Word of mouth is marketing’s way of the future in a digital world

According to bestselling author Seth Godin, the secret to marketing is no secret at all: “word of mouth is all that matters.”

Godin defines marketing as “the art of making something that people want to talk about.”

Many marketing practitioners and marketing scholars point out that word of mouth (WOM) is marketing’s single most powerful tool. It is generally considered to be the primary factor behind 20% to 50% of all purchasing decisions.

According to Nielsen, 92% of consumers believe recommendations from friends and family over all forms of advertising. Yet there appears to be a gap between our actions and the need for WOM: in a recent study done by the American Marketing Association and the Word of Mouth Marketing Association, 64% of marketing executives said word of mouth is the most effective form of marketing, yet only 6% said they had mastered it.

Word of mouse

People today love to talk about great companies, brands and “wow” products. According to writer Dave Balter (Grapevine), 15% of all our conversations have something to do with a product or service. Brands are now a major currency of conversation in America.

Today’s consumers particularly love a number of well-known companies, including Amazon, Starbucks, Google, Harley-Davidson, Southwest Airlines and Whole Foods, according to Firms of Endearment. Interestingly, those loved companies have not only been more profitable, but also spent less on marketing compared with their rivals, and, according to Firms of Endearment’s authors, are “wonderful for investors, returning 1,025% over the past 10 years, compared with only 122% for the S&P 500.”

With the growth of the Internet and social media, word of mouth is going to play an even more important role in the future given that today’s consumers need only one mouse click and just a few seconds to spread the word. In addition, word of mouth on the Internet lasts much longer because most of our conversations are now recorded “forever.”

The fourth business orientation: delight and surprise the customer

We used to read in marketing textbooks that management focus had shifted from production (until the 1950s) to sales (1950s-1960s) and then to marketing and customer satisfaction (1960s-2000s). The three management philosophies can best be described with different mottos such as “If you can make it, you can sell it” (production era); “Push, push, push” (sales era); and “Discover and satisfy the need” (marketing era). The new era and the fourth business orientation have just emerged. The most successful businesses now go beyond the simple satisfaction of customers’ needs. They go the extra mile. They focus on creating “wow” and giving their customers something to talk about. Their focus is to surprise and delight the customer.

We are really at the early stage of a big change; companies are creating titles and even departments around WOM marketing. It’s really beginning to take a grip, according to Jim Nail, chief strategy and marketing officer at Cymfony.

Are you ready?

There are lots of strategies and tactics that can help you create “wow” and harness the power of word of mouth. Perhaps you can create great conversational pieces and stories like Dove’s “Real Beauty.” You might develop your company’s customer service training like Zappos’ “School of WOW,” or you can run your “random acts of kindness” campaign like KLM Flights. You can create your viral hooks like a famous Hotmail invitation to open webmail, or you can create your own referral engine such as Verizon’s Refer a Friend program.

It might be the right time to rethink your strategy to better activate the potential of word of mouth. What can you do to delight your customers and give them something to talk about?

Ivan Surjanovic (ivan@ipowerlab.com) is CEO of iPower Lab (www.ipowerlab.com), a strategy consultant, and a member of Capilano University’s business faculty.