Word-of-Mouth Marketing: How and when to use it???

Word-of-mouth is not new. People have always talked about their experiences, needs, emotions and also products, services and brands....

Written by Elisabet Lund

Word-of-mouth is not new. People have always talked about their experiences, needs, emotions and also products, services and brands. Therefore businesses of all sizes and scales rely on word-of-mouth to create awareness and ultimately sales.

Traditionally marketers made use of advertising, promotions and Key Opinion Leaders whom they could target and influence, which Kozinets et al (2010) refer to as linear influence.

Social media has increased possibilities for people to share and express themselves and it is now possible for one person to communicate with hundreds or even thousands of other people about products and the companies that provide them (Mangold and Faulds, 2009). In order to facilitate social interactions, increasing importance is placed upon the role of consumer networks, groups, and communities (Kozinets et al, 2010)

The fact that word-of-mouth is so important online is one of the reasons why businesses need to listen to what is being said about them, their market and competitors. This will enable them to learn from what they hear, and respond when necessary.

Mangold and Faulds (2009) argues that social media is a hybrid element of the promotion mix because in a traditional sense it enables companies to talk to their customers, while in a nontraditional sense it enables customers to talk directly to one another in a non-linear way called the Network Coproduction Model by Kozinets et al (2010).

According to Godes et al. (2005) consumer choice is influenced in a direct and meaningful way by the actions taken by others. These “actions” range from face-to-face recommendations from a friend to the passive observation of what a stranger is wearing. They refer to these actions as “social interactions” (SI) and propose a framework with four generic strategies that the firm might implement in managing social interactions (SIs) online and offline. These are the:

1. Observer: The firm simply collects SI information to learn about its ecosystem

2. Moderator: The firm fosters SIs by establishing online communities to allow customers and prospects to exchange information.

3. Mediator: The firm actively manages SIs making strategic decisions as to how and to whom the information will be shared with, for example when a company uses a former customer to act as a reference of a good product and installation.

4. Participant: This is the most aggressive role where the firm plays a role in the SIs and strategically manipulates online forums.

In reaction to any questionable statement or activity, social media users can, however, create huge waves of outrage within just a few hours. These online firestorms pose new challenges for marketing communicators. A company’s ability to show composure and confidence during an online firestorm can strengthen the brand’s position in social media and enhance credibility and image (Pfeffer et al, 2014).

To secure a budget and an executive approval of your social media marketing campaign, this channel, as well as others, has to prove it’s Return on Investment (ROI). The ROI is the sum of all social media actions that create value such as brand awareness, generating leads and reducing the cost of customer service minus the costs of the people who work for the campaign, the costs involved in preparing marketing material and the cost of technology. By applying this method it is possible to calculate the Customer Life Time Value (CLV) and Costs per Sale (CPS) (Croituru, 2014).

In order to make sure that your employees ”behave” online I suggest that your company creates a code of conduct which highlights the following issues:

Stay away from biases:

Since a slight mistake in social media can lead to a big PR disaster, it is recommend that the company stays away from negative political, religious, ethnic or cultural bias that can be termed as controversial.

Be honest and transparent

In ensuring transparency you lend credibility to your own content as well as provide others to further spread the facts of the matter. If the company makes use of Key Opinion Leaders (KOL) it is important that the KOL discloses why he or she is endorsing the product/company and if he/she has any particular relationship with that particular product or the company.

Think before you tweet

Always verify what you share before sending it out for prospects. Any factual error may lead to embarrassment and negative perception of the brand.

Social Media Strategy Planning

Map your content and have a content calendar. Also a strict monitoring mechanism has to be installed to ensure compliance with the code of conduct.

References

Croituru, G., Nitu C.V., Nitu, O. (2014) How to Monitor, Measure and Calculate Social Media ROI, Valahian Journal of Economic Studies, Vol. 5 Issue 3, p. 57-62.

Godes, D., Mayzlin D., Chen, Y., Das S., Dellarocas, C., Pfeiffer, B., Libai, B., Sen, S., Shi, M., Verlegh, P. (2005) The Firm’s Management of Social Interactions, Marketing Letters, Vol.16, Issue 3/4, p. 415-428.

Kozinets, R.V, de Valck, K., Wojnicki, A., Wilner, S.J.S. (2010) Networked Narratives: Understanding Word-of-Mouth Marketing Online, Journal of Marketing, Vol. 74 Issue 2, p. 71-89.

Mangold, W. G, Faulds, D.J (2009) Social media: The new hybrid element of the promotion mix, Business Horizons, Vol. 52, Issue 4, p. 357-365.

Pfeffer, J., Zorbach, T., Carley, K. M. (2014) Understanding online firestorms: Negative word-of-mouth dynamics in social media networks, Journal of Marketing Communications , Vol. 20 Issue 1/2, p. 117-128.

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