Des Moines Business Record
09-17-06
Look who's talking
By Sarah Bzdega
sarahbzdega@bpcdm.com
Marj Huber, owner of Outstamping Designs and Heirlooms by Design, finds it
hard to look at the scrapbooking business as anything but personal.
The Valley Junction-based business attracts customers who are seeking advice
on how to preserve their personal photographs, and as a result, employees work
one-on-one to help them. The service and information customers receive has
encouraged them to recommend the store to family and friends, causing word-ofmouth advertising to become the "most valuable advertising we do," said Huber.
However, Huber has never considered word-of-mouth a formal part of her store's
marketing strategy and still advertises in national magazines, in the newspaper
and on television. Although she hosts classes and special events, it's part of the
goal "to make the experience when here as pleasant and stress free as
possible," Huber said, "which hopefully [customers] will share with friends."
Marketing agencies and public relations firms have started looking at word-ofmouth as an effective way to generate a stronger customer base and have
developed strategies to encourage consumers to share positive experiences and
information about a company with others. The effects of word-of-mouth can be
great given that Americans discuss brands in conversation on average 56 times
a week, according to a survey of 1,507 Americans conducted by the Keller Fay
Group's TalkTrack measurement system.
The Word of Mouth Marketing Association defines word-of-mouth as "the act of
consumers providing information to other consumers" and word-of-mouth
marketing as "giving people a reason to talk about your products and services
and making it easier for that conversation to take place."
Although people have talked about the products they buy for centuries, the
Internet and consumer distrust of big corporations have caused companies to
pay more attention to word-of-mouth in recent years.
"I think it's only been in the last four years that [people in] communications, public
relations specifically, said, 'Hey, there's a way to harness conversation to make
things happen,'" said Ryan Hanser, senior vice president of Hanser &
Associates, a public relations firm, and head of the company's word-of-mouth
service.
Although 92 percent of word-of-mouth conversations occur offline, according to
Keller Fay's study, Hanser said the Internet has made these conversations more
visible to companies.
The Internet eliminated the middleman, Hanser said. "It forced organizations to
deal with the fact that now their suppliers, customers and competition could
connect with each other directly and start to talk about their experiences."
"I think what's happening, is companies are recognizing that it's so easy for
consumers to share word-of-mouth now," said Russ Laczniak, a professor of
marketing at Iowa State University. "It used to be a friend or relative.
Nowadays, you can go onto chat rooms or message boards. There's word-ofmouth from people across the world and various opinions [that can be obtained]
just simply by clicking a mouse, and I think that prevalence has increased so
much that marketers say, 'This could be pretty powerful. This could have
negative impact on us if we don't try to manage it in some way.'"
This new communication channel could also be a reason there's some distrust of
businesses and traditional forms of advertisement, said Hanser. Cyndi Fisher,
director of new business development for Flynn Wright, a Des Moines-based
advertising agency, and Ron Hanser, president of Hanser & Associates, say
recent corporate scandals, such as the collapse of Enron Corp., have also
caused distrust toward companies.
Distrust of companies and their advertisements is evidenced in a study done by
Yankelovich Inc. in 2005, which found that 76 percent of those surveyed don't
believe companies tell the truth in advertisements.
Because of that, businesses "have to be very transparent, and I think companies
are much more aware of that now," Fisher said. Their response includes talking
openly with consumers about who the company is and what products and
services it offers.
Word-of-mouth recognizes this skepticism and tries to restore trust on a one-toone level with the customer. "Word-of-mouth is important to everything you do,
because a one-on-one relationship with someone opens the door," said Fisher.
"There is a trust level already there."
Fear of word-of-mouth
Businesses have traditionally feared word-of-mouth rather than tried to take
advantage of it, because word-of-mouth can have a negative effect, said
Laczniak.
"It makes it difficult for marketers to manage because they're not in the loop and
usually marketers feel they can control their advertising so the consumer knows
what we're getting," said Laczniak. "They're realizing it and saying, 'What can I
do to have any influence on the process? If we truly can't control it, then we
better pay attention to it.'"
Over the past five or six years, Laczniak, along with ISU associate marketing
professor, Tom DeCarlo, and ISU marketing professor, Sridhar Ramaswami,
have studied the negative impact of word-of-mouth to determine if negative wordof-mouth is as powerful as some business owners fear.
By studying reactions of around 500 subjects to a wide range of products and
services after hearing a conversation and reading a transcript of the discussion
about a product or service, they found that word-of-mouth has an effect, but it
may not be as negative as some believe.
The results showed that if a consumer felt very strongly about a product, said
Laczniak, then no matter how well-structured the negative information was about
the product, it did not have a big impact on the consumer's opinion. In this
situation, if a person could dismiss the information because of a fault with the
information giver, he would. On the other hand, if someone did not feel very
strongly about a brand and heard a negative conversation, the negative message
could have a much greater impact on that person's opinion.
These results, Laczniak said, suggest that the best strategy is for a company to
present a strong brand and build strong consumer association with that brand.
The tactics
Using word-of-mouth strategies is one way for a business to establish a strong
brand association with the public.
According to the Word of Mouth Marketing Association, the basic elements of
word-of-mouth marking are educating the people about your products and
services, identifying people most likely to share their opinions, providing tools
that make it easier to share information, studying how, where and when opinions
are shared and listening and responding to supporters, detractors and neutrals.
Using some of these tactics, Hanser & Associates follows a four-step process
with its clients: readiness, identification, activation and measurement.
First, a business must be willing to hear feedback about products or services
from its customers, even if it's negative. Then Hanser tries to help the company
identify its influentials, the one person in 10 who has the ability to influence the
purchase of the other nine consumers. For example, said Ryan Hanser, the
owners of a small wine shop recognized that one of its customers spent a lot of
time in the store and would talk to other customers, so they targeted him as
someone who could help spread the word about their store. Influentials can also
be found by looking at frequency of purchase, volume of purchase and the way in
which a customer found out about the store.
Activation involves utilizing strategies for reaching influentials, such as events
that invite the influentials and potential clients to learn more about a product or
service, or at the grassroots level, great customer service.
Fisher said customer service is a key component in developing a personal
relationship with a customer who might share that positive experience. "In every
action that company has, from the receptionist answering the phone, they employ
image of company," said Fisher. "It's critical for everyone to listen and try to open
the door to any dialogue and discussions needed."
Fisher said Flynn Wright practices word-of-mouth by distributing a quarterly
newsletter to all clients and prospects, sharing some of the agency's latest
creative work, as well as taking opportunities to talk at trade shows.
To measure results, Hanser uses traditional means such as product codes, 1800 numbers and Web addresses for the group exposed to that tactic. Flynn
Wright hosts focus groups, conducts phone surveys and use other techniques to
keep track of the community's attitude toward a business.
Beyond creating a strong brand association with the consumer, it's also important
to continually monitor word-of-mouth, Laczniak said. Methods may include
looking at blogs or hosting one on the company's Web site, or setting up a search
tool that looks for keywords on the Internet.
Laczniak said businesses should not ignore, but rather counteract negative wordof-mouth with a simple, logical response. He uses the story about McDonald's
Corp. being accused of using worms in its hamburgers as an example. The fastfood chain responded by running an ad showing that a pound of hamburger costs
less than a pound of worms, making it a logical choice to only use hamburger.
Impact
Because many word-of-mouth marketing and public relations programs are still in
their beginning stages, it's hard to predict the long-term effects word-of-mouth
may have in how companies try to reach consumers.
Hanser believes many businesses are considering shifting some money away
from traditional advertising and into word-of-mouth programs. In addition, some
of the tactics may even save companies' money they now invest in developing
advertising messages and testing different advertising markets.
It also could just be a fad that gives way to a different tactic in the future,
Laczniak said, or is something that needed to happen.
"Marketers," he said, "are finally saying, rather than worry about it, an
environment we can't control, let's try to be more proactive today."
By the numbers
Word-of-mouth advertising
62%
The number of brand-related conversations that feature products in a positive
light.
41%
The number of conversations about brands that involve a reference to advertising
or something seen or heard in the media.
72%
The number of opinions about brands shared by family members and personal
friends.
6%
The number of word-of-mouth conversations that take place through e-mail,
instant messages and online chat rooms/blogs.