How to avoid negative Word-of-Mouth: A guidance for PMs and Marketers
Did you know?
Unsatisfied customer spread twice the word-of-mouth as satisfied customer.
Welcome back for the third and last episode of our blog series!
In this episode, you will learn about the effects of WoM and how to avoid negative word-of-mouth (NWoM) in favor of increasing sales.
Previous episodes have dealt with the impact of WoM and the motives for consumers to engage in WoM.
Generally, one can distinguish between positive- and negative WoM.
NWoM is based on emotions and is communicated immediately. One driving motive to spread NWoM is self-acceptance.
Positive word-of-mouth (PWoM), in turn, is described as cognitive and guided by a rational evaluation.
PWoM is determined as a direct or indirect recommendation to buy a certain product and is driven by self-enhancing motives.
As a result, both forms are created with different intentions.
NWoM is spread by the intention to restore self-esteem. In return, PWoM satisfies social needs and increases social benefits.
In the next step, you will get to know the consequences.
Effects of word-of-mouth
Both forms have a decisive impact on consumer behavior. PWoM convinces consumers to try products. NWoM prevents potential customers from buying.
In general, it is difficult to measure the effect of WoM since it is not feasible. Nonetheless, there are methods to gather information.
Many companies conduct surveys to understand how consumers become aware of their products. The tracking capabilities of social media enable us to measure the effectiveness of campaigns.
It is proven that PWoM increases sales while NWoM, on the other hand, reduces sales.
A study by Luo (2009) states out that 1000 complaints in the flight industry resulted in a massive loss of $8.1 million. In reverse, an increase of 7% in PWoM can lead to an increase of 1% of the company’s revenue.
In addition to that, one has to differ between online- and offline WoM.
Offline PWoM results in more sales than online PWoM. That can be explained by the greater impact on consumer behavior. Additionally, offline WoM is more spread than online WoM.
However, online WoM is trending, and through the years, one can expect it to become more dominant.
“Positive word of mouth is a marketer’s most valuable resource.”
– Word of Mouth Marketing Association Chairman, Brad Fay
Nevertheless, one has to admit that PWoM can be influenced and contrived. NWoM, on the other hand, increases credibility. Regarding this, products with an overall review of 4.5 out of 5 stars gain more sales than products rated with 5 stars.
The value of WoM is more than 5-times higher than paid media. 13% of sales are directly linked to WoM with a share of total marketing budget lower than 5%. In comparison, paid media drives between 20–30% of sales but with 50% of marketing budget.
In summary, WoM is omnipresent and plays a key role in consumers buying decisions. In comparison to the traditional advertisement, WoM incarnates diverse characteristics since it is driven by consumers. The reliability of WoM can be seen as an outstanding factor.
Implications for Product Managers and Marketers
Managers have to be aware of the power of WoM. Though it is not possible to influence the communication between consumers directly, they have to focus on delivering the best consumer experience possible to avoid NWoM. The following factors are decisive:
- Treat your customer gentle
As the results above have shown: The word of the customer has a dramatic influence on a company’s success. Unsatisfied customers seek justice through their complaints. Show empathy and address them accordingly. It is easier and cheaper to keep a customer than to attract a new one.
Pleasurable customer support is essential for the company’s reputation. It is not exclusively about the message but rather about the experience you deliver. Firms lose up to 15% of revenue due to poor customer service. Take responsibility for your mistakes, and keep on improving your product.
Surprise your customers. Try to create interest and exceed expectations. Convince consumers to spread your content. Creativity is demanded.
- Simplify customer interaction
Enable reviews and connect with your customers. 60% of online customers are reading reviews before making a buying decision. Reviews have the power to make a difference because of their credibility.
If your company is struggling in enhancing user experience, consider UXCam. UXCam takes you beyond analytics to seeing real user behavior.
Never forget: Your best salesman is a satisfied customer — May the WoM be with you!
Want to learn more about customer experience?
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Originally published at uxcam.com.
