The power of word of mouth

The power of word of mouth

Monday, February 4, 2013

The age old maxim on word of mouth that you are incline to tell 4 people if you are delighted with a particular service you experienced recently and you will possibly tell 12 people if you experienced a lousy service is the fundamental to the dynamics of word of mouth today. Picture that you dine in a first time visit restaurant with your family. The food was excellent, price was reasonable, ambiences was great and most importantly the service was simply marvelous. You simply had a fulfilling experience and your family had a great time together in that entire experience. The next day at work or among your friends or neighbours, you may relate this wonderful experience with them. Now lets backtrack and picture that you had a real bad experience in a restaurant that you visited for the first time. The food was bad and service was horrendous! You will be so disappointed at that event which is suppose to be an important moment for you and your family that you will talk about this bad experience to anyone and everyone, from your friends, neighbours and total strangers.

It is also said that it’s easy to ruin a reputation but not as easy to earn back. It’s not linear equation. The maxim further denotes you have to work three times harder to earn back a good impression from losing it with a bad one (3 x 4 good = 12 bad). This suggests an important implication in building customer loyalty. When you lose a customer due to poor services, it takes you three times the effort to earn one back. Hence companies need to spend much more to acquire new customer than to retain one. The late Zig Ziglar said that 90% of disgruntled customers leave you without telling you why they are leaving, but tell everyone else. 

Today word of mouth is ‘amplified’ with the advent of social media. There are a dozen of websites that provide avenue for un-happy customers to voice their dissatisfaction about a company, service or product. People prefer venting out their frustration on the web than to write or talk to the company that created that impression. It may be because of various factors such as difficulties in voicing their frustration to a service provider, fear of reprisals, no confidence of action taken or don’t want to invest any time in improving a company that gave a bad experience.  People trust recommendation or word of mouth from (online or offline) friends more than any traditional marketing advert sponsored by the company trying to sell its products or services. It is no surprise that they say traditional marketing is dead. A market study by Forrester found 73% trust their friends and family to make purchase decision while only 19% trust adverts.

Word of mouth is prevalent among the Consumer business (B2C) as poor experience encountered gets online and become viral among consumers because they can personally relate to such experience and react by stop using a product or service. Though not as widely influential in the business to business environment (B2B), the word of mouth would eventually be key among the business decision makers as they would want to know how the other players in that industry (even their competitors) are treated by a company.

This trend of word of mouth getting more importance especially the negative ones is a big concern to companies in retaining their profitable customers. However, the forward-looking companies see this as an opportunity instead of threat as they leverage these word of mouth to learn, recover and act with urgency to convert un-happy customers to their loyal customers.

Satya Narayanan