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« June 2006 Table of Contents

Trend Watch: WOM marketing proves its value

Genuine testimonials can be more cost effective than paid advertising

Word of mouth is a powerful endorsement, as most of us can testify. The say-so of a trusted, unbiased friend, colleague or family member can go a long way toward fostering others' willingness to try a product or service.

It's precisely this level of confidence and trust that word-of-mouth marketers are trying to harness to promote their products. After all, why use advertising exclusively when you can get enthusiastic consumers to say good things about your products for free?

The word-of-mouth concept has been around forever; word-of-mouth marketing is about learning how to make the concept work within a marketing objective. That's accomplished by educating people about your products, identifying those most likely to share their opinions with others, providing tools to facilitate that sharing, studying how, when and where opinions are being shared and, finally, listening and responding to those opinions, be they pro, con or neutral.

"Businesses that want to engage in a word-of-mouth marketing campaign first have to find the word of mouth that already exists on the Internet, through forums and blogs where people are talking about things that relate directly to your business," says Ben Straley, marketing director at Judy's Book.

The Seattle-based company, founded in 2004, has created online communities around the country where people exchange advice and recommendations for area products and services, from restaurant reviews to window-washer recommendations.

"Once you've found those sites, you work on developing a relationship with these people and the community," says Straley.

A lot of companies - from small businesses to giants like Fidelity Investments, The Coca-Cola Co. and Kraft Foods - are using such campaigns. Fidelity, Coke and Kraft are just three of the 300-odd members of the Word of Mouth Marketing Associ­ation, a trade group that formed a year and a half ago.

"Word of mouth puts consumers in control," explains Andy Sernovitz, WOMMA's founder and CEO. "If you have a great product, they will advertise it for free. On the other hand, consumers will find out about bad products much faster. The bottom line is: Learn to work with happy customers, learn to get them talking, and they will supercharge your marketing."

For that learning process, some companies turn to word-of-mouth marketing services like Me2U Marketing, which will determine if your product is word-of-mouth-marketing-worthy. If it is, the marketing firm will create and execute a word-of-mouth program, following up with research to find out if it's working. That research is done through a variety of methods, including telephone or online surveys, consumer touchpoints, such as Web-site hits, e-mail response, attendance at events, coupon redemption, and, the obvious, increased sales.

How do you know if you have a worthy product? That depends on the efficacy and openness of the channels of communication between your company and your customers, says Tom Eiland, team leader at Me2U.

"We've talked to some companies with a robust Web site that collect anecdotal information about their products and are responsive to their customers' needs. They might have an idea if they're word-of-mouth-marketing-worthy. But if you don't have those channels of communication, it would require more research, which could cost anywhere from $35,000 to $60,000."

With clients like Tillamook and Oregon Public Broadcasting, Eiland has seen sales grow by as much as 60 percent in one year through a campaign whose primary focus was word-of-mouth marketing.

"Consumers have so many options for finding information, and they're not sure who to trust," he says.

"They often tend to tune out advertising and rely on their friends to get key information on products. We're helping companies get involved in those conversations, and though advertising may be used to help the word-of-mouth marketing activity, it's not the core technique. That's what's fundamentally changed."

Various techniques are used in word-of-mouth marketing. Buzz Marketing uses high-profile entertainment or news to get people talking about a brand, while Community Marketing forms or supports niche communities (user groups, fan clubs and blogs) that are likely to share interests about a brand. Product Seeding involves providing information or samples to influential individuals, and Cause Marketing is about supporting social causes to earn the respect and support of people who feel strongly about that cause.

One way to begin is by capturing testimonials, otherwise known as the positive-word-of-mouth unit, says Herbert Ong, founder and CEO of Genuosity, a Vancouver, British Columbia, firm. Its product, Kudos Works, helps companies capture feedback by developing systems for customers to submit testimonials and images and then accelerating cus­­- tomer-to-friend referrals with reward campaigns. These kudos can include a gift certificate, a raffle or a donation to a charity of your customers' choice for each referral they make to friends.

"People are always talking about you. In any business, you have evangelists and detractors," Ong insists. "Any business should be asking for testimonials and making it easier for customers to supply them."

Between evangelists and detractors lies a large group known as "passers," whom Ong describes as the "70 percent of customers who are happy and satisfied but not going out of their way to give you testimonials unless you make it easy for them.

"Word-of-mouth marketing is all about testimonials, capturing and showcasing them. And, with the right tools, every testimonial can become a potential referral."

But testimonial marketing has to be the real thing, or it can backfire. Trust is the backbone of the word-of-mouth marketing industry, and there are always companies that abuse consumers' trust. Some hire actors to spread positive word of mouth, while others pay people to write positively slanted reviews or recommendations about their product on blogs and discussion forums.

The industry's challenge is to expose such abuses and maintain the credibility and integrity of WOM marketing.

"The moment you try to create word of mouth, if you have a vested interest in that word of mouth being positive, you can dig yourself a pretty deep hole immediately," warns Straley.

SFlb Contributing Editor Lauren Kramer lives in British Columbia