Saturday, July 12, 2008

"Word of Mouth" Works (Yawn)

The constant news about Social Media and Word of Mouth (WOM) is impressive. It's voluminous. It's constant. And it's a little boring.

I'm a Social Media convert and I hate to sound jaded, but the barrage of news, case studies, and reports that indicate people listen to each other is getting mundane. Every day, it seems a new report or press release arrives in my RSS feed indicating WOM works; it's as regular as the sun coming up and Twitter going down.

In some respects, it's a bit funny and a little sad that some people need a report or case study to prove that something that's worked in the real world since the beginning of human existence--people listening and talking to each other--is also effective online. But apparently they do, so here is this week's batch of social media examples and studies for your consideration:
  • Opinion Research tells us that consumer reviews play a big part in purchase decisions for online shoppers. Sixty one percent of respondents said they had checked online reviews, blogs and other online customer feedback before buying a new product or service, and of those who looked for reviews and other feedback, eighty-three percent said such evaluations had at least some influence on their purchases. eMarketer reports that online shoppers value product reviews from other consumers even more highly than professional reviews. How many reviews does it take to convince a shopper? Nearly one-half of US consumers surveyed who shopped online four or more times per year and spent at least $500 said they needed four to seven customer reviews before making a purchase decision.

  • The Wall Street Journal reminds us that the best way to build Word of Mouth isn't to create a Facebook profile, to Tweet, or to blog--it's to offer products and service that get people talking. The WSJ shares a brief interview with Marka Hansen, president of Gap North America, who pulled the retailer's high-profile TV ads in order to focus first on getting things right in the stores. With sales lagging, the brand needed something to get people talking. Says Hansen, "You don't want to have everybody over to your house for dinner unless you are sure the food is going to taste good and the house is cleaned up. So we have been working hard to make sure we get the product piece right and let the word of mouth happen."

  • Of course, another way to get people talking is to hit the right chord with consumers via advertising. Here's the story of a small Chicken Finger restaurant in Mobile, AL that lashed out at Boeing and ended up sparking enormous WOM, and it all began with a single billboard, if you can believe that. Mobile's future as a major manufacturer of large airplanes was put in jeopardy when Boing complained to the the Government Accountability Office about the bidding process. Boeing won their appeal, and the restaurant decided to express its feelings with a billboard reading, "We would like to offer Boeing a finger." The billboard was front page news in the local newspaper, was covered by all three network affiliates, and currently has 631 mentions on the internet. Giving people something to talk about is still--obviously--the best way to get them talking!

6 comments:

BJ said...

I agree on the side that there are a lot of reports out there that state the obvious. I'm interested in hearing about the success stories of companies reaching back into the review/feedback crowd and engaging these people in a way that it promotes improvement. What's the response rate from companies on feedback?

Augie Ray said...

BJ, that's a very interesting question. Many brands are happy to just to have some sort of review/feedback tool on their site, figuring that getting people speaking to one another is the goal.

But you suggest something even deeper in terms of engagement--reaching out to those who provide feedback for greater brand benefit.

I'll have to keep my eyes open for case studies or statistics on this. If you have any info or links to share on anything you've run across, I'd be interested!

Kim said...

I think this just means that companies are getting through the stage of understanding WHY customer feedback is important -- now it's just a question of HOW to use that customer feedback for company/business growth, something that I'm working on now. It's actually quite a complicated process - as obvious as it may seem since the principles are straightforward, the next stage is to attempt to measure/convert emotional value into quantifiable profit.

Augie Ray said...

Kim, May I ask some provocative questions? What if the desire to "quantify profit" gets in the way of doing the right thing? What if the costs of trying to prove that something works are prohibitive? What if we measure the wrong thing? What if thing you're trying to measure is so complex that the cost/benefit model fails to capture all the value (while calculating every cost to the penny)? Or what if the time required to figure out how to quantify the value of an effort prevents the organization from moving as quickly as necessary?

At some point, even though American business has been waving the "quality service" banner for two decades, customer service and listening to the customer stopped being a competitive advantage and instead became a cost to be measured, limited, and cut. As a result, consumer satisfaction with the service they receive is at a low.

Zappos isn't a stupid brand, nor is it unsuccessful. They monitor costs and watch profit like other companies. But they don't let analysis paralysis get in the way of doing the right thing. They know their brand, they know their customer, and they develop programs that gather customer feedback and listen to the customer without a great deal of concern about whether any particular program produces $X or $Y profit.

The president of Zappos recently issued an invitation via Twitter to consumers, inviting them for a drink. A couple dozen showed up. I doubt Zappos worried whether this effort would produce a profit; they just knew it was right for their brand. And had they tried to calculate the benefit, they might've come to the conclusion that costs of the drinks and the CEO's time was not worth the incremental sales that could've been developed from the consumers who showed up. What would've been lacking--because it's too tough to measure--is the cost of the positive PR across all the blogs, microblogs and forums on the Internet and the small improvements in brand image that would result when thousands of people heard about this.

At some level, while I understand companies have an obligation to control costs and to maximize profit, I think it's a little sad that we must quantify the profit from listening to the consumer. We don't calculate the profit from the lightbulbs we burn, because that's a cost of business. So should be listening to the customer, learning from them, providing the best service, and creating experiences that bind consumers to the brand.

Linda Margaret said...

I like the Zappos approach; it's more than giving people something to talk about, it is also important to give them the space within which to talk. Gap puts celebs in their outfits and then waits for the mainstream media to buzz. It might be more useful to set up a site where social media users can mix and match the outfits Gap puts on its celebrity influencers. Give space to talk as much as something to talk about.

Augie Ray said...

Interesting thoughts, Linda. Gap's certainly got the sort of differentiated experience around which social media tools would work!