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January 17, 2006

The Influential Power of Word-of-Mouth

I hope you are signed up to attend the Word-of-Mouth Basic Training Conference in Orlando this week. If you are signed up, like I am, you’ll get a deeper understanding in the arts and sciences of the most influential medium in a consumer’s purchase decision – WORD-OF-MOUTH.

Late last year, BIGresearch, a consumer behavior market intelligence company, released their newest Simultaneous Media Usage Survey (SIMM VII). 15,000 survey respondents answered questions on the influence various media play in their purchase decisions. The results give increasing credence to the influential power of Word-of-Mouth.

In this study, Word-of-Mouth ranked as the most influential marketing medium. The "Top Ten" most influential marketing mediums, regardless of demographic age group, include:

1 | Word-of-Mouth
2 | TV
3 | Coupons
4 | Newspaper Inserts
5 | Read Article
6 | Direct Mail
7 | Magazines
8 | In-store Promotion
9 | Cable TV
10| Online Advertising

When you break it down demographic age-wise, it gets a little interesting. Word-of-Mouth clearly has greater purchasing decision influence with people aged 18-34 and 35-54 as it relates to their purchases of cars, electronics, and apparel. Purchase decisions in these retail categories from Adults 55+ are still heavily influenced by Word-of-Mouth, but not to the degree of those younger than 55 years old.

To learn more, you’ll have to find a copy of the Simultaneous Media Usage Survey (SIMM VII) from BIGresearch. If you can’t get access to the report, the following bar charts will give you a little more detail in the influential purchasing power of Word-of-Mouth with A18-34, A35-54, and A55+.




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Although the influence of what our friends, families and coworkers say is clearly important... as marketers, we need to be careful when tracking data like this. Having been involved in a bunch of consumer research studies in the past (mostly in telco), there a couple things we need to watch out for when folks report that they are influenced by word-of-mouth.

1. People tend to over-report the influence of live influenced and under-report the influence of media. Partly because we don't want to feel pressured by advertising, partly because we don't understand the influence of advertising. When you "true out" the effects of advertising dollars spent in various large national campaigns against reported word-of-mouth effects, what you'll find is that people are affected by the big campaigns more, even when they report other influences very heavily.

2. Word-of-mouth has to start... somewhere. If I take my buddy's recommendation of a product to heart, that's great. But where did he hear about it? From another guy? OK... where did he? At some point, there's a tree falling in a forest and somebody going, "What was that?" That's the marketing. So while I'm a big fan of customer-inspired marketing, word-of-mouth, buzz marketing, etc., there's a need for the flow to begin somewhere. And no matter how cool it is to get free buzz, it can't often be counted on. And the big guns, no matter how uncool it is to say so, are still working pretty well for the major players.

3. Word-of-mouth is often inaccurate, fickle and confused. I've worked in well-run companies where it's hard to keep the salespeople on message. If you've got a product that has more than one button, or a service where the sales pitch is longer than 30-seconds... buzz can be very tough. For every iPod that rose to greatness on a wave of buzz, there are products who went to their death because the buzz was bad... and wrong. And good, ol' fashioned marketing probably could have helped correct the situation.

Again... I got no problem with word-of-mouth. I just think it shouldn't take the place of words-of-marketing.

Have fun in Orlando. :)

"Words-of Marketing" ... hot damn Andy, that is GOOD. REALLY GOOD. So good I'm bound to use it over and over again.

Use away, John. Just remember me fondly when I'm gone. Currently, the prediction among my friends and family is that you'll catch a glimplse of me on Fox News along with the words, "... before turning the harpoon on himself..."

The complementary aspects of Word-Of-Mouth and Word-Of-Marketing above are interesting. Especially since the best of both worlds is something a lot of marketers seem to forget.

I wrote a little blogpost (in Dutch, sorry) titled "Viral marketing? Everything is viral marketing!". With that, I mean that you should push and grab every chance you get to make every contact you have with the outside world, viral.

Word-of-mouth marketing is of course the heart of viral marketing, but giving someone the opportunity to easily e-mail someone else the URL of your cool webpage, is something often forgotten. (think of easy to use URL's and mail-a-friend forms).

The same goes for asking someone's opinion to make them feel valued and thus more likely to word-of-mouth market your company/ product. Same for stimulating and pubishing testimonials, user reviews and user ratings which will both simulate and stimulate further word-of-mouth effect.

There are tons of possibilities to make people feel good about your brand when they are in close contact with you. However, what Andy says is the first and most expensive part where people are still far away from you. The easy part after that shouldn't be forgotten.

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