Attention all bloggers!

On the front page of today's Financial Times is the headline "Rumour has it. Ignore word of mouth at your peril". The article also appears on the excellent
It demonstrates the combined power we users have to influence the market. The logic can be applied to kayaking gear and boats.
Click on the title below to read the article on the FT site.
I've also copied it below with full accreditation to the FT. Err, the cow is for no other reason than I like it.

How to work a rumour mill
By Robert Matthews

There is no gainsaying the power of word of mouth to make or break a new product. Just ask those who have been on the receiving end of consumer brickbats or bouquets. The UK-based mobile phone retailer Carphone Warehouse is still smarting from the consumer bad-mouthing prompted by its failure to handle inquiries about its now-notorious "free broadband forever" offer last year.

In contrast, a catfood launched at the same time by the UK petfood maker Masterfoods saw sales soar as a result of positive recommendations from consumers.

Marketing experts have long recognised the importance of both positive and negative word of mouth (WOM) to the fate of new products. But the advent of the web, internet forums and social networking sites has given WOM the power to turn a product from global hero to zero with frightening speed.

In what is already regarded as a classic case study, the 50-year reputation of the cycle locks made by US-based Kryptonite was undermined in just a few days in 2004 by one internet forum posting showing how the locks could be picked using a ball-point pen. The company had a free lock exchange programme in place in just eight working days - fast, but not fast enough to stop the whole world from knowing about the embarrassing design flaw.

"What the internet has done is to empower the consumer through blogs, forums and websites," says Paul Marsden of the marketing research agency "A recent study showed that word of mouth is now 50 per cent more important to consumers in making decisions than it was 30 years ago." According to Mr Marsden, the increasing reliance of consumers on word of mouth is being driven partly by distrust of standard advertising and partly by sheer information overload. "During the course of a day, people are exposed to thousands of adverts," he points out. "Word of mouth helps to cut through all that using personal recommendations."

Not surprisingly, there is mounting interest in understanding the word-of-mouth phenomenon. Consultancies specialising in such marketing methods are springing up and, say industry insiders, a UK equivalent of the Word of Mouth Marketing Association, established in the US in 2005, is likely to emerge soon.

But companies thinking of dabbling in word-of-mouth methods should be wary. New research suggests that some long-held claims are at best misleading and sometimes just plain wrong.
Marketing gurus have long claimed that consumers are more likely to bad-mouth unsatisfactory products and services than to recommend good ones. This certainly makes sense: most people expect to be satisfied with their purchase, so they aren't likely to spend time telling everyone about it - unlike their disgruntled counterparts, who are happy to tell the whole world they feel let down.

While plausible, this supposed bias towards negative word of mouth is a myth, according to research about to be published by a team led by Robert East, professor of consumer behaviour at Kingston University. The team interviewed more than 2,000 people across 15 consumer categories, from coffee shops to credit cards. In each case, those interviewed were asked how many times they had recommended or advised against using the product or service in the previous six months. The results, about to appear in the International Journal of Research in Marketing, showed that in every sector people were more likely to tell others about good experiences than to warn about bad ones. "We found that across the 15 categories, positive WOM was more common than negative by an factor of 3 to 1," says Prof East.

Significantly, the team also found that brand leaders tended to generate most positive word of mouth, giving them a powerful advantage over potential competitors. In contrast, consumers who have abandoned a brand are especially likely to tell others about their bad experiences, and account for almost half of all negative word of mouth.

As a general rule, says Prof East, the consumers who spread negative word of mouth are also most likely to spread the positive variety - making them especially valuable to whoever can win them over.

Such findings contain useful marketing insights - such as not giving up on disgruntled users. Canny use of complaint logs and databases of current and lapsed customers will help identify those most likely to bad-mouth a product or service, says Prof East. And it is worth the effort: the negative word of mouth spread by consumers with bad personal experiences has a habit of "infecting" even those who have never tried the product. "And when negative word of mouth escapes from the user base, it really takes off," he says.

Mr Marsden agrees about the importance of combating negative word of mouth. "It may be less frequent than the positive variety, but there is more scope for doing something about it," he says. Research conducted by Mr Marsden for the London School of Economics in 2005 revealed that cutting the level of negative word of mouth about a product has almost triple the impact on sales growth as trying to boost levels of positive word of mouth by the same amount.

The impact is anything but academic. Mr Marsden and his colleagues found that companies with a poor balance of positive to negative WOM - in this study, Lloyds-TSB, J. Sainsbury, and T-Mobile - grew more slowly than their competitors over the period studied.

Whisper it quietly, but it seems word of mouth really does matter. Psst - pass it on.
The writer is visiting reader in science at Aston University, Birmingham

Copyright The Financial Times Limited 2007

1 comment:

Anonymous said...

I have suspected for a while now that some of the positive customer reviews of certain products sold via websites are not entirely genuine. They sometimes read like they have been left by people trying to boost those products. Could manufacturers or distributors be trying to influence us in this way. Surely not !