Why Word-of-Mouth Marketing is Crucial for a Winning Brand Strategy Duncan Kavanagh Other peoples’ experiences and thoughts about products are an important source of information for many consumers. They can both be more relatable, since they’re written from a user perspective, and more trustworthy, since they represent independent voices. But reading reviews written for strangers is just one of the many social sources consumers refer to along their path to purchase. Public-facing reviews are matched by word-of-mouth recommendations that are often invisible to brands, since they take place in person, or through ‘dark social’ channels. Unlike public product reviews, word-of-mouth recommendations come from sources familiar to us already, i.e. friends and family. What they lack in ‘authority’, compared to a professional reviewers, they make up for in trustworthiness. Word of mouth has the rare trait of being able to increase brand loyalty; a study from the Wharton School of Business found that referred customers are between 16% to 24% more loyal on average. Our data reveals that WOM is the fourth most-cited source for brand discovery among global internet users, behind search engines and ads seen on online or on TV. While taking pride in sharing their expertise seems to be important for many people who leave reviews, word of mouth tends to be more related to sharing tailored knowledge and experience to those who will really make use of it. Despite the increasing influence of mobile and social media, face-to-face communication still seems to hold incredible value for brand discovery and advocacy. But what place does word of mouth (WOM) have in today’s purchase journey, where offline sources compete and overlap with online, and who are the people that respond to it the most? The importance of word of mouth. WOM recommendations are a crucial marketing tool for any brand. This is mainly because since they come from sources familiar to us already, i.e. friends and family, and due to the ‘buzz’ user-generated content can induce, they’re more trustworthy and valuable. Our data reveals that WOM is the third most-cited source for brand discovery among global internet users, behind search engines and ads seen on TV. Tellingly, WOM recommendations (31%) are more important at this stage than both recommendations/comments on social media (25%) and consumer review sites (22%). Where does word of mouth hold most sway? WOM continues to play an important role across all our tracked markets, but privacy concerns and diminishing brand trust has made it especially relevant in some specific regions. Currently, WOM is particularly important in North America (41%, Index 1.32) and Latin America, where around 4 in 10 cite it as a key source of product discovery (38%, Index 1.21). This could reflect particular personal privacy worries in these regions, leading consumers to look for more traditional and trustworthy forms of brand advocacy. These are also markets where product reviews play a key role in brand discovery. The importance of reviews and recommendations – peer-to-peer sources – extends beyond the consumer sector, reflecting the social/cultural aspect. WOM is also a marketing tactic that is viewed favorably by business leaders in America. U.S. business decision-makers cite ‘conversations with people from the company on a social network’ as the second most influential source for B2B purchases, and 62% of marketing executives say WOM is the most effective form of marketing. The Middle East and Africa is the lowest-indexing region, with only 23% (Index 0.73) of digital consumers using WOM to discover new products and services, just as they’re less likely to use formal review sites. This finding holds true across all generations, but is particularly pronounced for Gen Z, who are half as likely as the average consumer to use WOM. Ads sen online and ads seen on TV rank as the top sources for brand discovery in this region, with WOM trailing in eighth position behind comments on social media and brand/product websites. There is no one clear-cut reason for this lack of trust in peer-to-peer recommendations,. It although it could be that in the Middle East, many companies still view social media as a means to ‘sell’ their brands and extend their global content into the region, rather than invest in authentic regional content. The relatively more limited availability of Arab and other local language resources could also play a role. This could explain why brands and agencies in this region are resisting to adopt WOM as a marketing tool. Profiling the WOM consumer. There are some key patterns that people who value word of mouth share no matter where in the world they live. WOM consumers are most likely to come from North America, what other characteristics define these individuals? Compared to the average consumer, they’re: 15% more likely to be female 28% more likely to be divorced or widowed 10% more likely to be in the top 10% of earners. Older generations are typically more inclined to use WOM for brand discovery, with over a third of 45-54 (34%, Index 1.09) and 55-64 year olds (38%, Index 1.21) citing this as a main source for finding out about new brands and products. For both baby boomers and Gen Xers, WOM recommendations places third as a brand discovery source behind ads seen on TV and search engines. It drops down to fourth for millennials, and sixth for Gen Z, but this still places it just ahead of recommendations on social media for both these younger generations. Brand trust is at the root of word of mouth. In 2018, we’ve seen a major shift in the way we think about privacy and brand trust. The combination of high-profile corporate privacy scandals and wide-sweeping data legislation has brought about a sense of fatigue and disillusionment with contemporary online marketing techniques. When the GDPR came into effect in May, many consumers predicted it would have a positive impact; the ability to hold companies to account for data misuse and to have greater control over what personal data they obtained was viewed very positively by those we surveyed. Since then, however, internet users have become frustrated with the constant barrage of privacy notices, consent boxes and general GDPR-related information. Despite much of the high-profile privacy-related events of the past year stemming from Europe and North America, brand distrust is rampant across all of our tracked markets. At least 6 in 10 people in all regions say they’re worried about how their personal data is being used by companies. And this number jumps to 8 in 10 people in the Latin American market. With this distrust comes both a general wariness of brands who only engage with their audiences through targeted ads on social media, as well as a hyperawareness of any disingenuous influencer marketing. It’s therefore hardly surprising that consumers consistently look towards recommendations from close one. Increasing the spread of WOM marketing. If brands can recapture what’s been acknowledged as the most valued form of marketing – built on consumers’ experience and trust – they’ll be able to increase their reach and boost positive reception, whether they take place on public review sites or in WeChat groups. But while WOM recommendations can be an incredibly powerful marketing tool, but they crucially they have to be fostered by marketing strategies that go beyond ‘likes’. These strategies even go beyond purposeful campaigns; although purpose-led strategies have been singled out as the key to brand growth, marketers have too-often fallen into the trap of seeking larger meaning only to look ‘faux-inspirational’ or insincere to consumers. Creating credible recommenders is key to cracking WOM marketing. In his 2016 TED talk, Chris Cowan shows that credible recommendations are much more likely to be considered and passed on compared to recommendations motivated by rewards. Brands now, more than ever, need to focus on building genuine and authentic relationships with consumers through amazing customer service, transparent value exchanges, transparent data collection and creative marketing campaigns, so avid consumers will be encouraged to share their experiences.