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June 10, 2009
The roots of word of mouth
Where does word of mouth come from?
A good experience, says Forrester.
A trustworthy relationship with peers, says Big Research.
A purple cow, says Seth Godin.
They're all right, but the bigger question is: What binds all of those source elements together?
The answer is almost always hidden within a company's culture.
Companies with great word of mouth tend to operate by a simple, yet inspiring purpose and well-defined values. They have created a cultural constitution, and every employee is sworn to abide by it, so help them God and the HR department. They understand that a purpose-driven company helps clarify decision-making while inspiring longer-term unity. They know that abiding by community-driven values compels employees to think of customers first, company second. They see the benefits of inspired, evangelistic customers and how company culture is the feeder river for streams of word of mouth.
When companies shun purpose and adherence to values, that's usually the source of trouble. Just look at credit card providers, health insurance plans, Internet service providers and TV service providers, whose four industries recently appeared in a Forrester report as generating more bad word of mouth than good. The primary interests of companies in those industries often are, in order of importance: company executives, institutional shareholders, Wall Street bankers and analysts, then customers. They stealthily raise fees, add hidden clauses to purposefully complex operating agreements and cut customer service before rolling back excessive executive compensation. It's not surprising then, that the government is now proposing standards to rein in excessive executive pay at publicly held companies.
Indeed, building word of mouth is bigger than simply paying employees well, much less leaving its function solely to the marketing or engineering departments. For creating good customer experiences, a company hires smart and empathetic people who believe in the company's culture and provide evidence of believing in its values. It does not hire talented jerks, regardless of education or work history. It expunges those who acted their way through the hiring process.
For building trustworthy customer relationships, a company makes decisions according to its values. They do not rely on bad profits, the kind which trick customers (often used by the industries in the Forrester report). A company with great word of mouth is consistently fair and honest with customers, employees, suppliers, vendors and competitors. They do the right thing and right their wrongs quickly, often going above and beyond what's necessary.
For creating purple cows, a company fosters creative thinking within tightly defined sandboxes to maintain elegant simplicity, a process that can be difficult but is ultimately rewarding to customers (and employees, especially), who crave simplicity in an age where complexity is daunting, worrisome and exhausting. Simplicity itself, especially with traditionally complicated products or systems, can be a bountiful source of word of mouth. Elegant simplicity is a form of art, and fans will gather to pay it homage.
Other blogs that reference The roots of word of mouth:
Very good - I like the way you've described this. I can see myself quoting you on this!
The issue that many of us face, of course, is that most of the companies that we are helping with their word-of-mouth aren't at all 'purpose-driven'. However, we at Idiro find that there's still quite a lot that we can do with ordinary companies, ifthey're prepared to change their marketing campaigns.
Simon
nice verbage :: very interesting analysis of the above mentioned tools. Lets be honest :: the root of all this is exponential synergy and trust WITHIN an organization. boom
For entrepreneurial companies, 'purpose-driven company' is synonomous with the animating passion that the entrepreneur brings, and that serves as a focal point for both employees and customers. Very few entrepreneurial ventures have ever succeeded over the long term without that passion.
This is important stuff. The root issue is that Word of Mouth is not just a marketing idea. It is a much bigger idea that has to start in the executive office and become ingrained throughout every part of the organization under a single banner of creating great value and customer experience. It is doomed to fail if it is just a marketing tactic as opposed to a defining characteristic of the business.
Simon -- What you're up against is, unfortunately, too common. I'd like to believe that a solid word of mouth program could help change a company's DNA, but I'm pretty convinced that a company's DNA determines the outcome of strong word of mouth, not to mention evangelism. Nonetheless, we all need a starting point!
iHate -- Amen, bro. External and internal trust are absolute requirements. There are plenty of stats about customer trust of companies; I'd love to see some stats on employee trust of companies.
Ted -- So true, and maintaining that trust when the entrepreneur(s) hand over the reins to the next-generation managers is crucial. Look what happened when the founders of Home Depot turned over management reins to Bob Nardelli. Cultural disaster.
Mike -- I'm so with you. Spread the word that word of mouth is divorced from marketing!
Mike and Ben,
Agreed. Word of mouth as a marketing tactic is doomed to fail because it lacks authenticity. You can't fake this stuff - it doesn't work. But, I would argue that when companies truly believe that customers come first - everything they do – from customer service and sales to advertising and marketing - is more effective because it reflects that core value. I always go back to my days as a salesperson for Nordstrom. They were true believers. Since then, I have worked for other companies that have claimed they were like Nordstrom, but more often than not, they came off as pretenders. Why? Because they were just that - they were pretenders.
Word of mouth is tricky. You can never be sure of what will be said. Even if someone means well they can turn off a potential client.
I think if you really want to build word of mouth then you should be very responsive. I find that I get the best referrals from customers who have access to me via IM. Even better than phone, because they never get an answering machine when they see me online.
Great article. Thanks for linking to some useful resources on word of mouth.
Elizabeth,
Great article. The point many companies miss is the benefits of the "cultural constitution." Instead, they just copy a competitor's process and wonder why customers don't reward them like they did their competitor. They don't understand that passionate customer service based on a company's cultural passion for every customer pays off far more than telling the employee they should smile and say thank you because the procedure manual tells them to do so.
Jim Connolly
Organizational restructuring consultant
Bloomington, Illinois
www.orgresults.net
www.orgresults.net/newsblog
