McKinsey Weighs in on Word of Mouth -- "The Most Powerful Form of Marketing" - Ed Keller - MediaBizBloggers

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The upstart word of mouth marketing industry got a big boost recently from a blue-chip source: McKinsey & Company.

A recent article in the McKinsey Quarterly made some rather big--and justified--claims about the power of word of mouth. Some headlines that are worth noting:

· "The rewards of pursuing excellence in word-of-mouth marketing are huge, and it can deliver a sustainable and significant competitive edge few other marketing approaches can match."

· Word of mouth is the primary factor behind 20 to 50 percent of all purchasing decisions.

· While word of mouth has different degrees of influence on consumers at each stage of their purchase journey, "it is the only factor that ranks among the three biggest consumer influencers at every step. It is also the most disruptive factor."

The McKinsey report differentiates between three types of WOM:

1. Experiential word of mouth, which results from a consumer's direct experience with a product or service. McKinsey notes that this is the most common form of word of mouth.

2. Consequential word of mouth, whereby brand-related conversations are triggered by marketing activities. In consequential word of mouth, consumers who are directly exposed to marketing campaigns pass on messages about them.

3. Intentional word of mouth, which McKinsey defines as instances in which marketers use celebrity endorsements to trigger positive WOM, e.g., for product launches. McKinsey calls this the least common form of word of mouth.

My firm's research has long supported the notion that there are multiple ways in which brands can spark conversation, but we also have found that they are not mutually exclusive. In fact, we find that when they work in combination the result for brands is often the most powerful.

Let's start with experiential WOM. Keller Fay's word of mouth research over the past four years has documented that word of mouth based on direct consumer experience is a major fault line in determining whether word of mouth has credibility and impact (especially purchase intent). For example, word of mouth conversations that are driven by personal experience increase the likelihood to purchase based on that conversation by more than 20 percentage points compared to WOM that includes no personal experience.

But while we see that customer-driven word of mouth drives impact, our research shows that the combination of customer experience plus a marketing stimulus is actually the most impactful. For example, word of mouth that is driven by both personal experience and includes references to media or marketing is the most likely to spark strong recommendations to buy/try the products being discussed. Similarly, WOM that includes both personal experience and discusses media/marketing is more likely to lead to conversations with others.

The important learning here is that while personal experience is the sine qua nonin word of mouth, brands can create a "secret sauce" which mixes experience plus well designed and executed marketing programs that are designed to spark conversation. And yet our research shows that in less than half of the instances in which people talk about their personal experiences with brands are they also talking about media/marketing. There is a clear and compelling opportunity for marketers to drive this figure higher.

Too often, marketing remains focused on driving new prospects to become customers. Advertising and "traditional marketing" usually operate independently of word of mouth and social media initiatives. In today's word of mouth era, the two must come together. There should be a strong focus on reaching people who already have prior experience with the brand. Marketing provides them with new things to talk about, and the language and motivation to recommend the brand to others. It cues them to talk. At the same time, their customer experience conveys confidence and credibility, which in turn drives the people with whom they talk to take action based on the conversations.

In other words, market to your current customers, and encourage them do what for you is the hard work but for them comes naturally – namely, the recruiting of new customers.

Ed Keller, CEO of the Keller Fay Group, has been called "one of the most recognized names in word of mouth." The publication of Keller's book,The Influentials, has been called the "seminal moment in the development of word of mouth." Ed can be contacted at ekeller@kellerfay.com.

Read all Ed’s MediaBizBloggers commentaries at Ed Keller - MediaBizBloggers.

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