In the beginning the word…

Manoj Khatri
Research and Coordinate Editor

Word-of-mouth communications is as old as humankind. In the Garden of Eden, after Eve tasted the forbidden fruit, she strongly recommended Adam to take a bite. Eve’s insinuations stirred up in Adam’s heart an irresistible temptation, which led him to try the fruit himself. And thus was set in motion the first ever word-of-mouth phenomenon.

Though marketing communications has certainly evolved since the days of first man and woman on Earth, the spoken word is still God of marketing communications. In spite of several highly modern mass communication tools, the power of the word remains unchallenged. Every business in the modern era, either knowingly or unknowingly, generates Word of Mouth (WOM) that is either positive or negative. While positive WOM increases sales and helps raise brand equity, negative buzz is usually harmful to business.
Even as positive WOM can substantially reduce your marketing and advertising costs, negative WOM is accompanied by the danger of annihilating your brand. Therefore it follows that every marketer in his right mind will aim to minimise negative buzz about his brand while maximising positive murmur around it.

The power of WOM
George Silverman, President, Market Navigation, Inc. says, “In study after study, with almost every category of buyer, WOM has been shown to be what is known as the proximal cause of purchase - the most recent thing that happened just before purchase.”1
Ask yourself what you do when you’re looking for a doctor, lawyer, plumber, architect or a financial consultant? Seek a reference from a trusted friend? You bet.
There is a small automobile service centre in this writer’s neighbourhood. It specialises in service and repair of Maruti cars and has thriving business. The owner is a thorough professional and believes in providing true service to his customers. He never fixes anything that doesn’t require to be fixed, and goes that extra mile to ensure that the car delivered to the customer is as perfect as it can be. His work is brilliant - the car always runs smoother and better after a visit to his garage. He never charges you for minor repairs. He has installed computers at his office to record the repair history of all his customers. His bills are never inflated and his charges are quite reasonable - certainly much lower than what an authorised centre would charge. Almost all the Maruti cars in the area (numbering in hundreds) turn up at his garage for servicing. This, in spite of the fact, that there is a Maruti Authorised Service station right next to his small garage. Not only that, several non-Maruti owners also patronise this garage. His business is brisk because he believes in consistent quality service. His customers (including this writer) swear by his service and bring their friends, colleagues and associates to him. His is a local business and he does absolutely no advertising.
á The Bukhara of ITC Maurya in Delhi, which is now ranked seventh among the top 50 restaurant brands in the world, has never been advertised. According to Gautam Anand, general manager, ITC Maurya Sheraton, Delhi, “Bukhara is like a temple of the Indian experience where it has stayed relevant for 25 years and nothing has changed - not its menu, not its ambience or even its seating style. It offers a very predictable experience and people know what to expect consistently. It has just been the buzz that has made it so.” The brand has grown and has lent itself neatly to ‘Kitchens of India’, the ready-to-eat, canned premium range from ITC Foods and not just that; the restaurant itself has spread to other cities such as Chennai and Mumbai, albeit as Peshawari.2
On the negative side we have the Palio car from FIAT. Its sales picked up very well only to slacken down later because of the buzz that it is a petrol guzzler. In spite of Sachin Tendulkar’s endorsement and some brilliant advertising, the brand could not hold on to the market share, as negative WOM about its poor fuel efficiency led to consumer aversion.
The above examples of WOM are by no means exceptional. In a study of 7,000 consumers in seven European countries, 60 percent said that they were influenced to use a new brand by family and friends.3 See Box: What do people “buzz” about?
Positive and Negative Manifestations of WOM
Information goods like books, films and entertainment depend heavily on buzz - in fact WOM is the single largest determinant in the success or failure of information goods. A 2001 McKinsey report found that buzz plays a major role in entertainment. The report states that motion pictures and broadcasting are two of the categories largely driven by WOM. The report also says that 54 percent of sales across industries are affected by WOM.4
The enormous success of JK Rowling’s Harry Potter series is attributed to WOM. Paulo Coelho’s The Alchemist is one of the top selling books of all time, once again purely due to buzz. Because this is the age of the Internet, e-mail, websites, chat rooms, and video teleconferencing, WOM is even more important to businesses today than ever before because information today travels faster than ever before.
But examples of successful WOM are not limited to information goods. WOM marketing contributed significantly to the success of many globally recognised brands such as KFC, Harley Davidson, Body Shop, Hotmail and Apple.
Apple did not advertise until very late in the game, and relied almost entirely upon WOM in the form of dealer recommendations and friends telling friends.5
Maruti 800 became the largest selling Indian car with hardly any advertising - more people bought the car because more people bought it - chiefly due to network effects. Coca Cola re-entered the Indian market in 1993 after 16 long years of absence, yet its brand awareness among the youth was substantially high. They had heard about Coca Cola from their parents and other elders who knew about the brand.
Just like positive WOM benefits your brand image and in many cases boosts sales, negative WOM is detrimental to the reputation your company/brand has built over years. Problem is, negative WOM spreads faster than positive WOM. Studies have shown that a satisfied customer will tell an average of three people about a product or service she likes. Yet, more importantly, a customer will tell eleven people about a product or service with which she had a negative experience.6
The average urban consumer is exposed to 200-800 commercial communications per day, but only acts on one every week or two, and then mostly to get more information, not to buy.7 When people ask someone about a product, they are likely to ask, “Did you face any problem using X?”
Another reason that WOM is so often negative is because the positive experiences are expected and soon forgotten, but the negative experiences cause people to be angry and frustrated, generating negative WOM.

Mass Media Advertising versus WOM
“Media advertising is often characterised by huge clutter. It may get awareness up - but rarely results in purchase intention,” suggests Dr Bernd Schmitt in Experiential Marketing. Research shows that WOM can be seven times more effective than print media, twice as effective as broadcast media and four times more effective than sales personnel. Why? Because the source of WOM communications is normally independent of the company - the person is offering his or her own candid opinion and therefore, the information appears credible. On the other hand, advertising is the renting of a medium to send out a carefully crafted message to a specific audience.
Regis McKenna, a well-known technology-marketing consultant, advisor to entrepreneurs, venture capitalist and author says, “People are deluged with promotional information, and they are beginning to distrust it [advertising]. People are more likely to make decisions based on what they hear directly from other people, including friends, experts, or even salespeople. These days more decisions are made at the sales counter than in the living room armchair.”8
Management consultants Cap Gemini Ernst & Young found only 17 per cent of the 700 U.S. consumers it surveyed in the past six months said TV ads influenced their car-buying decisions. Ads on Internet search engines influenced 26 per cent of consumers. Nearly half, or 48 per cent, of the consumers said a direct-mail offer from a car dealer would influence their vehicle purchases, but the most influential measure was WOM, cited by 71 per cent of consumers.9
The findings are significant because, as a group, automotive marketers in the US are the largest purchasers of advertising and skew heavily toward TV advertising.
In a report in Advertising Age, Mike Wujciak, a vice president who oversees Cap Gemini’s auto practice said, “We think manufacturers and their dealers are wasting money on broad-based TV advertising instead of a direct-marketing approach.” While he’s not suggesting that carmakers should entirely ditch their TV ad budgets, he does urge them to re-evaluate their media mix, because TV is such a big part of their budgets.10

Harness the Power of WOM
Ensuring a good product and high quality service are the best things you can do to avoid negative WOM and generate positive WOM. Yet most marketers feel that WOM is like weather - you can do nothing about it.
á The best way to get people talking about your company or its products is to create some excitement. Wendy’s did it years ago with a funny demonstration of the competitive advantage their burgers hold over McDonald’s. By asking “Where’s the Beef?” they were able to build name recognition and show customers why their burger is better. The humorous and offbeat approach helped turn a successful consumer campaign into a positive WOM campaign.
As recently as September 2003, Sony Entertainment Television launched a massive buzz campaign to launch and promote its new comedy series Jassi Jaisi Koi Nahi. Besides TV, print and outdoor, the channel also fired up other offline initiatives such as flash mobs, PR, email marketing, radio, SMS, leaflet messages and phone-in messages, all of which saw a steady build-up from pre-launch to post-launch.
á Another way to create excitement is to give something away. Car Company Chrysler went directly to business leaders to introduce its LH series, offering new cars for a weekend to 6,000 top executives. The subsequent exposure in newspapers and the electronic media brought immediate public relations benefits. According to statistics in follow-up surveys, 90 percent said their opinion of Chrysler had changed; 98 percent said they would recommend the car to a friend; and at least 32,000 people know about the car as a result of the 6,000 weekend test drives.11
But marketers must remember that ultimately artificially created buzz can do only so much. If the consumer does not like the product, it will fail anyway - perhaps faster due to the buzz.

Dealing with negative WOM
Often, companies and brands become victims of negative buzz. Unfortunately, people are more likely to talk about your business when they are unhappy than when they are happy or satisfied. Recent research reports that 92.6 per cent of rumours about companies or brands heard in the past year by consumers were negative in nature.12 Whether the negative buzz is a rumour or reality, marketers must deal with the situation carefully. You must control damage as early as possible, definitely before it blows out of proportion and harms the image of your company or brand.
The best way to counter negativity is to create positive WOM. Try to find the source of the problem and specifically answer the charges.
á Sometimes keeping quiet and doing nothing about it is the best option because consumers may actually hear about the rumour only when marketers attempt to correct it. Many years ago in Ohio, the McDonald’s Corporation was the victim of a nasty rumour. The focus of the rumour was that McDonald’s hamburgers contained worm meat in them. McDonalds tried to counter the rumour by advertising a letter from the Secretary of Agriculture which claimed that hamburger produced by the effected establishments is “wholesome, properly identified and in compliance with standards prescribed by Food Safety and Quality Service regulations.” In spite of these attempts to suppress the rumour, it remained strong. Later, a study found that 35 per cent of consumers learnt about McDonald’s worm only when they saw the company’s anti-rumour campaign.13
Another option to deal with negative WOM is to address it discreetly. When people in the US perceived oil companies as greedy, companies launched campaigns highlighting the socially desirable things that they had achieved.14
Perhaps you can do something extraordinary. In fact, some of the strongest and most frequent WOM results when a customer who has been let down is turned around by an extraordinary response to their expression of dissatisfaction.
Another idea employed of marketers to deal with negative WOM is to release creative advertising to get consumers to think about something else. For example, during the time period of the worm rumour, McDonalds could have advertised their cleanliness and the quality of their food. Here, without mentioning worms, the rumour is indirectly addressed by getting consumers to realise that a clean McDonalds is a wormless McDonalds.15
For business-to-business and service industries, negative feelers are often a result of discontented customers. Compile your customer complaints, and check for a pattern. If a particular product or service emerges as the problem, rectify the problem immediately.

Final Words
The Holy Bible says: In the beginning was the Word, and the Word was with God, and the Word was God (John 1:1-3). Well, from the above discussion we can safely conclude that as far as marketing communications go, the word is still God.
WOM has the power to both accelerate and slow up product acceptance. Most marketing professionals, even those who understand the power of electronic broadcast, believe that WOM is the most compelling way to bring in new customers. WOM communication is credible, spreads fast, is low-cost and triggers purchase better than all other communication. Time and again, WOM has proven to be more effective in stimulating sales than any other medium, mass or niche.
When used effectively in combination with other tools like mass-media advertising, direct marketing and public relations, WOM can lead to substantial savings in your marketing expenditure. Take my word for it!