The importance of positive Word of Mouth (WOM) to retain customers and acquire new customers is something every company should be aware of and should learn to manage. Why? “Referral from a loyal customer (Promoter) has a 92% retention rate vs. 68% for a customer acquired from advertising.” (Source: Bill Bleuel, PhD., Graziadio Business Report.)
Word of Mouth is organic. It is not associated or driven by a company’s direct marketing efforts. It is directly related to a customer having an emotionally and physically positive customer experience in which they connect to or live a company’s brand promise.
The Internet and Social Media
Want to understand the emotional and physical customer perceptions of your company? Never before has it been so easy for companies to listen to both customers and employees. Tapping in to the internet and social media, a company can easily pick up threads of how their company is perceived both internally and externally.
If you are really curious about how strong emotions run, Google some typical emotions like “love” and “hate” [your company name]. Love, really? Yes, even in this economic gloom and doom, there are positive threads to be found. You’ll learn just as much by reading about companies that are still loved by their employees and customers alike.
Want to know how your company is perceived? Google [your company name] “sucks” and brace yourself for potentially bad news but don’t forget to search for the positive perceptions as well. Understanding what your company is doing well (that results in positive WOM) and maintaining/increasing what your customers perceive as positive is just as essential to your company’s sustainability as fixing the problems customers are complaining about.
An Example: “Dear American Airlines: A Novel” by Jonathan Miles
You may be a little skeptical about the significance of WOM. Just how important is both monitoring and taking quick action should your company waiver on engaging employees and customers during this economic challenge?
In this example, the book “Dear American Airlines: A Novel” relays the experience of a traveler whose flight is canceled and, as a result of the canceled flight, spends the night stranded at Chicago O’Hare. As you’d expect, the customer demands a refund of $392.68 for the canceled flight. (Source: “Dear American Airlines: A Novel” by Jonathan Miles, available on Amazon.com.)
However, the cost of the flight is not the point of the story. What was really the catalyst for the level of this customer’s anger was not just the cancelled flight. The cancelled flight meant missing the wedding of his daughter and his perceived ‘last chance to redeem himself as a father to his estranged daughter’.
What made this situation worse? In the book, he describes how he and his fellow airline customers were “treated like ‘dull herds of cattle’”. The airline employees were “apathetic, robotic”, disinterested, and unengaged. Their lack of empathy was the catalyst of this customer’s canceled flight resulting in a best-selling novel (at the expense of the airline’s reputation). This situation escalated from a spontaneously written letter to the American Airlines CEO during the long, miserable night at Chicago O’Hare airport to:
• a best-selling (~190 page) novel,
• interviews of the author on TV and radio, and
• blogs, podcasts, and an internet presence that has not benefited American Airlines in the least.
What ignited the intensity of emotions were the airline employees who treated the customer with outright indifference. If the American Airlines’ employees had interacted with the stranded customers in an empathetic way, they most likely could have kept the situation from escalating.
Why is WOM so important?
Historically, a person with a positive customer experience would tell 2-3 people; a person with a bad customer experience would tell 5-10 people. Double those estimates when the customer’s experience evokes very strong positive or negative emotions.
Satmetrix recently published a study on the “Impact of Loyalty on Word of Mouth” in the wireless industry. It estimates that each Promoter (highly loyal customer) is responsible for about the average annual spend of a customer (meaning they bring the company a new customer). Their study found that 75% of Promoters positively referred in the past 12 month period. Each Detractor (defecting customer) is responsible for about 1 customer’s worth of spend (meaning the Detractor not only doesn’t buy from the company again but also influences another potential customer from purchasing). Satmetrix also discovered, not surprisingly, that the higher percentage of Promoters a company has the greater extent of positive WOM. (Source: Satmetrix The Net Promoter® Company, White Papers:
In Closing
Consider how empowered your customers are now with the limitless reach of technologies. A recent example mentioned in the article “Virtual Water Cooler” by Michael Axelsen, conveys how a person with a bad customer experience Twittered 789 followers about her experience while still in the store. That conversation now shows up in internet searches. That negative experience is picked up, conveyed, and recorded for posterity.
Whatever you call it – customer-centricity, customer advocacy, customer first, voice of the customer, customer service, customer experience – it’s all about how you operate as a company, and how you and your employees interact with the customer.
Sue Morgan.
By Sue Morgan | Published: July 27, 2009