February 2007
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WOMMA is always hard at work trying to get you the best data to drive your word of mouth efforts. With that in mind, we are pleased to offer our members exclusive access to an abstract from the SPI ("Social Persuaders and Influencers") Report, a new quarterly research offering released last week by StartSampling Inc. and McElroy Inc. The SPI Report abstract is available for download by all WOMMA members via our Member Center.
WOMMA members: Be sure to log into to the Member Center to get the complete abstract from this insightful report. Simply log on to the Member Center and click on "Research Specials" to access this data.
Log on to WOMMA's Member Center and download the abstract.
WOMMA is eager to extend this partnership opportunity to other research companies. If you have research you think might be valuable to WOMMA members and you want to discuss a future partnership with WOMMA, contact us at editor@womma.org.
* When it comes to buying a car, 30.4% of consumers are influenced by word of mouth, compared to 24.1% by TV, 21.3% by reading an article, 20.2% by newspapers, and 17.5% by magazines.
* When it comes to making electronics purchases, 42.6% of consumers are influenced by word of mouth, compared to 34.1% by reading an article, 32.3% by TV, 32.0% by newspaper inserts, and 27.2% by in-store promotions.
When it comes to influencing consumers, word of mouth trumps TV, print, and the web, according to the most recent edition of BIGresearch's Simultaneous Media Usage Study (SIMM). Consumers are asserting control over their media environments in ways that were never possible before, and it's changing the media model. The report shows that 67.9% of consumers use other forms of media while watching TV, 56.4% while listening to the radio, 68.9% while reading newspapers, and 70.7% while online. What this means for marketers is that consumers' attention is being shared, which dilutes the potency of traditional media messages.
Learn more (Market Wire)
Learn more (eMarketer)
Learn more (Media Buyer Planner)
More than half of CMOs are dissatisfied with traditional, large advertising agencies' abilities to meet their contemporary and online marketing needs, according to a December 2006 study commissioned by Sapient. As the traditional media model evolves, CMOs are responding by shifting their ad dollars to blended and niche shops; only one in 10 CMOs indicate that they expect to partner with traditional ad agencies for their online marketing needs.
According to the study, the two biggest challenges for marketers today are measuring the effectiveness of marketing spend and operationalizing their entire digital strategy. When it comes to assessing the offerings of a potential marketing partner, CMOs look for (in order):
* Quality of creative content
* Innovation and strategic value
* Price/cost
* Sophisticated analytics and measurement systems
* Proficiency in emerging, interactive, or digital media
* Traditional print, offline, and media buying services
Learn more (Sapient)
Learn more (Jaffe Juice)
When a consumer has relatively little personal experience with a service, positive information about a single employee can sway their overall interpretation of the service provider, leading them to believe that the firm's other service providers are similarly positive, according to a June 2003 Journal of Consumer Research article, titled "The Positivity Effect in Perceptions of Services: Seen One, Seen Them All?" Authors Valerie Folkes and Vanessa Patrick assert that a similar negative experience with a single service provider will be less likely to create similarly inclusive inferences about the overall negativity of the service firm.
Studies conducted by Folkes and Patrick showed significant variance between consumers' perceptions of products and services. Because there is relative homogeneity in consumers' experience with products, a positive or negative experience with a particular product is expected to influence overall perception, but because of the more "human" element involved in service industry experiences, it could be assumed that one positive experience would lose power given the implied heterogeneity. That is not the case. One amazing customer service experience -- or word of mouth about one amazing service experience -- can inform a consumer's overall impression of the service provider.
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Social media is elbowing its way into corporate America, and it's doing so more quickly than anticipated, according to a recent study by the University of Massachusetts Dartmouth. The school's Center for Marketing Research surveyed last year's Inc. 500 to see how the nation's fastest-growing private companies were leveraging social media. A full 66% of surveyed companies say that social media is either "very important" or "somewhat important" to their business/marketing strategy.
Other results:
* 42% say they are familiar with social networking, 38% with message/bulletin boards, 36% with blogging, 31% with online video, 30% with podcasting, and 16% with wikis.
* 33% say their company uses message/bulletin boards, 27% social networking, 24% online video, 19% blogging, 17% wikis, and 11% podcasting.
Learn more (Center for Market Research)
Learn more (BizReport)
More than half (55%) of teens online have created a personal profile on a social networking site, and nearly half (48%) incorporate social networking activities into their daily lives, according to a January 2007 Project Data Memo released by the Pew Internet and American Life Project. The study finds that the greatest proliferation of online networking activity occurs in older girls, who turn to the sites to reinforce pre-existing friendships. Teenage boys, alternatively, use the networks primarily to "flirt" and make new friends.
Other findings:
* 70% of girls and 54% of boys aged 15 to 17 say they use online social networking sites.
* 91% of teens users say they use the sites to stay in touch with friends they see frequently, 82% use the sites to stay in touch with friends they see rarely, 72% use the sites to make plans with friends, and 49% use the sites to make new friends.
* 85% of teens who have created an online profile say the profile they use or update most often is on MySpace.
* Nearly half of teens who use social networks visit the sites either once a day (26%) or several times a day (22%), while 17% visit the sites three to five days per week, 15% visit one to two days per week, and 20% visit every few weeks or less often.
Learn more (Pew Internet and American Life Project)
Learn more (MediaPost)
Learn more (eMarketer)
Learn more (ClickZ)
Learn more (MediaWeek)
Learn more (BusinessWeek)
If consumers are influenced by internet-based opinion forums (and evidence shows that they are), what's to stop companies from anonymously manipulating the bias of those forums by posting fake reviews and opinions? Word of mouth, according to WOMMA Advisory Board member Chrysanthos Dellarocas' article "Strategic Manipulation of Internet Opinion Forums: Implications for Consumers and Firms," which appeared in the October 2006 edition of Management Science.
Lying costs a lot more than it's likely to reap, says Dellarocas, thanks to the effects of negative word of mouth on ROI. Rather than increasing or decreasing positive online chatter about a company, false and manipulative postings merely decrease the validity of an online forum -- something consumers are very adept at catching on to. Also, Dellarocas contends that competitive online manipulation between firms inevitably leads to an "arms race" in manipulation that hurts the profits of all companies involved. The best way to increase the value of a forum, Dellarocas concludes, is through the encouragement of higher levels of active consumer involvement.
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The presence of a relationship between employees and customers can have a significant influence on positive word of mouth communications, according to a January 2001 International Journal of Service Industry Management article, titled "Generating Positive Word of Mouth Communications Through Customer-Employee Relationships." Authors Dwayne D. Gremler, Kevin P. Gwinner, and Stephen W. Brown studied four dimensions of interpersonal bonds (trust, care, rapport, and familiarity) and asserted that as a customer gained trust in a specific employee, positive word of mouth about the organization would likely increase as a consequence.
The researchers found that customers' satisfaction with the service experience alone is not enough to stimulate word of mouth activity, but that the addition of an interpersonal relationship (between the customer and an employee) is often enough to tip the scales, prompting the spread of more positive word of mouth. Overall, the authors concluded that the presence of interpersonal relationships between employees and customers is significantly correlated with word of mouth behavior, and suggested that management would benefit from organizing the service design and support systems in ways that foster these bonds.
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Social Persuaders and Influencers (or "SPIs") indicate that product reviews, brand and shopping websites, and in-store trial and dialog are tactics likely to inspire them to spread positive word of mouth, according to the January 2007 SPI Report from WOMMA member company StartSampling and McElroy Inc. This finding demonstrates that, compared with average consumers, who are generally immune to these tactics, SPIs are relatively easy to reach and influence. The report also illustrates the four-step word of mouth process -- which leads from awareness to research to personal experience and, finally, to recommendation -- that these influential consumers follow.
Other findings:
SPIs are ...
* 61% more likely to learn about products or services through product reviews
* 88% more likely to share information at a meeting or social event
* 81% more likely to email information to others
* 76% more likely to call others with information
* 76% more likely to seek out information from store employees
* 65% more likely to read offline reviews
* 65% more likely to visit manufacturer or brand websites
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Marketing organizations that strive to be more customer-oriented can enjoy the benefits of higher returns, claims a December 2006 Aberdeen Group report, titled "The CMO's Strategic Agenda: Creating a Customer-Centric Marketing Organization." Companies that master this approach track customer behavior, use customer profitability modeling, maintain centralized knowledge and data management systems, and possess real time decision support -- all in the name of improving their BtoC efforts.
According to the report, a majority of customer-centric organizations achieved better than 15% annual improvement in ROMI, gross revenues, and customer retention rates. These annual improvements can be attributed to leveraging customer analytics in ways that improve the understanding of the kind of relationships their best customers want.
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It's no surprise that as marketers gain confidence in consumer-generated media, and as consumers continue to flock to social networking websites, ad spending in social networks will continue to grow. In its November 2006 report, "Social Network Marketing: Ad Spending Update," eMarketer predicts that 2007 will see a dramatic increase in this type of spending, which speaks to the confidence marketers are gaining in online word of mouth as a way to drive sales.
eMarketer's 2007 predictions:
* $525 million will be spent in MySpace advertising
* $200 million will be spent in other general social network sites (Facebook, Bebo, Piczo, Friendster, etc.)
* $95 million will go to social network offerings from portals and other sites (MSN Spaces, Yahoo! 360, AIM Pages, Orkut, etc.)
* $45 million will go to vertical social networks and marketer-sponsored social networks
Learn more (eMarketer)
Learn more (BizReport)
Consumers continue to exhibit relational market behavior in spite of the fact that it limits their available market choices, according to the 1995 Journal of the Academy of Marketing Science article "Relationship Marketing in Consumer Markets: Antecedents and Consequences." Authors Jagdish N. Sheth and Atul Parvatiyar assert that consumers choose to form amabassador-like relationships with products and services due to personal, social, and institutional influences and because they want to simplify their buying and consuming tasks.
One of the primary influences of relationship marketing behavior is word of mouth, which can either prompt a consumer to favor or reject products, provided the source the WOM comes from is credible and the network through which the communication travels is very connected. The authors suggest that as long as neither consumers nor marketers abuse the cooperation and trust that is implied in this marketing method, marketers can expect greater productivity as a result of this practice.
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Making consumer-generated content part of the advertising mix is one way a company can boost its likeability, according to a December 2006 study conducted by the American Marketing Association and Opinion Research Corporation. The study found that most adults (consumers aged 25 to 64)prefer companies that market via consumer-generated media to those that market via professional advertising; those surveyed indicate that a company using customer-created ads is more customer-friendly (68%), creative (56%), and innovative (55%). Relatively few adults feel a company that uses consumer-created ads is less trustworthy (10%), less socially responsible (10%), and less customer-friendly (5%).
Young adults (consumers aged 18 to 24), however, are slightly more dubious of what consumer-made content says about a company's character -- 21% say they are less trustworthy, 20% say they are less socially responsible, and 13% say they are less customer-friendly.
Learn more (AMA)
Learn more (Back Channel Media)
A large portion (43%) of internet users in the United States who are members of online communities "feel as strongly" about their virtual communities as they do about their real world communities, according to the University of Southern California, Annenberg School Center for the Digital Future's sixth annual Digital Future study.
Other findings:
* 20.3% of online community members perform actions offline at least once a year that are related to their online community.
* Average respondents have met 1.6 of their "web acquaintances" in person, 40% are using the web to stay connected with people, and 37.7% say the internet is enabling them to communicate more with friends and family.
* 64.9% of online community members who participate in social causes online say they are involved in causes that were new to them when they started participating in social networks, while 43.7 % of online community members say they engage more in social activism since they started participating in online communities.
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Senior level marketers say their loyalty efforts are hindered by insufficient budgets (48.8%), lack of leadership vision (41.6%), spotty customer service (33.7%), ineffective insight tools (32%), lack of top management support (28.2%), indifference to innovation (27.8%), poor product/service quality (23.4%), an insufficient database (23.4%), lack of loyalty programs (21.6%), and an over reliance on pure demographics (19.9%), according to a November/December 2006 Reveries.com survey.
In her analysis, titled "Loyalty, Harley Style," Dori Molitor, founder and CEO of the consultancy/agency WomanWise LLC, offers brand marketers a solution that bypasses a majority of these loyalty roadblocks. Molitor suggests that brand marketers should focus on effectively creating a "deep-soul connection" with consumers by feeding cultural values -- which can be accomplished with a variety word of mouth marketing techniques, including cause marketing (see http://www.womma.org/casestudy/create-a-cause/). According to Molitor, using cultural values as a way to promote products "can enrich the lives of each and every one of their consumers, which in turn enriches the community, society, and the world at large."
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The "relational approach" is not just a strategy for customer retention, it's also valuable as a way of encouraging customers to voice their complaints, according to a September 1999 Journal of Market-Focused Management article by Isabelle Prim and Bernard Pras. Titled "'Friendly' Complaining Behaviors: Toward a Relational Approach," the report argues that using information derived from complaints, as well as providing the correct answers, is an essential part of making a relational marketing approach a vital part of the marketing mix. After all, it suggests, when a customer is satisfied by the response to his complaint, he becomes more loyal than other consumers. Complaints, in other words, can be a means for communicating with consumers, as well as for building and maintaining loyalty.
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