With the increase of channels that allow consumers to share their experience directly, the influence of word of mouth (WOM) on brand perceptions is growing. A lot of energy is being spent on encouraging discussions, quantifying their frequency, and measuring their impact on a brand’s bottom line. Few people, however, stop to consider why consumers talk about our brands in the first place.
Stated simply, consumers talk about brands because doing so gives them a series of benefits. According to a study on brands and word of mouth conducted by the Marketing Science Institute these benefits fall into three buckets: functional, social, and emotional. Functional benefits are focused on understanding the features of a product—it’s the how and what. Social benefits help us to display uniqueness and connect with others. Emotional benefits represent a psychological response, like satisfaction or excitement, that results from a product or experience. By picking the right medium for their message, marketers can be more precise in crafting their campaigns to achieve better results.
The proliferation of consumer-driven product ratings are a clear example of the functional benefits of WOM. Product reviews help consumers evaluate the attributes and benefits of a product. Yelp, or other specific product review websites like CNET for consumer electronics, are a primary example of how consumers can get the functional benefits of WOM online. Marketers needs to monitor their online product reviews carefully as a wave can sink their product. Conversely, positive online product reviews can help remove the barrier to trial for those that trust the source. Fortunately, studies show that most of online conversations have a positive tone and two-thirds of study respondents think positive word-of-mouth is credible.
In other online contexts, WOM (what some people now call “Word of Mouse”) tends to focus on the social benefits. Liking a brand on Facebook or engaging in a Twitter hashtag conversation are great examples of the social benefits; it lets everyone know that you want to be associated with that brand. By targeting the opinion leaders in these communities, they will spread and confirm your message for you.
WOM in an offline context, however, tends to focus on the emotional benefits. This is a reflection of the more intimate nature of offline interactions. Face-to-face meetings allow consumers to share emotional responses in a way that can’t be recreated online. An example is being able to discuss or even use a product or brand that someone you know has recently purchased. This is effective for when you have an “every day” product, like breakfast cereal, that may not be able to capture interest in an online context.
The key for a brand being able to utilize WOM is to use the proper channel depending on the benefit you are trying to give to the consumer. A new brand or a complex or expensive product will have a hard time conveying it’s functional benefits via Twitter or Facebook. However, if your brand is different than others in its category, using Twitter and Facebook can help consumers express their own uniqueness.
Current methods of “simulation” or “predictive modeling” are limited in how they can model how consumers interact with each other in real world markets. A new and powerful methodology, called Agent-based simulation modeling, can address these limitations by modeling the effects of WOM and marketing communications on consumers’ brand selections. We will discuss this new method of modeling in a future blog post.
Tell us about your experience with word of mouth and marketing. Do you have any examples of good or bad WOM? Let us know in the comments.