7 Additional Answers
(Senior Online Strategist, n-tara)
Creating memorable experiences for customers is fundamental. The fact that I am answering this question at all bugs me.
Good PR is good PR. Every small business better wake up to the fact that they can't really control reviews and comments on Google Maps or some Places services, which are often pre-installed on every phone being made. However, they might be able to talk a few friends into watering down bad press from that occasionally disgruntled customer.
Indeed, how we raise our social consciences to re-post or WOMMIFY our favorite brands is a big question in 2011, but I'm really thinking it can't be forced without old school methods like contests with actually interesting prizes. But, is that genuine? Nah, but it gets you more fans.
Finding your biggest fans (the less than 5% who actually talk about you) and lavishing them with praise and support has been a good strategy (as in, yes, ROI) for years.
(Lead Designer, Focus)
Word-of-mouth doesn't necessarily have a price-tag associated with it. Word-of-mouth can easily be free. Businesses that do a good job serving a customer's needs can easily lead to positive word-of-mouth. For example, a customer service rep can be extremely nice while helping a customer. Being nice doesn't cost anything, but goes a long way in the customer's mind.
If 'going the extra mile' ends up costing you money but leads to word-of-mouth, the costs should be worth this form of advertising. Not only is it cheaper than most traditional forms of advertising, but people take the word of peers, family and friends with higher value than the word others, such as a celebrity on TV endorsing a product.
Word of mouth is one of the most powerful forms of advertising and the costs are minimal if anything.
(Internet Marketing Director, Web Marketing Partners)
Restaurants live or die by word of mouth advertising
(CRM/VOIP Specialist, Focus)
Some beneficial 'word of mouth' advertisement examples include sites like Yelp and Zagat. Yelp and Zagat provide that personal feel by allowing individuals to share their experiences and opinions. From restaurants to hair salons to doctors, these types of sites do three main things: they provide essentially free advertisement for vendors, they allow the public to voice their opinions and share insight, and they allow other individuals to get multiple opinions on a vendor as well as provide them with that vendor's contact/site information.
(Computer and Business Consultant, TBFed.com)
Brian: You touched on my point, but didn't really answer it, when you said 'the costs should be worth this form of advertising.' The problem I have is that there are no models I can use to quantify what that cost is. So I cannot do a cost/benefit analysis.
The customer service rep who is 'extremely nice' might do so at the cost of X seconds of time. If they take, say, 10% longer with each customer, then there is an associated cost that can be analyzed. But you'd have to then go back and see if that 'nice' turned into something positive for the company.
My whole question comes down to quantifying the costs of the 'free' advertising we call 'word of mouth.' It is never 'free.' There are costs associated with it -- be it in the form of incentives or work done gratis, or just the time and effort needed to perform 'well above expectations' each and every time.
I have always prided myself in giving better service and support than my peers. But I've noticed that this has become expected -- and when, for whatever reason, I provide 'normal' level of service, it is seen as problematic, and I get low marks for doing everything I am being paid for to the degree I am being paid for it.
At the same time, I have noted that several of the professionals in my area that I am watching are doing less for each customer, doing it faster, using more marketing and advertising, and getting better returns on their bottom line.
Thus, from my certainly non-scientific assessment of what is happening in my own life, my 'word of mouth' advertising costs are roughly 20% - 33% of my operating expenses -- and THAT is NOT FREE! I'm betting that there are a lot of companies out there that have discovered this phenomenon for themselves.
Hence my questions:
* What is the cost/benefit analysis of 'word of mouth' advertising?
* Where does the cost of providing the extra effort needed cross the value of the 'word of mouth' advertising you receive?
* How do you motivate your clients to provide said 'word of mouth' advertising?
Left to my own devices and analysis, I'm thinking that 'word of mouth' advertising might just be one of the more expensive options out there -- that it only SEEMS free because you normally don't write a check to cover it. You have to maintain a certain level of decorum and customer service, but is it possible that going beyond that level is simply not justified? (Which, I guess, would be my 4th question)
I promise that I'm not trying to be a jerk with this question. I'm honestly asking for information from folks who have some kind of feeling for the costs and returns on it.
(Business Development Director, Wurlwind)
Interesting question and discussion, but I'd like to question the connection made between 'Word of Mouth' and Advertising.
Awareness and Interest can come from many sources, which can be generally put under the headings of Advertising, Referrals, Content Marketing and Cold-calling.
Referrals, whether off-line (over the garden fence or between peers about suppliers) or on-line (Social Media comment, 'Like' button etc) are a very desireable source of potential business.
Customers are more likely to express negative comment than positive, so businesses should work very hard to raise satisfaction across the board, as 'business as usual'.
What may be applicable is to actively encourage customers to make referrals, by asking for introductions at the end of a business meeting, or a 'forward to a friend' or a member-get-member' campaign, via the customer service call-centre at the end of a call and so on.
A simple question like 'Do you happen to know anyone who ...?' could generate responses, or at least plant the idea that could open a conversation between friends later.
Whether Word of Mouth is 'best' is worth measuring and comparing to other sources of inquiry, in terms of quality measures like order value, lifetime value, buying cycle, cost of sale etc.
But even if it is 'best' it's only going to be one of many sources of inquiries for a business, of any size or market.
(President, SBA * Consulting LTD)
Lee - why do you see Customer Service only in the light of a 'Cost Center'. Good customer service is like a good salesperson, and they (the salesperson) is considered a 'Profit Center'.
If by spending a few extra seconds you make a customer for 'life', that customer tells their friends, and yada yada yada you have word of mouth advertising.
While that salesperson you can quantify cost vs sales = overall salesperson profit, you can't quite get that metric with customer service. But, use your own experiences - businesses that give you bad customer service are those you tend either not to use again or use reluctantly.
You tell your friends that xyz company is terrible and the only reason I use them is I'm stuck. Research iPhone users and you'll see alot of them bad mouth AT&T and then say I'm stuck using them. Now there is Verizon providing the service, but it's not a slam dunk changeover, so it will take quite a bit of time for either change in AT&T's customer service (competition should foster better service) or Verizon to reap/loose the benefits.