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.
[...] UPDATED: With pictures thanks to Andy at Don’t Panic, and links to follow-up posts from Andy, Ian, Heather and Mark Borkowski. [...]
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