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The Power of Word of Mouth
Flowers Canada |
Today’s customer-driven marketing jargon involves concepts such as
loyalty, acquisition, retention, data management, and branding – to
name but a few. However, many of us forget about the basics. A key
study was released at the end of March by two leading Canadian firms
and the Wharton School of Business
identifying the power of “Word of Mouth Marketing.”
Today’s customer-driven marketing jargon involves concepts such as loyalty, acquisition, retention, data management, and branding – to name but a few. However, many of us forget about the basics. A key study was released at the end of March by two leading Canadian firms and the Wharton School of Business
identifying the power of “Word of Mouth Marketing.”
More than 50 per cent of consumers reported that a negative shopping experience of a friend or colleague will prevent them from setting foot in the store altogether. The Customer Dissatisfaction Study (accurate to within +/- 2.8 per cent), released by the Baker Retailing Initiative at Wharton, finds that as shopping problems get repeated, they often get embellished and actually become up to five times more damaging to customer retention than the initial negative shopping experience itself.
This study clearly identifies that for every 100 shoppers, 64 people will be told about a store’s poor products or services. It will not matter what that store does to entice shoppers (sales, promotions, advertising), those people will not set foot in their store again. Almost one-third of all retail customers who have had a bad shopping experience will tell four people in such a way that those four people will be more negatively impacted than the person who initially had the problem. The finding that jumps out the most is that customers who have a problem are happy to tell their friends in a very powerful way, but they don’t bother to tell the company. In fact, shoppers experiencing problems are five times more likely to tell a friend about it than contact the company. The verdict is in! We all need to focus and invest on ensuring that each of our customer experiences is top notch – from adequate parking, to trained front line staff, to the right product mix, both in stock and on the shelves.
Other Key Finding in the study included:
• Fifty per cent of consumers experience a problem. Those who have a problem, experience three problems on average.
• Thirty-one per cent of consumers tell one or more friends about their problem.
• On average, shoppers tell four people about their negative shopping experience.
• Almost half of shoppers have avoided a particular store in the past because of someone else’s negative experience.
• Negative word of mouth influences future patronage up to five times more than the person who experienced the problem first-hand as a result of (i) Problem embellishment. Each time someone tells the story it is exaggerated. (ii) Risk aversion. Why shop at a store with problems? There are many other choices for consumers. (iii) Location. Exit barriers or general convenience for potential shoppers who have no previous relationship with the store because it is not close to home, they are not a part of an awards program, etc.
• Top problems consumers experience are related to the following three areas: (i) Time – can’t find parking and too long to get in or out of the store; (ii) Merchandising – ease of finding product, store layout and product information displays; (iii) Front line staff – poor product knowledge and lack of courtesy.
• The bigger the store – the more likely consumers are to experience problems.
• Category killers are supposed to be experts but they don’t always meet customers’ expectations about information and product availability.
• Department stores and mass merchandisers have more issues related to time and/or accessibility.
• Men are less loyal than women.
• Men and women are remarkably similar in the problems they experience.
• Men’s tolerance levels are lower than women’s. Men are less likely to return to a store if the product/ service they were looking for is out of stock.
By understanding the problems our customers experience, we can begin to immunize ourselves against negative word of mouth. Word of mouth marketing is about transparency and open-source dialogue. When a product or service is cool, extraordinary, delicious, fun, or well-designed, your customers will talk about it. They will talk about it to their friends, their loved ones, their co-workers, peers, and nowadays they write about it in their blogs. How many restaurants and hotels have we visited on the recommendations of our neighbours and friends? How many movies have we wanted to see at the theatre but we wait for the video release based on someone’s feedback?
Word of mouth marketing happens whether we like it or not. People like to talk about the things they really enjoy and stuff they really hate. We need to be tapped into what our customers are saying about us. We need to encourage feedback from them and empower them to help us improve our businesses to better serve them. The thought 40 years ago was: Hey, if they say so on TV, it must be true. Today, the thought is: Don’t believe anything you see in a commercial or print ad. If you have a way to get your products, services or point of difference talked about positively by your customers and prospects it is the starting point of all other marketing.
Cor Smit is President Flowers Canada (Retail & Distribution Division).
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