Word of Mouth is down 20% since 2008

Consumer insights on word-of-mouth

Despite an explosion in consumer conversation technology, Americans have cut back substantially since 2008 on the opinions they share by word-of-mouth (WOM) about companies and their offerings, according to a survey by Colloquy.

In its survey of over 3,000 US consumers, more than half (58%) said they often have conversations with family, friends and co-workers about products and services they’ve used. But that figure is significantly lower than the 73% reported in 2008, representing an overall decline in WOM activity of 20%. Additionally, 57% of respondents in the new survey said they often recommend products and services to others, compared to 75% in 2008 (a 24% decline).

However, this reduction in WOM activity certainly can’t be attributed to a shortage of ways for WOM to spread. Today’s consumer has options for face-to-face conversations, landlines, cell phones, email, instant messaging, texting, blogs, micro-blogs (such as Twitter), review sites (such as Trip Advisor), and of course social networks (such as Facebook). In fact, Colloquy asserts that the economic downturn has been responsible for the change in consumer behaviour, and therefore took a closer look at respondents holding both favourable and unfavourable views about brands, and compared those figures against the previous year.

It appears that the tough economy over the past few years may be culprit responsible for a lesser willingness to engage in brand WOM activity. For example, of those respondents who reported their households are doing better economically now than one year before, 71% said they often have conversations with others about the products and services they use. That’s very similar to what Colloquy found two years ago, before the recession became “an economic meltdown.” However, among those who now see themselves as worse off, only 56% reported having brand-related conversations, and only 55% said they make product recommendations.

Looking to the future, 74% of respondents who see their own financial outlook brightening said they have conversations about products and services, compared to 55% for those who see their financial outlook worsening. And 67% of those who see a brighter future said they do make recommendations, compared to only 55% of those who see their finances tightening.

These findings suggest that worries about current employment and future prospects have crowded out discussions about brands among a significant portion of the consumer population. According to Colloquy partner Jim Sullivan, “Consumers on shrinking budgets don’t seem to be in the mood to talk about the hottest new restaurant, the brightest plasma screen, or the best airline. Or, if they are in the mood to talk, they may be sensitive to the possibility that others in more dire straits are in no mood to listen.”

Colloquy’s managing partner, Kelly Hlavinka, therefore offers the following advice:

  • Make sure customers not only have an opportunity for a dialogue (not a monologue) with the brand, but with each other. Get these conversations started by asking for opinions and insights, and recognise any contributions received.
  • Involve customers in WOM programs by forming online social sharing communities, panels and co-development platforms. Do your own social media.
  • Be innovative and make sure content is relevant, fresh and rewarding. Start by transforming your marketing mindset from “incentive” to “service.” Be sure to nip any service problems in the bud and head off any negative WOM that can quickly go viral from these well-connected customers.

Interestingly, Colloquy also found that 33% of consumers fit the definition of “WOM Champions,” and that 9 out of 10 of these WOM Champions belong to one or more loyalty marketing programs. In fact, WOM Champions account for 39% of memberships in loyalty programs, and loyalty program members are three times more likely to be WOM champions than consumers who don’t belong to loyalty programs.

Colloquy has published a white paper, entitled Urban Legends: Word-of-Mouth Myths, Madvocates and Champions, exploring and debunking common myths and misunderstandings about brand conversations and WOM in social media. The paper has been available for free download from Colloquy’s web site – click here (free registration required).

What are you doing to enhance WOM to promote your business?

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About Insights From Analytics

Integrated marketing professional who generates insights from analytics to increase revenue. Daily blog now resides at www.insightsfromanalytics.com/blog.
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