What I Learned About Word of Mouth

Thanks to Simon from Green for sorting me out a press pass to Word of Mouth Communications. A very inter­esting day which I thor­oughly recom­mend the next time it comes around. I’m going to write about three cough… two of the present­a­tions in three … two posts, to keep me stocked up with new material over the weekend.

Professor Robert East of Kingston Business School has been researching the impact of word of mouth. He’s of the opinion that there’s a lot of hypo­thesis and spec­u­la­tion around the subject and has recently finished con­ducting some proper empir­ical research about it.

First of all — how do people make decisions about new products and services? Surveying people to create over 10,000 data points about their pur­chasing decisions on matters ranging from res­taur­ants to ISPs to cars and super­mar­kets, he found that on average:

31% make their choices through recom­mend­a­tions from other people.

22% say they conduct a personal search, which might include news­pa­pers, magazines, online and sampling. [East suspects this number may be higher than the reality. We like to think we make our own decisions, don’t we?]

14% agree that they are most influ­enced by advert­ising. [Similarly, this may be an under-​​estimation, for the same reason]

The remaining 32% fall into the ‘other’ category. This might mean, for example, that there’s no choice. If there’s only one super­market in your town, or someone takes you to a new res­taurant, then your choice is pretty proscribed.

These per­cent­ages vary, of course, depending on the type of product or service being chosen. Your choice of car and beauty products is more likely to come through advert­ising. On the other hand, choosing res­taur­ants is very likely to come through recommendations.

Positive word of mouth is much more common than negative word of mouth. Perhaps up to a 3:1 ratio. The reasons for this are unknown, but perhaps people just prefer to recom­mend things than slag things off.

In addition, contrary to what most people, and perhaps most mar­keters, believe, positive word of mouth has a stronger effect than negative word of mouth. On average, PWoM has a 22% effect, while NWoM has a 16% effect. In other words, if you start from a position of 0% — that is to say, you have no inten­tion of switching from your estab­lished res­taurant, for example, then it will take just under five recom­mend­a­tions or six-​​and-​​a-​​bit cri­ti­cisms to make you change. The warmth of the cri­ti­cism or recom­mend­a­tion will obvi­ously change that per­centage, but we’re talking averages here.

Most people actually start from an average position a little over 50%. We’re not espe­cially averse to making a switch or trying new things. Therefore, two recom­mend­a­tions or three cri­ti­cisms are enough to make Mr/​Ms Average jump.

What does this mean for mar­keters involved in using social media to help their brands? It is a lot more effective to encourage sup­porters than it is to try to convert or dis­courage critics. You only need to create two evan­gel­ists to win new cus­tomers, whereas you’ll have to convert or dis­courage three critics. In addition, your brand evan­gelist is likely to recom­mend three times more often than your brand assassin is likely to cri­ti­cise. Add those two together and the evan­gelist has four times the power of a critic. Take mar­keters and PR people engaging with blogs, for example. Going along to a critic’s site and coun­tering all their objec­tions is arguably a lot less effective than going to a neutral observer’s site and thanking them for their work and feeding them with new inform­a­tion and other rewards. In an ideal world, of course, they’d be able to do both, but most com­panies have limited resources in one way or another and this research gives a valuable steer to what might be the best use of their time.

This is quite counter-​​intuitive. Companies are ter­ri­fied of “bad PR” but maybe, while it’s not true that there’s ‘no such thing’, it’s not actually what they should be focused on.

One last point. According to Professor East’s research, soli­cited word of mouth — e.g. I ask you which phone to buy — has around 1.5X the effect of unso­li­cited word of mouth e.g. you tell me I *must* see this film. That is good news for mar­keters inter­ested in viral cam­paigns. Even if I’m not asking for your opinion, your words have only 33% less power than if I was.

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