Word-of-Mouth Is Powerful Marketing

July 29, 2010
/ PRINT / ShareShare / Text Size +

Word-of-mouth recommendations are the primary factors behind 20% to 50% of all consumer purchasing decisions, according to McKinsey Quarterly.

The influence of word of mouth is greatest when consumers are buying a product for the first time or when products are relatively expensive—factors that tend to make people conduct more research, seek more opinions, and deliberate longer than they otherwise would. Expect its influence to grow as the digital revolution transforms one-to-one communication to one-to-many, where consumers post product reviews online and social networks spread consumer opinions to thousands in seconds.

Understand three forms of word of mouth, the researchers point out:

  1. Experiential is the most common and powerful form. It typically accounts for 50% to 80% of any word-of-mouth activity. It results from a consumer's direct experience with a product or service, largely when that experience deviates from what's expected.
  2. Consequential occurs when consumers directly exposed to traditional marketing campaigns pass on messages about them or brands they publicize. The impact of those messages on consumers often is stronger than the direct effect of advertisements, because marketing campaigns that trigger positive word of mouth have comparatively higher campaign reach and influence.
  3.  Intentional occurs when marketers use celebrity endorsements to trigger positive buzz for product launches. Few companies invest in generating intentional word of mouth, partly because its effects are difficult to measure and because many marketers are unsure if they can successfully execute intentional word-of-mouth campaigns.

How can you harness the potential of word of mouth and realize higher returns on your investments? Follow these tips:

  • Learn to assess different types of recommendations. This helps you calculate what McKinsey researchers call "word-of-mouth equity." It represents the average sales impact of a brand message multiplied by the number of word-of-mouth messages. Critical drivers of success are recommendations from influential resources passed along tight, trusted networks. Influentials typically generate three times more word-of-mouth messages than noninfluentials do, and each message has four times more impact on a recipient's purchasing decision, McKinsey notes.
  • Understand which dimensions of word-of-mouth equity are most important to a product category: the who, the what, or the where. For instance, in retail financial services, it's the who. Then work on generating positive word of mouth, using the forms identified above.
  • Create buzz. Consumers' experiences must not only deviate significantly from expectations but also deviate on the dimensions that matter most to them and that they will likely talk about. For example, battery life is a crucial driver of satisfaction for mobile-handset consumer, but they talk about it less than the product's design and usability.

Post a comment to this story


What's Popular

Popular Stories

Recent Discussion

Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory ( will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

Your Say: Who should be Credit Union Magazine's 2014 CU Hero of the Year?

View Results Poll Archive