Word of mouth (WOM) is one of the most important communication channels that customers use to discuss retail shops and brands. WOM is informal, frequent and important and the outcomes can be beneficial or disastrous for a brand or a retailer.
Word of mouth has a huge impact on consumer behaviour. Social talk generates over 3.3 billion brand impressions each day and shapes everything from the movies consumers watch to the websites they visit 1. A study by Bughin, Doogan, and Vetvik (2010) 2 suggest that “word of mouth is the primary factor behind 20 to 50% of all purchasing decisions and generates more than twice the sales of paid advertising”.
However, negative WOM can quickly cause havoc with a brand or a retail shop. The advent of the internet, together with social media platforms has changed how peers communicate their experience with brands and shops. A single bad experience shared by a customer on a social media website, may hurt your brand or business badly.
For retailers to use WOM strategically as a marketing tool, they must first understand why customers discuss your business. Why do they praise or criticize your brand?
Customer conversations aka ‘word of mouth’
Customers love to talk about their shopping experiences because they need to share and receive information, have social interactions, or express emotions 3.
Lu-Shien, living in San Francisco, USA had this to say on the Yelp review site about a new restaurant in their neighborhood: “The vibe, the serving ware, the food. All of it is presented in a modern fresh bistro style. A simple menu with a few headliner items – just the way I like it.” Maybe Lu-Shien has said enough to fill the restaurant to capacity because WOM is perceived by consumers as more credible than, and free from the bias of, firm-to –consumer communications 4.
Sometimes, however, customer reviews aren’t that positive. Said Ali D, from New Orleans, USA also on Yelp about a clothing store “You know, I’ve bought and sold here a few times over the course of a few years, but today’s experience means I will not be going back. I had questions but could not – really – get the attention of the sales girls, because they were having the ultimate bitchy conversation at full volume in front of several customers.”
Nevertheless, according to Ken Davenport writing in The Producers Perspective, only 8% of brand-related word of mouth conversations are “mostly negative”. Hence, the average online review is 4.3 stars out of 5. But what about the customers saying nothing online, and just walk away from your business? Ken suggests that 9 in 10 word of mouth conversations about brands are offline.
Therefore, there is no respite for retailers keeping their customers happy.
Word of mouth marketing – the retailer’s response
Retailers need to take word of mouth marketing seriously, especially now that is taking place in the cyber space. Silverman (2010) 5 identified the following properties that make word of mouth a powerful marketing tool:
- Credibility – its independence makes it the most powerful, influential, and persuasive force in the marketplace;
- It is an experience-delivery mechanism;
- It becomes part of the product itself;
- WOM is custom-tailored, more relevant, and complete;
- It is self-generating, self-breeding, and grows exponentially, sometimes explosively;
- Because it is virtually unlimited, word of mouth happens fast and big;
- WOM can originate from a single source, or a relatively small number of sources;
- It is extremely dependent on the nature of the source;
- Word of mouth can be very inexpensive to stimulate, amplify, and sustain.
If word of mouth has such a big influence on image and profits, then surely retailers should make it part of the marketing strategy.
Silverman suggests taking advantage of these properties, retailers should look at:
- What is the content of the word of mouth?
- Who is originating the word of mouth (its sources)?
- Who is receiving it?
- What are the channels through which it travels?
“When we understand the answers to these questions, we’ll be ready to look at how to trigger a chain reaction leading to an explosion: how to get it started, how to amplify it, how to channel it, and how to cause it to go in our direction”, proposes Silverman.
Have a look at this video from The Word of Mouth Marketing Association:
Getting people to talk about your brand and shop is the way to go. The most important rule of WOM marketing is to “be interesting” and that “nobody talks about boring companies, boring products, or boring ads.” 6 But, word of mouth also has a sharp end. So, retailers need to make WOM work, like a marriage, ‘for better or for worse’ (preferably for better).
1 Berger, J. 2014. Word of mouth and interpersonal communication: A review and directions for future research. Journal of Consumer Psychology, 24(4):586-607.
2 Bughin, J., Doogan, J. and Vetvik, O.J. 2010. A new way to measure word-of-mouth marketing. McKinsey Quarterly, 2:113-116.
3 Lovett, Mitchell J., Renana Peres, and Linli Xu. 2016. There’s No Free Lunch Conversation: The Effect of Brand Advertising on Word of Mouth. Marketing Science Institute.
4 Thomas, V.L. and Saenger, C. 2017. Promoting or protecting my brand: The identity-expression and fear-of-imitation conflict, Journal of Consumer Marketing, 34(1).
5 Silverman, G. 2011. Secrets of word-of-mouth marketing: how to trigger exponential sales through runaway word of mouth, AMACOM Div American Mgmt Assn.
6 Berger, J. and Schwartz, E.M. 2011. What drives immediate and ongoing word of mouth? Journal of Marketing Research, 48(5):869-880.