Critically Of Word-of-mouth For Business Success: Leverage Its Economic Benefits

Christopher Roberts Jan 24, 2023

The list of the thousands of ads that we see today is endless. According to industry reports, in 2022 people were exposed to an average of 10,000 advertisements a day. These could have been billboards, media screens, social media ads, pop-up ads, TV and radio advertisements, in-video ads, SMS marketing… the list is endless.

Now add to this the fact that there are not a handful, but hundreds of TV channels, many more radio stations, podcasts, OTT platforms, multiple social media channels, and more, and it is but obvious that advertising through practically every channel has lost effectiveness owing to such heavy fragmentation as no one channel may necessarily reach a majority of your target audience. This has become even more of a challenge today with viewers being given an opportunity to access certain platforms ad-free. This means that unlike even about 20 years ago, prime-time ads may not necessarily reach a majority of your target market given that a fairly large number of people are on the OTT platform today.

So what has truly helped organisations bolster their advertising efforts? The answer lies in the humble concept of Word of Mouth.

According to Engaged Strategy’s studies that span close to 100 brands, we found that Word of Mouth is 4X more powerful than TV advertising in influencing purchase decisions. More importantly, our data from the 1+ million consumers that we have surveyed have found customers stating that Word of Mouth was the highest influencer of their purchase decision, with Reviews and Ratings following next. You could argue that reviews are just a one-to-many version of Word of Mouth. But there’s one pertinent difference.

A very critical insight that we found in our studies is that Word of Mouth has been found to be the primary source of sale in about 25 to 30 per cent typically of organic sales and in some cases as high as 55 per cent. Word of mouth and Reviews have been found to influence about 70 per cent of purchase decisions. Just imagine the economic scenario when these numbers are positive and negative for your brand!

Now that you understand the economic impact of Word of Mouth in driving purchase decisions, let us look at developing a healthy environment to build strategically strong positive Word of Mouth.

Word of Mouth is not 1-1 anymore. One great or bad experience can be splashed across multiple platforms at a go. In times like now where every good or bad word reaches tens of thousands (if not millions) of people at a go, an organisation needs to ensure that its three arms are in complete sync with one another.

There are five critical drivers of Word of Mouth which, if done right, can lead you toward building a strategic brand with huge economic benefits:

1. Align your practices to your unique value proposition

Having a unique value proposition that sets you apart from your competition is a necessity. But what’s more important is that you deliver on this unique value proposition.

- Is your uniqueness adding value to your customer’s lifestyle?

- Are they able to save more, protect their lifestyle and benefit from your uniqueness?

- Do they feel like they are part of a unique club or group of people who benefit from your product or service?

2. The customer experience you offer

This is a critical driver and must be woven into the operational fabric of your organisation. It includes two critical elements:

- Functional Elements – These include elements such as answering calls quickly, resolving issues sooner, communicating with your customers efficiently and politely, etc.

- Emotional elements – This is about adding zing to your functional elements. Do your customers feel valued, cared for and supported? Do they enjoy not just a pleasant, but a great experience with your brand at every touchpoint?

When your customers are not just satisfied with your brand but are able to connect to you emotionally, you are guaranteed Word of Mouth from them.

3. Your staff are your secret sauce

If you want your customers to feel a certain way, you need to ensure that your staff feels those emotions too. When your staff have a clear line of sight and are able to resonate with your organisational goal, they truly understand the emotions you want customers to feel, and they transfer these emotions to your consumers.

4. Create a talkability factor

Let me share an anecdote from one of my clients, TUH, a highly respected r health insurance fund for teachers in Australia. Every day, their frontline staff cater to hundreds of queries from their members. On one particular day, an old lady had come by their Health Hub for a claim. However, on her way back she realised she had forgotten where she had parked her car. An employee of TUH walked along with her through three private car parking lots and ensured she found her vehicle.

No one knew about this employee’s gesture until the lady wrote in a note of appreciation. However, for the employee, it was just the organisation’s culture to practice its duty of care.

And this is the kind of story that drives powerful word of mouth for the brand. More importantly, it showcases the inextricable link between your staff and customers, reiterating what I stated in point 3.

5. Actionable Insights

It is extremely critical to conduct tailored strategic surveys at every key touchpoint to help you understand your key pain points and drivers. Once you have this critical data, it is imperative that you take immediate action against the feedback you receive to plug operational loopholes and provide a better customer experience.

The end result is that you grow your cohort of extremely happy customers.

Happy customers stay longer with your brand. Even if they are average buyers, their accrued lifetime value with your brand has massive economic benefits. The happier they are, the more powerful is their word of mouth.

The economic value of this advertising format is immense and extremely critical to help any brand survive a crisis of any magnitude. When an organisation achieves this state of economic survival, it can be safely called a brand that has matured and is here to stay.