchi & Saatchi working for him, but he had WMM-friendly parables which spread quickly, starting with the 12 disciples, says Green. In an ideal world, we’d all have 12 disciples to spread the word. The challenge is to create messages that live on well beyond the sender, he adds. This might be through memorable phrases, for example. I can still sing TV jingles from decades ago. That’s because the content was WMM-friendly. (Think, for example, ‘Shake & Vac’.)
Then there’s the effectiveness of the network. Relying on and encouraging existing happy customers to spread the word is one thing, but companies can also encourage word-of-mouth coverage using business networks. From the British Chambers of Commerce to the Freemasons, organisations have long relied on formal and social networking as a means of swapping business cards and influencing the business world’s movers and shakers.
With the online dimension, such networking has never been easier. Most traditional organisations and clubs now have an online dimension, while others have been created specifically to exploit the power of the Internet in bridging distance and networking efficiently with large volumes of primed participants.
Ecademy is one that works particularly well. The network, which has itself been built entirely by word-of-mouth and PR, has 106,000 members around the world, 66 per cent of which are freelance or small business owners. Traditionally, small businesses would split their marketing between Yellow Pages, a bit of PR and a handful of networking events. Ecademy opens a series of new doors to them, says Penny Power, who founded Ecademy in the UK in 1998. A member’s Ecademy profile acts as an online business card, yet is much richer than that, thanks to the ability to link it to an online CV, blog and photos as well as the company’s own web site. This makes it very easy to refer fellow members, Power adds.
Key words make entries easily searchable, and Ecademy invests a great deal in boosting member’s Google rankings, propelling them into the broader business limelight. But what’s remarkable is the proactive help members give each other. One member is an advocate for 32 companies, Power says. When visiting clients, he recommends them if appropriate. This makes him look well-connected and adds value to his service while boosting business for 32 other organisations.
The more proactive Ecademy members are and the more they help each other, the more membership privileges they gain and the higher they rise up the network’s listings. That ‘help’ can be as simple and undemanding as rating each other’s services on the Ecademy web site in the recognition that customers buy more willingly from someone who’s been repeatedly endorsed.
Membership fees, just £10 a month, are waived if participants invite ten new members to join the forum each month, encouraging the network to continue growing and adding potential new business contacts that all members can benefit from. It’s mutual back-scratching at its best, Power says. Around 6000 new members join each month and around 500,000 visitors come to the site, which today features some 80,000 blogs, 56,000 marketplace listings and has led to 18,000 offline events, which are managed by members and bring people together in specific geographical areas. It’s much more than an online organisation, Power notes.
So where could this lead? For some in the marketing industry, the growth of interest in WMM is a welcome relief as it represents a return to old-fashioned, core marketing skills and a chance for marketing to be valued again. Firing unwanted messages into an abyss is no good for anyone’s morale, less still the environment. WMM, by contrast, is both challenging and rewarding.
