Franchise Update Magazine Issue IV, 2013 | Page 34
Grow Market Lead
32
Connecting
with
customers
By Jack Mackey
Just Say the Word
Here’s an inexpensive way to drive exponential growth
A
McKinsey Quarterly Report shows that positive
word of mouth has more
than twice the impact of
traditional advertising. For example,
research by McKinsey showed that
just one (free) episode of positive
word of mouth can generate $200 in
additional sales at a restaurant. It also
turns out that personal recommendation is the primary factor behind
20 to 50 percent of all purchasing
decisions—and that its influence is
greatest when consumers are buying
a product for the first time.
There are two reasons word of
mouth is so much more powerful than
paid advertising. The first is trust. We
tend to believe recommendations from
people we know. We trust friends, acquaintances, and colleagues not just
because we know them, but because
they have no financial incentive or
ulterior motive to try to influence us.
The same can’t be said about traditional advertising.
We know advertisers are trying to
sell us something, and we know “let
the buyer beware.” When we are making buying decisions, people we know
who have made similar buying decisions before us are a much safer, more
reliable, and more credible source of
information. We are more likely to
act on their recommendations than
on paid marketing.
The second reason word of mouth is
so powerful comes from the targeting
effect. Your customers associate with
lots of people who are like them—your
target customer demographic or psychographic. People your customers
hang out with and talk to are quite
likely to want, need, and buy similar
products and services. When your
current customers tell their friends
Franchiseupdate Iss u e IV, 2 0 1 3
positive stories about doing business
with you, their audience is more targeted to your offer than a mass market
audience that you reach with traditional promotions.
This according to Jonah Berger,
a marketing professor at Wharton,
who recently spoke to 100 multi-unit
operators at SMG’s Power User Exchange about the findings in his new
book, Contagious, which is about why
ideas, products, and brands catch on.
There is a lot of excitement today
about the potential for word of mouth
to go viral. But wait! The truth, says
Berger, is that only about 7 percent
of word of mouth occurs on social
media. And even then, specific online
channels come and go. Several years
ago, MySpace was the next big thing;
now it’s not. In 2010 there was huge
buzz about Foursquare, in 2012 Instagram, and today Pinterest. Facebook
has been steadily growing, but that’s
no guarantee it will be here forever.
What has remained constant for
100 years is that consumers’ direct
experience accounts for most wordof-mouth advertising—regardless of
whether it happens online, on the
phone, in print, or in face-to-face
conversations.
Rather than over-focusing on social
media or any other single channel of
communication, the most important
issue is to understand why people
talk positively about your business.
Because when customers love you,
they often express it. “When people
care, they share” is how Berger puts
it in Contagious.
With all the popularity around
Net Promoter Score (NPS) it’s important to note that being “willing
to recommend” and actually talking
positively about the brand are two
different things.
How do you make your customers
care and share? Multi-unit franchisees accomplish this by focusing on
two things: 1) operational excellence,
so you always give people what you
promised, and 2) delighting customers, which includes being different in
any way that tickles customers and is
“remark-able.”
For example, In-N-Out Burger is
a concept with a great reputation for
freshness and quality, an uncomplicated menu, and a fanatically loyal
customer base. Since the brand almost never offers any new products,
what’s to talk about? Have you heard
of In-N-Out’s secret menu? When I
googled it, I got 77 million hits; in
other words, 77 million examples
of other people talking and writing
about In-N-Out!
Find a way to give your customers
something to talk about. Something
to share. Literally.
Customer service expert John DiJulius, also the founder of John Robert’s
Spa, gives two gift certificates to each
of his best customers around the yearend holidays: one to use and one to
give away. The first is inscribed with
the customer’s name as the recipient;
the second is inscribed as “From” the
customer’s name.
That’s the genius of marketing
to your current customers. You are
helping them be better ambassadors
for you. It’s also the most disruptive
marketing factor. Word of mouth can
influence a consumer to try you in a
way that more advertising spending
simply cannot.
Finally, it’s critical to remember
that word of mouth is not just a onehit wonder. If each current customer
brought you just one new customer,
your business would grow indefinitely.
If each customer brought you just two
more customers, your business would
grow exponentially. n
SMG Vice President Jack Mackey helps
multi-unit operators improve customer
loyalty and drive growth. Contact him
at 816-448-4556 or [email protected].