Posted by: Andy Porter | September 9, 2011

Word of Mouth Marketing: Questions and Answers!

Is word of mouth really the best form of advertising?

          Yes. Without question Word of Mouth IS the best form of advertising. This fact is widely known and accepted. The big question is: How do I capitalize on this fact and use it to expand my business?  

          Just knowing that Word of Mouth is important or telling all of your employees how vital good word of mouth really is to the business will never be enough to create the level of service necessary to WOW your customers.

The purpose of this article is to expand understanding of the basic factors making up great word of mouth and excite you, the business owner, so that your creative juices flow and ideas pop like a huge 4th of July fireworks display and you get all excited about what can be done in your company to expand through word of mouth!!!

A few basic facts…

          If a business is providing adequate, normal, regular run-of-the-mill service they will get SOME word of mouth referrals. The way this works is that if, for instance, someone asks you where to go for dry cleaning or computer repair you will most likely want to give some recommendation. People generally want to be helpful and we all like to give advice, so we will give some answer, we will often refer someone to a place where we received simply mediocre service. The point is that if you are providing what is considered to be good, or acceptable service you can only expect a few referrals.  

          Really great word of mouth comes from a remarkable or memorable experience. Lets say that you have been in to your local veterinary hospital, or Thai restaurant and the experience was memorable you very possibly will not wait until some asks you for a good vet clinic or Thai place before you tell people about it. Your word of mouth becomes unsolicited. Have you ever done this or seen it done? I have seen people talking up their hair stylist or espresso stand to people who are bald or don’t even like coffee!

          Let there be no mistake, unsolicited word of mouth is what will really drive in more new customers. This is (or should be) the goal of any company. 

          On the other hand, unsolicited word of mouth DEFINITELY applies for bad service as well! Customers who are irate with a business will sometimes tell as many as 20, 30, maybe up to 50 people about their bad experience, with out ever being asked directly about the business.   

          So, when we are speaking about word of mouth, we must understand that what, exactly, we are going for is unsolicited, positive, word of mouth about your business.

Why IS word of mouth the most effective form of advertising?

          Well, the first answer is that word of mouth means that someone, probably someone who you know, is telling you that Olympic Pizza has the best pizza, or that Fred’s Auto Repair does fantastic and reasonable work. You’re hearing it from a person, someone that you know and (probably!) trust.

          Compare this with normal advertising: TV, Radio, news papers, magazines, web, direct mail, etc. Let me ask you this, as a consumer, do you BELIEVE what you see advertised? I mean really, if you get a flyer in the mail offering you a “low cost mortgage”, do you believe it? If you see an ad for a cheap airline ticket toFlorida, are you suspicious that it may be a scam? Do you wonder if the quoted price for the ticket actually includes things like airport fees, taxes and that your baggage actually gets to go with you?

          By far the majority of consumers, when they hear any advertisement, wonder: “What’s the catch?” We look for the fine print. We think, “If it sounds too good to be true, then it is!” We have all heard the pat phrase, “new and improved” so many times that the words don’t have meaning to us. The point is the very few people completely believe ANY regular advertisement. We know that ads all too often contain exaggerations, half truths, gimmicks and sometimes even complete fabrications. In case you haven’t noticed, this trend is getting worse, not better.

          But if someone you know, or better, someone you like, or even better, someone whose taste or opinion you respect, tells you that the Mocha’s Espresso stand on 4th and Main is awesome, or that theNorthCascadeVeterinaryHospital is the best around you will listen. If you have a connection with the person telling you about a business it becomes much more believable. Another reason for this believability is that the person has no reason to mislead you. The person telling you about the fantastic service atNorthCascadeVeterinaryHospital probably doesn’t work there, or get commissions from them, so we reason that they don’t have any reason to mislead us.

          There is also a common statement that not only is word of mouth the best form of advertising, but it’s the cheapest. This brings up the question of how to determine how much it costs to attract a new customer, client or patient. Most businesses I see are sorely lacking in any effective method to track where their new customers come from, but at least they can say how many new clients they had in a month. Calculating the “cost of each new customer” is not too difficult, simply add up your entire expenses for advertising and marketing for a month and divide this by the number of new customers, and there you have it, you can now see how much you “paid” for each new customer. This is a great exercise, by the way and I highly recommend not only doing the calculations but sharing the results withALLof your staff.

          Of course if you are really on the ball and can track not only how many new clients you got in a month but HOW each new client heard of you, it is possible to calculate the cost-effectiveness of each form of marketing you use. (Look for a new blog entry coming soon on tracking new clients.) For example you can see how much your yellow page ad cost, and how many new clients it brought you and do the math. This is a very enlightening exercise and the most intelligent way to make decisions about where you spend your advertising dollars. 

          In either case I bet you will be surprised to see how much one new client “costs”.

          Word of mouth is the most effective form of marketing because it is more believable and the less expensive than any other form of advertising. 

Great word of mouth about your company makes all of your other marketing efforts much more effective.

          The above statement should be in huge bold CAPS. This is one of most important and grossly overlooked laws in all of advertising and marketing.

Let’s say that you have a spa. You are sending out all sorts of marketing messages; yellow page ads, a web site with search engine marketing, you’re in lots of travel guides, you attend chamber meetings, maybe you use billboards, you are using a whole host of avenues to get your name out there.

          Now let’s look at this from two possibilities, let’s say first that the overall word of mouth about your spa is awesome. If someone has already heard from a friend that the spa is great and then they see one of your ads, or maybe a special offer you are currently running, they are much more likely to respond. Positive word of mouth makes your other marketing more believable, more effective, more productive. A business will get a MUCH bigger bang for their advertising buck when they have great word of mouth.

          Once in a while I have heard people talking positively about an ad they saw or heard for a business or product. Your friend tells you about the great experience she had at a clothing store recently. A little later your with a different friend and you see or hear an advertisement for that same store, and you say: “Hey, isn’t that’s the place Sally went last week where she bought those cute new dresses?!”

The effect of great word of mouth on your other marketing efforts cannot be overstated! 

          A person may hear some good word of mouth about a company and at that time not need the service or product, but later when the need arises and they are searching or when they get exposure to an ad, they willTRYto remember what they heard and will respond.

          On the other hand, if the word of mouth about your spa is poor, then the money you spend on marketing will get LESS response. If a potential new customer has already heard some negative feedback from someone about the Bayside Spa and then they see an ad somewhere promoting the Spa, their tendency will be to discount it, or ignore it. They won’t listen to your message, their mind is already turned away from the business.

          Have you ever experienced this? If you have heard bad word of mouth about a company and THEN hear an advertisement for the company, what’s the first thing that flashes in your mind? The negative story you heard before, that’s what!

          How about this example, lets say you yourself had a very bad experience with a company (think telephone service provider, or maybe bank…). Now you’re sitting with a friend watching TV and an ad comes on for the company that you feel wronged you. What happens? In many cases just seeing the ad will elicit a negative comment from you to your friend! “That’s the bank that ripped me off!” “I used to have that cell phone service and I’ll NEVER go back to them!!!” Have you ever seen this, or done this yourself?

What can be done to improve your word of mouth?

          Here are two of the most effective (and rarely done!) things to do:

Follow up.

          Calling a client, customer, patient, back to see how they are doing is an AWESOME way to improve word of mouth. Has your doctor ever called you back to see how you were feeling? If they did, did it impress you? Have you ever been to a restaurant where the chef (or cook) came out into the dining area and asked the customers how they liked the food? This can be done in auto repair, chiropractic clinics, schools, nail salons, cleaning companies; really, the list of businesses that can make use of follow up contacts is endless. It does take some basic communication skills so that your follow up doesn’t make the customer angry, but it’s pretty simple. And the higher up the person doing the follow ups is, the more wow factor it imparts. Anyone who is doing follow up calls MUST be interested in what ever the customer has to say, positive or negative. I think that one reason that follow up calls are NOT done is because there is trepidation that the response will be less than positive. Who ever makes the calls has to be equally happy to receive positive or negative response, and be prepared with what to say and do if the response is negative. 

  • “Did your shipment arrive on time, did you receive what you expected?”
  • “How was your adjustment with the doctor last night? How is your neck feeling today?”
  • “How was your chicken cordon bleu? Did you like the green beans?”
  • “I know that yesterday was your first visit to see us, did things so as smoothly as you hoped?”

There’s an infinity of questions that you can ask.

          Follow up calls, done correctly; show the customer that you genuinely care about the product or service that was provided, that you care about the customer and that their complete satisfaction is important.

          Follow up calls can give you valuable feed back from your customers that you can use right now to make your product or service better.

          Remember that statistics show that only 1 in 25 unsatisfied customer will ever say anything to you about what they don’t like. (Although they may tell 25 other people what they didn’t like about you!) Asking them in a way that shows that you WANT them to tell what they liked or didn’t like REALLY works.

Compensation when things go wrong.

          Every company has things go wrong with clients from time to time. Customers get shipped the wrong thing, or someone’s steak is cooked wrong, or there is WAY too little chocolate in their mocha. How you handle it when things go wrong is HUGE. If a customer has to wait, or client came in to pick up a product (which you forgot to order for them), or what ever you did wrong, be sure to have on hand some form of compensation ready. I recommend buying $100 worth of $5 coffee cards, and also movie tickets, or restaurant gift cards and have them on hand to give out. I say have three types and values for the various levels of how badly you may have messed up (or how irate the customer is!) 

          Your company should have a set system for compensating irate customers. Create “tiers” of compensation, start with the coffee card, then the movie tickets, then the restaurant gift card. If the client has to wait more than a short time, use the coffee card: “Mr. Thompson, we are very sorry you had to wait so long today, here is a gift card for the “Mochas” espresso stand over on Fir Street,  thanks for hanging in there with us today!”

          You may not think that a $5 coffee card is going to make any impact, but it DOES. Your customers will feel appreciated, acknowledged, validated and recognized.

           I have gone over this idea with many businesses and everyone thinks it a great idea, but implementing it is not always a snap. From my experience the hardest thing is to get the staff to hand them out as much as I would like! Sometimes employees will get a little stingy with them, “Well, she only had to wait half an hour, and it wasn’t our fault she had to wait, so no card for her”. “I don’t want to waste the card on that person, or why give away five dollars…” are some of the things I have heard. Some times you get busy and just forget to hand them out…

          Let’s go back to an earlier article: Why IS word of mouth the most effective form of advertising?

          This was where we discussed the cost of a new customer, and if you did the calculations in that article you probably saw that a new customer may “cost” $50, $80, $100 or possibly a lot more.

          Well, how many people will your customer talk to about you if they receive a coffee card or movie tickets? Do you think that they’ll tell anyone? If you give out a $5 coffee card and the customer tells 7 people about it, how does that work out? You get the idea, giving out a $5 coffee card that results in even one new client is easily the “cheapest” form of advertisement ever! So, give the cards out when there is any even slight problem. 

          Back to our tiered system of compensation, the coffee card is for a small upset or inconvenience, the movie tickets for a bigger screw up on your part, the restaurant gift certificate is used for…you get the idea, figure out your own system and tiers. If you don’t like coffee cards you can use discounts for future services at your business, you can credit money to the clients account, give out free items, the list is endless. The stuff you give out does not need to be expensive to create a powerful effect. 

This is NOT only for irate customers!

          Do you have awesome customers or clients who you love? Give them coffee cards or what ever you decide for “compensation” once in a while! “Julia, I just wanted to say that you are the most awesome customer! Here, have a coffee card (or movie tickets, or what ever).” There doesn’t have to be any set system for this (like giving a gift card on a special holiday, etc), in fact random and unexpected tends to create more of a memorable experience.

Two more short footnotes:

  • Employees who are encouraged to liberally compensate customers are happier employees! They feel empowered and will also give your business good word of mouth to THEIR friends.
  • The better your word of mouth the higher employee morale will be and the easier it will be to hire great employees and retain them!!!

Word of Mouth Round-up!

          Well, are your creative juices popping like pop corn? Are you excited to implement some of your new ideas about improving your company’s word of mouth?

           I certainly hope so! I am always happy to receive any feed back, so if you have any great ideas on improving word of mouth, please send them in!

          And lastly if after reading this article you are thinking that you would certainly LOVE to implement some of these ideas, but it would be difficult because of a lack of time, or that some (or all!) of your employees may not embrace your enthusiasm, then with out question you are in need of a little help!

            If you call me directly I may be able to assist you in handling these barriers. There is no charge for calling, I am available to give advice anytime! I am located inWestern Washington, Pacific Time zone! My number is: 360-809-0661.

         Best of luck!

         Andy Porter  

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Responses

  1. Awesome posting man, I incredibly like the look and also the feel of this kind of blogging site. You write certainly well, you just need to be a aware guy. Will undoubtedly come back

  2. Word of mouth has great impact on purchase decisions. Researchers of a new study found that product quality is “the most important factor that influences consumers’ buying decisions.” So, if the quality does not meet the customer’s expectation, they won’t make the purchase, and they would tell others about that. To read the full study, you can find it here
    http://www.ibimapublishing.com/journals/JMRCS/2011/421059/421059.html


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