Word-Of-Mouth Has Universal Appeal

Discussion
Oct 03, 2007

By Tom Ryan

Despite a cacophony of advertising vehicles vying for consumers’ attention, word-of-mouth remains the most highly trusted among consumers worldwide, according to a global Nielsen survey.

In the survey, 78 percent of respondents said they trusted recommendations from consumers. High marks were given for WOM everywhere, although they varied by region. The highest trust levels were reached in Hong Kong, 93 percent; Taiwan, 91 percent; Indonesia, 89 percent; India and South Korea, both 87 percent; and Ireland, Mexico and UAE, all 84 percent. Europeans in general were least trustful, particularly in Denmark, 62 percent; and Italy, 64 percent.

Source: Nielsen Online Global Consumer Study April 2007
Base: All Respondents

In a related ad medium, trust in consumer opinions posted online such as blogs also ranked fairly high, at 61 percent. North Americans and Asians generally found online opinions more credible than consumers in other regions, but the trust levels varied even more greatly by region. Ranking particularly high was Korea, 81 percent, Taiwan, 76 percent; India, 73 percent; Philippines, 72 percent; and Poland, 72 percent. The bottom five were Italy and Chile, both at 47 percent; Estonia and Lithuania, both at 46 percent; and Finland, 35 percent.

“The recommendation of someone else remains the most trusted source of information when consumers decide which products and services to buy,” said David McCallum, the global managing director for Nielsen’s Customized Research Services, in a statement. “Even though new media technologies are playing a role in ‘globalizing’ society, many purchasing decisions are still based on firmly held national and cultural attitudes. Furthermore, given that nothing travels faster than bad news – with estimates that reports of bad experiences outnumber good service reports by as many as 5:1 – the importance of responsive, high quality customer service is yet again highlighted.”

The
survey of 26,486 internet users across 47 markets in Europe, Asia Pacific,
the Americas and the Middle East probed consumers attitudes on 13 forms of
advertising. Other findings:

  • Traditional advertising channels continue to
    retain consumers’ trust. Newspapers rank second worldwide in credible advertising
    mediums while television and radio each ranked above 50 percent;
  • Brand web
    sites were trusted by 60 percent of respondents, but brand sponsorships
    were only trusted by only 49 percent;
  • E-media advertising received particularly
    low trust grades: search engine ads, 34 percent; online banner ads, 26
    percent; and text ads on mobile phones, 18 percent. “E-mails I signed up for” rated
    49 percent.

Discussion Questions: How important is word-of-mouth to a retailer and/or brand’s sales performance? Do you think its appeal is getting stronger or weaker with globalization and the emergence of the internet? Are there retailers you can point to that have done a good job of seeking to manage word-of-mouth to a competitive advantage?

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16 Comments on "Word-Of-Mouth Has Universal Appeal"


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Susan Rider
Guest
Susan Rider
14 years 7 months ago

Word of mouth marketing is definitely here to stay and will continue to play a significant role with brand sales performance. Several opportunities will evolve. Many online ventures are using WOM today but the huge opportunity is with brick and mortar retailers. Many consumers check the internet for consumer comments on products before purchasing, or travel adviser websites before traveling, etc. These WOM tips will become even more commonplace as the consumer approaches a more tech-savvy group. How to transition the online consumer surveys to in-store without totally bogging down processes is the challenge. Every store could post TOP 10 Consumer Best Buys.

Online stores that do this very well are Overstock and Amazon.

Mark Lilien
Guest
14 years 7 months ago

To many advertisers, the issue isn’t credibility, it’s cost. Spam has low credibility, but its low price maintains its popularity. It’s very expensive to gain outstanding word of mouth advertising. Your product and service have to be outstanding, and that’s more expensive. It also takes time to achieve, and it’s not easy. It’s much quicker and cheaper to record a radio commercial or send ten million spam e-mails or run a newspaper ad. Of course, consistently great word of mouth builds a business more likely to last in the long run, with greater attraction to certain types of investors. If it was easy, everyone would do it.

Al McClain
Guest
Al McClain
14 years 7 months ago

The part that really intrigues me is bad service reports potentially outnumbering good reports by 5:1. There would seem to be a naturally strong ROI if businesses could just train and authorize customer service staff to respond in a more personal fashion to customer complaints rather than just going by the book.

I saw a situation recently where a local business received an unsatisfactory rating by the BBB due to a single customer complaint.

Richard J. George, Ph.D.
Guest
14 years 7 months ago

The Internet becomes the optimum vehicle to spread word of mouth advertising. In addition, Gen Y is the wired generation and the use of the Internet permits the word to spread exponentially. Those retailers with the greatest opportunity for success will offer highly informative, easy to navigate, useful links, and simple to order merchandise on their website. All of these attributes contribute to positive word of mouth.

Successful retailers that generate positive word of mouth and which spend little on more traditional advertising include: Starbucks, Amazon, Lands’ End, Trader Joe’s, Costco, and Wegmans.

Ben Ball
Guest
14 years 7 months ago

When opening Sales Training sessions on category management in the old days (aka the 90s) I used to get the sales people’s attention by declaring “there are only two people your retailer will believe–and neither of them is you.” They will believe consumers and, if they can learn what they are doing reliably, their competitors.

The point, of course, is credibility. And perceived credibility is driven by the listener’s perception of the speaker’s vested interest. In the case of WOM recommendations, the assumption is that the speaker has no vested interest in over-hyping or otherwise misleading the listener with respect to the performance of a product.

By and large, consumers still allow attributed comments from individuals online almost the same measure of credibilty they give those received in person. But that luxury is ours to squander.

Remember when “if you read it in the NY Times if must be true” was powerful enough to corroborate Virginia’s belief in Santa Claus?

Jeffery M. Joyner
Guest
Jeffery M. Joyner
14 years 7 months ago

In every facet of consumption word of mouth is among the most powerful advertising tools ever advanced. Each of us is the beneficiary of such recommendations virtually every day. While there is certainly value in many of the more discussed advertising vehicles nothing competes with the value of a recommendation from a trusted resource.

This is not just true of the traditional channel of securing products. It’s true of restaurants, banking, auto purchases, home repairs and countless other interactions that are regular to our lives. Let’s stop and think about this for a moment. I mean really think about it. Doesn’t it seem logical that if merchants and or sellers were to spend a much larger portion of their budget against the simple “recommendation effect” that brands could be positively affected? I say yes this is very true. Perhaps some brave executive will give this a REAL TRY.

Joel Warady
Guest
Joel Warady
14 years 7 months ago

WOM continues to grow in both its popularity as well as in how people execute their WOM opinions. Sites such as Yelp and Twitter are enablers for spreading consumer opinions via the Internet. Blogging is not a fad, it has become a way of life for many people. Interestingly, there are over 80,000 new blogs started every day, and these bloggers are simply people sharing their thoughts and opinions online, for all of the world to see.

As people continue to focus on the growth in social networks in their own lives, and they learn to trust the people in their networks, the WOM phenomenon will gain additional strength. The sooner marketers and retailers include these strategies in their execution plans, the more successful they will be.

Li McClelland
Guest
Li McClelland
14 years 7 months ago

For many consumers who look for recommendations or information by WOM, it works mainly when the “mouth” is someone they know and trust. It’s becoming more widely understood that legions of corporate PR and marketing people anonymously blanket the web daily through blogs and feedback/rating sites to hawk their wares. (Or rebut poor feedback) Too clever-by-half semi-dishonest corporate abuse of these sites will ultimately remove much of the value, trust and legitimacy to consumers that such WOM sites may have had.

Rochelle Newman-Carrasco
Guest
Rochelle Newman-Carrasco
14 years 7 months ago

Be it East, West, North or South

Nothing trumps word of mouth

If that makes you feel nervous

Work on giving better service

To get a bump in shopping trips

And have nice things come from their lips

Give customers your full attention

Give them a reason for a positive mention

And from their mouths will come the word

That will impact one and then a herd.

Mark Burr
Guest
14 years 7 months ago
It’s the best you can get, but how do you get it? Asking for it? I don’t think so. Creating feedback sites? I don’t think so either. Posting positive comments on your web site or bulletin board? Probably not. I’m instantly reminded of signs that I consistently see at car washes. They read: “If you’re not satisfied, tell us. If you are, tell a friend.” Sadly, neither is likely. The most likely occurrence is for the unsatisfied customer to speed off never to return. Much like loyalty, a retailer can’t create it with a program, a card or an offer. Likewise, generating word of mouth is equally as difficult and can’t be created by the retailer. Consumers own loyalty and more so they own their own words–good or bad. They own their message to other consumers and the retailer has little control over it, if any. Or do they? The best opportunity to create both loyalty and consumer conversation is experience. Keeping in mind that it works both ways, the conversation can be good or… Read more »
Doron Levy
Guest
Doron Levy
14 years 7 months ago

Word of mouth is still the end all be all for retailing. I don’t care what stats show or research. The bottom line is that humans instinctively trust other human’s opinions. The simple, “well if she shops there it must be good,” has made and broken retailers and as much as they hate to admit it, retail chains know that word of mouth is still the strongest form of marketing. All you have to do is to provide the service and product and your word of mouth marketing campaign is free!

The double edge sword cliche comes into play here though. Can’t and won’t provide outstanding service or products? That customer will tell many more people then if the service or product was excellent.

Liz Crawford
Guest
14 years 7 months ago

Consumer-generated posts will be an integral part of the marketing mix as online ordering (for everything) becomes de rigeur. The rants, raves and reviews section of Amazon & eBay bear witness to the rise of institutionalized consumer-reviews…this feature will no doubt travel to the mobile device as we become more sophisticated.

Further, the reviews will not only be by “strangers” but also by one’s friends (say those “linked-in” profiles or MySpace buddies)….

Roger Selbert, Ph.D.
Guest
Roger Selbert, Ph.D.
14 years 7 months ago
The Internet has not only radically changed how con­su­mers research and purchase products, it has transformed the most crucial element influencing purchasing decisions: word of mouth and friends’ recommendations. What was once conducted “over the fence” (face-to-face) is now conducted online (peer-to-peer), in chat rooms, on web sites, or through email and instant messaging. Among online buyers who give or seek advice, a particularly valuable group has emerged: brand advocates. In December 2006 Yahoo! released a study, “Engaging Advocates through Search and Social Media,” that defined brand advocates as a group of people who are highly influential and have a disproportionately large sphere of influence in the population. They are more informed, comfortable, confident, satisfied and loyal. They feel like experts and are empowered to share their expertise with others. • Half these brand advocates write about their purchases online, with the large majority (90%) writing something positive. • They have at least a 2-to-1 rate of converting an actual friend or family member to make the exact same purchase (3-to-1 in consumer electronics).• 25%… Read more »
David Biernbaum
Guest
14 years 7 months ago

Word of mouth is the most important factor now more than ever before because so many retail oriented websites allow for free-speech consumer comments and testimonies. Consumers trust other consumers more than they trust the advertiser, retailer, or seller.

Bonny Baldwin
Guest
Bonny Baldwin
14 years 7 months ago

I’m thinking along the same lines as Al on this one–since WOM IS so powerful, it makes sense to be proactive on the service side. Empowering employees to transcend policy once in a while could prevent not only complaints to the BBB, but the posting of online rants or negative ratings that persistently pop up when someone Googles your brand…what a nightmare!

Steven Roelofs
Guest
Steven Roelofs
14 years 7 months ago

I “Google” everything before I buy it to find out what others’ experiences with the product/service have been like. Yes, corporate PR and marketing folks do their share of posting on product review sites, but usually these are easy to spot. PR after all has a way of sounding like PR. But the positive reviews aren’t the ones I pay attention to. It’s the negative reviews that matter to me and you bet they influence my decision to forgo a particular coffeemaker, dog house, power drill, restaurant, paint, shelving system, lamp (some of the items I’ve considered buying in the past few months), etc. in favor of another or nothing at all.

The Internet is the best thing that has ever happened for consumers. Instead of the advice of those you know, now you have access to the advice of millions of people. What’s amazing is that there are retailers (are you listening Macy’s and Circuit City?) that ignore easily accessible word-of-mouth and hold to their ill-fated business plans.

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