Word of Mouth Tops All Other Media

Excerpted from World Advertising Research Center's 7/9/2009 article
"Word-of-Mouth Works for Consumers"

Based on a survey of 25,000 adults in 50 countries, Nielsen research finds online and offline word-of-mouth are regarded as being the "most trusted forms of advertising."

• 90% of consumers around the world trust recommendations from people they know when discussing brands

• 70% accord the same status to online consumer reviews

According to Jonathan Carson, international online president of The Nielsen Company, the "explosion in consumer-generated media" means the importance of word-of-mouth "has increased significantly."

My Take

With the growth of social networking sites and the dominance of social media usage, the Web-inization of local word-of-mouth is inevitable. If consumers begin sharing trusted word-of-mouth referrals it at a rate similar to their adoption of social media, it will tip the $100 billion US local ad market.



About YouGottaCall.com

YouGottaCall.com is a local and Web-based (Web 2.0) social network that provides businesses with a means for connecting with their customers and neighbors encouraging more word-of-mouth sales leads rewarding their network of referrers

The purpose of YouGottaCall.com is three-fold:
1. to facilitate “word-of-mouth” referrals among consumers for the local businesses they trust
2. to increase sales revenues for trustworthy businesses
3. to benefit the not-for-profit organizations that are supported by the network members

Membership in the YouGottaCall.com network is free.

The mission of YouGottaCall.com is “Rewarding the community by empowering trusted relationships.”

The goal of the YouGottaCall.com is to “turn local advertising upside down and inside out”. “Upside down” because businesses only pay for advertising after it has been effective – not before. “Inside out” because businesses pay the advertising fee to their neighbors and satisfied customers who brought them the qualified sales lead – not to a third party publisher.

Related Web-based Services:
No other services offer the combination of social, local, affiliate, not-for-profit features which comprise YouGottaCall.com's process. (see chart)

My Take: Mark Cuban and "Free" vs. "Better than free"

In his June 30 blog article, "Free vs Freely Distribute, Mark Cuban dives into the debate stirred by Chris Anderson's new book about the Web, "Free".

Consequent and perhaps ancillary to the "Free" argument is the question, "Exactly what is 'Better than free'?" - a trademark of YouGottaCall since 2007. No - I'm not claiming trademark infringement - rather pointing out an important distinction which will become more clear as the Web evolves.

Mark describes that Web content such as YouTube and news articles are "better than free". My comments to Mark:

I’ll argue it’s “better than free” if you either directly save money that you would have spent or else (even better) receive money.

The examples you give (Youtube, magazine articles, newspapers reports, TV shows on Hulu) don’t do either. Do they? In most cases they’re “just free”.

I’m quibbling over your wording to illustrate an important point. While the Web provides a flood of media that we browse for free and Web 2.0 brings us user generated content, also also available for free, the future Web will provide new opportunities in a social economy that actually provide cash – and are really “better than free”.

When on the social Web I am paid for my affiliation with the businesses I trust or can earn money for my favorite charity through my Web-based or Web-facilitated transactions then I’ll agree that it’s “Better than free.”

“There’s value in them thar relationships”,

– - Tim

Fences Make Small Gardens

According to Robert Frost, "Good fences make good neighbors." Business owners may add, "But they make for small gardens."

Growing your word-of-mouth referrals takes hard work. It's like tending a garden, needing constant time and attention, weeding, pruning, watering and feeding.


But in the midst of your networking, business card collecting and after-hours socials with fellow business people don't wall yourself into a small garden.

Your customers and neighbors - the people who like you and are talking about you right now - are a much bigger garden than your fellow networkers.


Your referrals naturally come from satisfied clients and people who trust you. So take down the garden wall separating you from your bigger opportunity. Social media provides small business owners with new tools allowing you to connect your business networking efforts with your existing network of fans.

The result - a growing source of recurring, qualified referrals.

A Look into "The Entrepreneurial Mind" of Prof. Jeff Cornwall

Using Referrals for Word of Mouth

Excerpted from Jeff Cornwall's June 18, 2009 blog

Word of mouth never just happens. Although it is a great way to bootstrap your marketing efforts, it does take, well, some effort.

1. Ask! Don't be afraid to be direct about asking for referrals. A great technique is to view every client you work with as though your sole purpose is to get a referral.
2. Create a referral program -- Offer service credits as an incentive to your clients who send you new business.
3. Spread the word by sending a description of your referral program to all of your satisfied clients.
4. A few other dos and don'ts:

• Don't ask for a referral when presenting a bill.
• When asking for a referral, also ask for a testimonial from the client. It's great for websites!
• Ask people who perform complementary services to you for referrals. (i.e. If you are a contractor, why not ask an electrician or plumber who may be on the same site?)
• Have some type of printed marketing material handy to provide clients with that describes everything you do-- and give them a few copies to spread around

My Take

Prof. Cornwall provides some refreshingly practical WOM tips. Business owners and sales representatives need constant reminders about these, because, while appearing simple they are constantly overlooked.

With growing usage of Web-based social networks it seems natural that businesses will use them as a medium to engage customers, ask for referrals and provide word-of-mouth tools - and even rewards - for their clients use.

Fueling Your Connection Engine

The "Golden Fuel"^TM Rule

In business, "doing unto others as you would have them do unto you" is a way to maximize customer satisfaction and generate word-of-mouth referrals - the best type of advertising.

Applying the Pareto Principle, if 80% of revenue comes from 20% of clients, then each referring client is worth 16 times more in lifetime value than the clients who do not refer.

Let that sink in - your referring customers are worth sixteen times more to you than your one-hit clients. And this does not even consider that your paid advertising had no effect on bringing you these clients who account for 80% of your sales.

So most of your advertising has zero effect on most of your new sales? Wow - that's enough to make you scratch your head.

These top referring clients are a business's "Golden Fuel" for revenue growth. And by following "The Golden Fuel Rule" they can contribute more and more to your bottom line each year. The Rule is "Do unto your top referring clients 16 times more than your other clientele."

How does a smart businesses implement their "Golden Fuel" strategy? Here are the elements:
- Find these Golden Fuel customers - identify which clients are regular referrers of business
- Communicate with them - stay close with them through regular mail or e-mail communiques. Use your Web site for this.
- Give them more reasons - as well as a means - to refer their friends. Your goal should be to create a new 16X client with each new customer
- Reward them - use your imagination to give incentives or meaningful, if inexpensive gifts to your top referrers. These go a long way to show your appreciation and keep you on the front of their minds.
- Keep them satisfied - your top level service is how you established your reputation in the first place.

Disclaimer: I am the founder of a local/social media site that provides a means of rapidly deploying a "Golden Fuel" strategy for free. YouGottaCall, in our central Connecticut test market, has hundreds of local members and businesses. We're developing integration with leading social sites as well as advanced reporting features prior to release to other markets.

Until we're available in your locale, there are practical ways to implement your "Golden Fuel" strategy. Help is on the way!

- - Tim

My Take on Thomas Baekdal's "Is Social Taking Over Google?"

Some articles need to be read in their entirety - excerpting just cuts out too much good stuff.

You gotta read Thomas' entire article, "Is Social Taking over Google?"

I am only including snippets and graphics here to tantalize you.

On baekdal.com:

• in 2005, Google and the other search engines accounted for 65%.
  
• today Google has dropped to 2%***.

Note: *** Normal search via Google.com. Search engines variations e.g. image search, language search, and other search engines - still totals 15%

Traffic vs. Influence

You need to forget about measuring traffic. It's inaccurate and it's irrelevant. Instead you need to measure ‘influence'. How many people have you really connected to today? How many people chose to make you a part of their stream? How many people decided to come back another time? That is your new ‘how many are there' statistics. Not people but Influence!

Referrer vs. communication

You need to look at all the times people are referring to you as person, your company, product, content, website, and your social profiles. And you should not look at where people are coming from, but instead what they are doing. What they are talking about, what they are sharing, and who is subscribing to it.

Reaction

But what you really need to do is to look at how people are reacting to your content (or you as a person). The point of this is to discover how people are responding

My Take

Again, please read Thomas' original article. This is a concise, data rich presentation of a trend foreseen in 2007 by Robert Scoble (Twitter: @scobleizer) in his "Why Mahalo, TechMeme, and Facebook are going to kick Google’s butt in four years" video series.

My Take on "Trust Word-of-Mouth" by eMarketer Digital Intelligence

From June 8, 2009 article in eMarketer Digital Intelligence

Look who’s talking

In a poll of chief marketing officers from the Duke University Fuqua School of Business and the American Marketing Association (AMA), the top overall customer priority named was service excellence, followed by building a trusting relationship.

Unfortunately, building trust can be difficult.

A 2007 Myers Publishing study found only 17% of people trusted advertisers. And things got worse in 2008, when respondents to a Gallup poll said that only 10% of ad practitioners were trustworthy.

According to BIGresearch, however, word-of-mouth recommendations have different effects depending on the type of purchase.

Over one-half of consumers believed that word-of-mouth influenced the restaurants they went to. Slightly more than one-third felt word-of-mouth had some impact on home improvement purchases.

Leveraging word-of-mouth marketing initiatives might matter more to some retailers and product sellers than to others—but whether to a greater or lesser extent, word-of-mouth matters, always.

My Take

"Unfortunately, building trust can be difficult." That's the power of word-of-mouth - the trust is already there.

WOM is a powerful and growing consumer force. Social media is an effective facilitator of WOM because it uses the Web to help consumers cut through advertising clutter and connect with trusted businesses.

BIGResearch's findings re: the percentage of consumers who use WOM looks off. It's difficult to compare the purchase of groceries to the hiring of a home repair contractor - the costs and the frequency of use are on completely different scales.

I doubt grocery shoppers vary supermarkets each week based on what their friends say. It'd be a stretch to accept that 40.7% of the items they place in their carts is due to a word-of-mouth referral.

Whereas our members tells us they hire 8 out of 10 of their home repair contractors based on recommendation of friends and neighbors. Most contractors rely on WOM for their business's survival and 80% of their revenues.

Placing dissimilar categories next to each other in such a summarized table merits a note on the survey methodology.