word of mouth

I was lucky enough to meet Ted Wright, founding partner of Fizz Word of Mouth Marketing, last night in my Integrated Brand Communications class. He was charming, funny, and had incredible word of mouth marketing tips drawn from a decade of experience declaring that broadcast advertising is dead and word of mouth is the new way to go.

Ted’s experience includes creating 8% growth per year for Pabst Blue Ribbon (as the rest of the category declines by 5%) and launching the insanely popular Crocs brand. He claims that a word of mouth marketing strategy can produce 8 times the profits that an advertising strategy produces.

I’m a huge fan of word of mouth marketing, so much so that I when I wrote my book (Social Pollination, December 2009) I wrote quite a bit about how companies should do word of mouth marketing online. I’m publishing all my notes from the talk for those people who want to better understand how word of mouth marketing happens. Please note that all of this information came from my interpretation of what Ted answered in response to questions from about 30 MBA students.

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Why is broadcast dead?

People in the US are blind to advertising. We are hit with thousands of advertisements every day, almost all of which we block out. There is no ROI for advertising. It’s wasted dollars. Anytime a company tries to interrupt or intercept a consumer, it loses.

If broadcast is dead, why do companies still do it?

Two reasons -

• Fear – it’s hard to cut a budget when others in the company attribute sales to advertising
• Inertia – Advertising worked in the ’90s so it still works. This is true in places like India and China who have only recently been introduced to heavy advertising through broadcast, but not in mature media markets like the US.

How do companies generate organic word of mouth?

By telling good stories that influentials feel are worth sharing.

Who are influentials?

Only one person out of 10 is a true influential. Influentials have three traits:

• They try things just because they are new
• They tell stories to friends
• They get intrinsic value from sharing their stories

Note #1: Influentials are not people who like free stuff simply because it’s free! True influentials are happy to buy the things they are interested in.

Note #2: Bloggers are not necessarily influentials and influentials are not necessarily bloggers, though many influentials use blogs as an outlet for sharing.

Note #3: Influentials self-identify, because they are proactive about finding new things and sharing stories with their friends.

What types of stories get shared?

Anything that gets passed along organically about a brand has to be interesting, relevant, and authentic. Without each of these three elements, your brand story is dead.

• Interesting – something unique, that no one in the industry or brand category has ever done before.
• Relevant – the audience has to care. The example given was if you don’t have kids you don’t care if I tell you about the best baby wipes on the planet.
• Authentic – pretty self-explanatory. You can’t pay people, bribe people, or even ask people to share the story – they have to do it because they want to, on their own timelines.

Why does word of mouth marketing work?

• 76% of Americans talk about at least one brand a day, and the average is 10 brands a day (TalkTrack, Keller Fay Group, 2008)
• 15% of conversations in the US include something about a product or service (Northeastern University)
• The average person has 112 conversations a day, with 56 of those conversations including brands – that’s 50%
• For influentials, the numbers are higher – 177 conversations with 116 about brands – 65.5%

How does social media work with word of mouth?

10% of word of mouth happens on the internet. This is substantial market share, so having an online presence matters. However, “Twitter is not a different animal, it’s a faster animal.”

71% of word of mouth happens face-to-face, so even with an internet presence, companies still must find a way to facilitate face-to-face conversation.

Monica’s Note: This does NOT mean that only 10% of WOM about your company is generated BY the internet. Someone can see what your company is doing online and talk about it in regular conversation, and vice-versa.

What about negative word of mouth?

People will share a negative story 7 times and a positive story 21 times. So if you are focusing on a sharing strategy, the positive will far outweigh the negative.

Plus, research shows that true influentials get no intrinsic value in sharing negative stories. Tim also points out, “Even if there is no online, you can’t control the message.” So essentially, don’t worry about it!

When does advertising work?

Advertising comes AFTER a good experience, when you already have strong word of mouth. Then, the influentials who see the advertisement are prompted to tell the story AGAIN, generating more word of mouth.

Brand stories have a shelf life of about 6-7 months, at which point you must create a new story to talk about.

Ted also shared the four-step process his company uses to create word of mouth:

1. Focus – create the a story that meets the IRA criteria, and test using WGAF (Who gives a F*ck?)
2. Design – create opportunities for the brand to interact with its true fans (the influentials) and if needed, create opportunities for the influentials to tell their friends
3. Delivery – sticking to your mission, and not letting anyone steer you off your message
4. Report – WOM works slower than advertising because it spreads organically, so show momentum before the cash starts coming in

How can I get my company to buy into this idea?

Start with one market and prove that the results are better than advertising. Keep adding markets at the company’s comfort level. Cities to target include New York, LA, Dallas, Chicago, Atlanta, San Francisco, and Miami.

Good reporting is also essential for this. At one point, Fizz used epidemiologists (people who study viruses) to map out where word-of-mouth about a brand started.

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So, what do you think of word of mouth marketing? Should companies “go dark” (cut out all advertising) and focus on a word of mouth campaign? What other questions do you have about word of mouth marketing?