Social Media and Word of Mouth Marketing

Word of Mouth has been the oldest marketing tool but was relegated to the background due to higher popularity of direct advertising. In the last century, the mass media became popular and direct advertising soon became a great tool in the hands of the marketing professionals. At that time, the number of TV channels were few, newspapers were few and the radio channels were also few so if you broadcast your message, almost everybody is bound to notice the advertisement. However, things have changed now with the expansion of mass media. Higher number of TV channels mean that the companies have to spend much higher to reach the same number of people. Even on the same channel, there are more companies advertising which means that an average individual sees 1000-4000 ads in a day.  Moreover, there is a degree of distrust in direct advertising and people are more willing to rely on the recommendations and consumer opinions (refer to the survey from Nielsen below).

Given the fact that the word of mouth and recommendations from known people are trusted more that any other form of advertising, it is important to take full advantage of the social media which includes the entire conversational media like social networking sites, blogs, forums, etc. It could be a great tool to attract new customers and give confidence to the existing customers that they made the right decision by choosing your brand.

Booz & Co has identified six elements for creating online customer lifetime value.

The next generation of successful online business models will combine the elements of a traditional retail site—trust, ease of use, and personalized offers—with social apponomics features, such as personalized advice, community, and the functionality of customized applications

Social media would enable the companies to create a community that can be used as a test market for bouncing off ideas and can also provide personalized proactive customer support. However, the first challenge is to create the community and then the second challenge is to to keep the community engaged. If we can overcome the two challenges, the viral marketing is mostly likely to be successful. I would explain  and list the various possibilities in social media by taking examples of online business or a mobile application but these may equally be applicable to any other business:

1. Use Facebook Connect:

An average individual has over 10 virtual identities (ids) on the net and at most he or she is able to remember 5-6. Last thing anybody wants is to create another id and any new website wanting its customers to create a new log-in id for its site is sure to put off a lot of customers. With almost 45% reach, every second person on the web is likely to have a Facebook account which can be used as log-in for any site.

2. Create applications for Social Media

If people are looking for recommendations from about existing users, then provide them that information using creative applications that post reviews and activities on Facebook, Twitter, etc. So, if there is a website that books movie tickets and gives great deals to its users, then it should create an application where the users are prompted to post the purchase on the social networking sites. Since the customer got a good deal, he would want to announce it to the world and satisfy his ego and at the same time it might entice the others in his network to avail the same deal from the website once such information is posted on Facebook.

Businesses may also look to create applications to increase the awareness about its brand and increase the usage. Pizza Hut’s page on Facebook announces all the deals that are available to its customers and has a application that allows the Facebook users to order their Pizza without leaving Facebook. I do not have statistics on usage of this application but I am sure it must be adding to the delight of the customers and may have snatched a few customers from Dominos.

3. Create Facebook Page

Having a Facebook page is a great way of not only reaching out to new customers but also keep them engaged and increase usage. Facebook page is the ultimate opt-in markting channel for any company. Coca Cola’s page on Facebook has over 6 million followers and this page is certainly adding to the brand value of Coca Cola (Click on the image below to see a clearer picture).

Companies can drive and measure response with special offers on the page and that would drive more fans to the Facebook Page.

Bad experience on Facebook page does not mean that the brand value would suffer. The cult following of iPhone has not dimnished due to a poor presence on Facebook. On the facebook page of iPhone, there is no information about the company, there are only 4 photos and almost zero engagement (click on image for better clarity). However, most of the brands are not as lucky as iPhone so ignore the power of social media at your own peril.

4.  Create Engagement Ads

Instead of serving direct ads, the companies can take benefit of the engagement ads available on Facebook. This would give a better recall to the brand as the engagement ads can be much more fun and interactive. If your social strategy relies on advertising in social media, it’s probably better to hang on to your money (Teddy Hall, COO Meteor Solutions)

5. Incorporation of a Facebook “widget” on the website

Show off your fan base by displaying the Facebook Widget on your website and add to the fan base directly from your website. This would help enlarge the community which is a captive audience for any future communication or test market.

6. Be visible on Social Media Sites

The top management should not only be present on Twitter, Facebook but also should be blogging about their companies. Zappos, an e-tailer has 500 of its employees active on Twitter ensuring there is ongoing conversation with the customers. They also take advantage of Youtube to facilitate word of mouth marketing and have 10 blogs to create an active community. Zappos was aquired by Amazon last year.

“You will make mistakes. If you are sincere about helping the community, the authenticity will show and your mistakes will be forgiven.” – Zia Yusuf, executive vice president for SAP’s global ecosystem and partner group. This quote from Zia sums up how should we approach the social media. If we are honest with the community, there is no reason why it would not reciprocate.

Does your company use social media sites?

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