When I reviewed business and marketing plans a decade ago, the same statement occurred again and again: “We will find dealers and/or distributors who will sell our product for us.”
Today, many business and marketing plans have the statement: “We will use word-of-mouth marketing to help promote sales.”
The appeal of both statements is understandable. If others sell our products, we can free ourselves from expensive advertising. e can increase profitability and devote greater resources to product development or expansion.
But both statements reveal a fundamental strategic error. Companies seek external resources as dealers and word-of-mouth as a crutch to drive sales. But no one else will work to increase your sales unless you first make the necessary investments. These investments include not only advertising – still a critical tool if well-targeted -- but also operational investments such as customer service, on-time shipping, quality control, returns handling and more.
As a result, the correct way to see word-of-mouth is as an advertising amplifier, not as a primary marketing tool. In many cases, word-of-mouth will often take care of itself if your operational house is in order. Consistently ship on time, and others will know. Answer the phone and respond to inquiries, and others will know. Add value to offerings, and every product goes out with its own built-in ad.
Of course, spreading such good news via word-of-mouth requires encouragement. Ask for testimonials, whose credibility makes it the most powerful foundation for advertising. Encourage forwarding of marketing messages. While this is a standard line in many emails, extend it to other marketing material as well.
The most cost-effective promotion in my decades in marketing came from a simple postcard. My client, a technology company, wanted to unveil a product at a trade show. We printed a two-color postcard with all the specs and diagrams that only an engineer could love. The postcard was sent postage-paid to all customers, prospects and prospective trade show attendees. The promotion cost less than $500, but was credited with more than $100,000 in sales.
To me, the most interesting aspect of word-of-mouth is not its growth as an advertising amplifier, but rather how it symbolizes a transformation of branding that too few have come to grips with.
I still see advertising agency sites talking about “positioning.” If you understand nothing else, understand this: “positioning” is dead. In fact, word-of-mouth has been one of the nails in the coffin of the 30-year-old theory, first developed in a world when advertising on one of three channels could establish a brand. Today, word-of-mouth underscores the fact that today it is customers, not companies, who define brands. This definition is not based on corporate-driven “positioning,” or even by advertising, but rather by the emotional, experiential and economic value that brands deliver.
Nick Wreden
CEO, FusionBrand
Author, ProfitBrand: How to Increase the Profitability, Accountability & Sustainability of Brands
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