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How Customer Communities Power Word-of-Mouth Marketing

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Word-of-mouth is storytelling—real customer experiences related by the real people that have them—and it influences up to 50% of purchase decisions today. Word-of-mouth becomes marketing (WOMM) when …

Word-of-mouth is storytelling—real customer experiences related by the real people that have them—and it influences up to 50% of purchase decisions today. Word-of-mouth becomes marketing (WOMM) when you harness the power of this inherent behavior, infuse it with intention, measure it, and use it to empower your brand. And in today’s social environment, doing so strategically is more important than ever.

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  • 1. How Customer Communities Power Word-of-Mouth Marketing
  • 2. share this whitepaper contents 1 Word-of-Mouth is Storytelling 2 Enter Social—WOMM on Steroids 4 Trust—The Essential WOMM Power Driver 5 Doing WOMM Right: Who, What and Where 7 Developing a WOMM Playbook 9 Measuring WOMM request a demo subscribe to SocialMatters Lithium social software helps the world’s most iconic brands increase loyalty, reduce support costs, drive word-of-mouth marketing, and accelerate innovation. Lithium helps brands to build vibrant customer communities that: reduce service costs with social support grow brand advocay with social marketing lithium.com | © 2014 Lithium Technologies, Inc. All Rights Reserved drive sales with social commerce innovate faster with social innovation 2
  • 3. share this whitepaper Word-of-Mouth is Storytelling The tendency to tell others about brand experiences that Word-of-mouth is storytelling—real customer experiences impress or enrage us is as old as human nature. “Word-of- related by the real people that have them—and it influences up mouth” is simply one person telling another a story—on or to 50% of purchase decisions today. Word-of-mouth becomes offline—about the experience they’ve had with your brand. marketing (WOMM) when you harness the power of this But not just any experience. They don’t talk about you when inherent behavior, infuse it with intention, measure it, and use you simply meet expectations. They talk about you when you it to empower your brand. And in today’s social environment, fail miserably or when you do something so spectacular it’s doing so strategically is more important than ever. unbelievable. Word-of-mouth is a double-edge sword for brands—but when it’s positive, the results are exponential. In our age of technology, it’s easy to forget that at the heart of our smartphones, texting, liking, sharing, and social What’s at stake? Brand perception, reputation, and customer loyalty. All of which drive competitive advantage and are crucial differentiators in today’s global marketplace. conversations is the passion we have for communicating. Simply, we need to tell our stories. It’s important not to confuse WOMM with “viral marketing”— strategically placed, corporate-produced videos, for example, designed to generate massive brand exposure. While such viral campaigns might be catchy or memorable to the consumer, that they are corporate-produced messages makes them very different from WOMM messages. he story of t WOMM the story of WOMM 1
  • 4. share this whitepaper Enter Social— WOMM on Steroids ia.org ped ma m 92% of consumers worldwide trust recommendations sour ce: from friends and family wo more than any other form of advertising – 66% of up from 74% in 2007. brand mentions are positive. Gone are the days when a disgruntled customer’s influence was confined to her immediate friends, family, and coworkers. A letter to the editor of the local paper was the most influential she could get. Today, one Tweet in the heat of anger can reach millions across multiple social networks and But while social media empowers customers like never easily end up as a headline on Yahoo!News. This is the horror before, it also causes consumers to be less trusting. story brands fear most. Every customer is now a single force Ironically, because so much information and opinion is of global media who can spur countless conversations across readily available, there are fewer fully trusted sources. social media. So what do consumers do in response? Turn to their own trusted social networks. The power paradigm has definitely shifted, but it’s not all bad. Elated customers also Tweet and their messages across This rise in distrust of advertising has seriously degraded its social media are just as powerful and in fact more prevalent. effectiveness, which by contrast, makes WOMM more valuable Indeed, statistics show that most WOMM over social media than ever. Brands with thoughtfully planned and executed benefits brands. WOMM strategies and campaigns win big. 2
  • 5. share this whitepaper The Canon Forum accumulated over 5,100 registered users and 2.8MM page views in its first 6 months. BSkyB Community thread views are in excess of 1.5 million per week. Worse yet, the full extent of social initiatives for many brands is a to put up a Facebook page and grab a Twitter handle and hope for the best. And while the laggards continue to struggle, savvy 21st century brands realize that the newly empowered customers of today want more of them and from them, and they’re becoming more adaptive. How? By creating and owning their own social customer So why don’t more brands move advertising dollars over to WOMM initiatives? The truth is, brands stumble because they believe that WOMM is too abstract and illusive to control, measure, and manage. The inclination to avoid “criticism” also plays in, as many brands prefer to turn a blind eye rather than face what customers may be saying. Further, when they do engage in social media conversations, they typically do so to advance customer relationship objectives, not marketing objectives. communities organized around a common interest in the brand and products. Unlike public social networks which are organized around pre-existing interpersonal relationships, customer communities serve as a hub of common interest where customers share information, ask questions, and problem-solve. Unlike communities on Facebook, Google+, Twitter, and LinkedIn, owned social properties allow brands to control, measure, and harness the full power of what their customers are saying and sharing. 3
  • 6. share this whitepaper Trust—The Essential WOMM Power Driver Lack of consumer trust spells bad news for brands and the tapping and leveraging all that trusted social content to news today just keeps going from bad to worse. Consumer influence purchase intent works very well—especially in the trust, in fact, seems to be falling off the cliff—a paltry 10% say early part of the buying cycle. they trust brands today, down from 17% just last year. All this lack of trust has enormous consequences for brands—53% of consumers say they won’t buy from a company they don’t trust, 56% will openly criticize companies they don’t trust, and 30% say they would share negative opinions online.1 Increasing lack of trust in brand messages drives consumers to the people in their lives they trust most: friends and family. This used to be referred to as “kitchen table talk”—meaning the people you’d invite to your kitchen table tend to be the people 89% of consumers say customer testimonials are the most effective content 81% of consumers are influenced by friends’ social media posts you trust the most. The concept still holds true today. Online forums, discussion groups and social networks are chalk full of kitchen-table talk, and those digital conversations have enormous value for brands—because they’re trusted. 92% of consumers trust earned media—social media, WOMM, recommendations from friends—above all forms of advertising. source: Nielsen By making UGC easier to push and more accessible than ever, social media is already the most widely used content marketing tool around. 25% of search results for the world’s top 20 largest brands are links to UGC. source: Socialnomics Consumers share and seek opinions from their trusted circle when they want recommendations for products and services and when they fear making a purchasing mistake. Fueling, 70% of consumers view online customer reviews first when considering a brand sources: wommapedia.org, SocialTimes.com And while there’s still no silver bullet when it comes to WOMM, fanning the flames of trusted user-generated content (UGC) comes awfully close. Organizations that put trusted UGC at the heart of their online marketing efforts reap enormous WOMM benefit. 75% of all new subscriptions for community-driven UK-based CSP giffgaff are driven by WOMM. The American Diabetes Association boosted organic web traffic by 8x with trusted user-generated community content. 4
  • 7. share this whitepaper Doing WOMM Right: Who, What and Where The most impactful WOMM comes from brand “influentials”or superfans—highly trusted and highly credible consumers with deep expertise around a product or service. These highly active customers account for 10% of WOMM, but they generate 3 to 5 times more WOM messages than their less influential counterparts, and their messages have 4 times the impact on purchasing decisions.2 Influentials or brand superfans are essential to a successful WOMM strategy, and savvy brands often have serious strategies for cultivating and nurturing them. The great news is that in social communities, influential superfans are easy to identify and cultivate. WOMM and social communities are a match made in heaven because both are all about engaging in conversations. They can be noisy and crowded, but that’s what makes them also relevant to more than just those who actively participate. Like any community, online social communities are full of people who listen and observe without saying a word. These silent observers read reviews, view conversation threads, and form opinions based on what they encounter. What is said is just as important as who says it. The type of content that consumers get excited about must provide true value—it can be tangible or intangible, but it must deliver. The most successful brands typically leverage three forms of WOMM: 1. Experiential – the most powerful type, this results from consumer’s direct experience with a product, service, and brand. Up to 80% of WOMM is triggered by this form. 2. Consequential – consumers are exposed to traditional marketing campaigns and share the messaging with others. (i.e., you run a commercial on TV for an earlybird sale; a consumer sees it and tells a friend.) 3. Intentional – you pay celebrities to endorse your brand with the hope that it will trigger positive WOM. This form can be tricky to measure because both the campaign and the celebrity figure influence the level of WOM.3 The environment where WOMM occurs also matters greatly. As mentioned, a Facebook page and a Twitter handle don’t automatically lead to successful WOMM. Here’s why: Public social networks like Facebook and LinkedIn are held together by pre-established interpersonal relationships 5
  • 8. share this whitepaper between individuals, like family, friends, classmates members. Further, brands that build and own their own social and colleagues. Those interpersonal relationships communities have a direct influence over the level of WOMM also mean there’s more initial trust in social networks that transpires. With access to their brand’s top influencers, than in communities. and the ability to develop trust with consumers, they lay the Unlike social networks, however, branded customer key foundations for a successful WOMM strategy. communities are held together by a common interest While an owned social hub is a key part of a solid WOMM around the brand, its products and services. The common strategy, it’s important to remember that customer element—the glue that keeps their community together—is conversations around your brand and products will never that they all care about the same thing: the shared interest be limited to that social hub. Consumers will talk about of their community. That communities are formed around their experiences with your brand anywhere they choose, common interest means there’s more initial relevance which is why a WOMM strategy must include methods and inside a community than in a social network—and that technologies for monitoring, responding, and tracking off- makes all the difference. domain social communication as well as the ability to direct the flow of traffic to your domain where you can have more control and influence. There is a push-pull concept at play here. On one hand, you want to push out content that will positively get people talking, rippling out among many social channels. On the other hand, you want to draw in negative conversation to your own site, so that people come to you directly with complaints and problems. Communities do both. Why? Because it’s vastly easier to build trust than to create relevance. Specifically, it’s easier to build trust within a community that already has relevance, than it is to create relevance within a social network that already has trust. One of the biggest advantages of an owned customer community, is that it naturally builds a sense of close-knit trust among 6
  • 9. share this whitepaper Developing a WOMM Playbook WOMM messages must be trustworthy, credible, transparent 3. A strategy for engaging superfans. What matters and valuable to influence consumer behavior. But before positive to brand influentials, or superfans? Being seen as WOMM can happen, brands have to get some major things important in their own social network. Visibility. Getting right. Word-of-mouth is based on the foundation of your existing in early on beta testing. Being allowed to be an early brand, customer service philosophy, and culture. Thoughtful, adopter. Rewards. A social strategy that rewards proactive planning is essential to avoid reactionary strategies. achievements (discounts/perks for referrals, badges Here are some must-haves for WOMM success: 1. A culture and training that generates a spectacular customer experience. You have to be exceptional to generate word-of-mouth (and remember, exceptionally bad also generates it). To generate positive WOMM, you need to make customers feel so valued and cared for that they can’t help but share their story with others. Remember, they won’t feel like sharing when you just live up to your brand promises or their expectations for quality. Not only does customer experience excellence help drive WOMM, it benefits the business enormously on the whole. 2. A social community and presence that engages, for levels of sharing, etc.) allows people who value their own influence to strive for higher levels of it on their own. When you provide it—they deliver huge value to your WOMM efforts by creating sharable content. BSkyB community superfan Annie+UK has read ~90% of community posts, responded to over 2,750 customers, and spent 13,584 hours working on community inquiries—equal to 7 full-time staff members. Spotify community member HAMMEH-UK has created over 6,100 posts in 6 months and spent 115,000 minutes in the community helping other members. You also want to remember to engage superfans voluntarily to ward off the appearance of “buying them off” (a hint of that will shatter trust instantly). A focus respects, and provides value. Customers expect you on intrinsic rewards—things like autonomy, mastery, to be online. They want real-time responses and they relatedness and purpose—works better than a focus are counting the minutes it takes you to respond to on extrinsic rewards. Take the time to figure out which an inquiry or comment. You need a social team that rewards matter to influential superfans and create is trained to represent the brand and empowered to avenues for them to attain those rewards. deliver high-quality interactions before you can leverage a WOMM campaign. 7
  • 10. share this whitepaper 4. High value, helpful content. It’s not enough just to announce a sale and expect everyone to shout it from the rooftops. Social community members want trusted, high value, helpful content. Remember, they’re seeking out those rare places they can find trust these days, and your social community needs to be one of them. This means you do your homework and learn (hint: ask) what matters most to your customers. The features/ benefits/rewards that you think should matter may not to them. Social communities are known for their ability to innovate and drive product development—so tap into your members for their insight. Then provide them content that they cherish. As you develop content for WOMM, remember that the full standard of consumer behavior still applies. People still love a bargain, they talk about features and benefits, and they react to content that sparks strong emotion. People want to feel good, and your messaging can do just that. Add value to their daily lives, to their dreams and aspirations, to their faith in humanity, and at the same time, you’ll increase loyalty and sharing. These are just a few of the essentials for a smart WOMM strategy. As with any strategy, there are also pitfalls to avoid. 1. Keep it Above Board. Brands need to be mindful that in WOMM there is no room for gimmicks or the slightest hint of manipulation. Social communities expect brands to be honest and genuine in every representation and communication. Regulated industries, such as financial services and healthcare, are under legal obligation to keep things visibly above board. 2. Transparency is key. Be clear, open, and honest. If you engage with bloggers, for instance, make sure that you obviously disclose any relationship that blogger has with your brand. People know that a brand’s ultimate intention is to sell products and services, they get that. But they will not tolerate being tricked, lied to, or misled. They’re suspicious and constantly looking for ways to decrease their vulnerability, so transparency is extremely important for maintaining trust. Consumers expect to be treated with respect, to be heard, and to engage with real humans, not feel as if they’re engaging with a corporate entity, or worse yet, a technology. 5. Use the lure of virtual items to spark WOMM. With gamification, you can create virtual items that keep people engaged, playing, and interacting with your brand messages. We’ve all seen the popularity of games like Candy Crush – think of the market exposure this game would have it were owned and driven by a brand. Gamification can use virtual to drive sharing and the sense of reward that social community members crave. What about negative WOM Messages? People are willing to forgive brands for mistakes IF the brand responds to public complaints or criticisms with honesty, authenticity and transparency. It’s crucial to have a game plan in place before negative WOM messages make it into the marketplace—because they will. Careful, thoughtful, respectful, humble responses are just as visible to the watching public as complaints. By responding well, you have the opportunity to take a negative situation and actually create positive WOMM for your brand. As you mindfully plan your WOMM strategy, incorporate tactics and messaging that position you as genuine, trusted, and credible. 8
  • 11. share this whitepaper Measuring WOMM The bane of word-of-mouth marketing has been the have variables that create greater or lesser WOMM impact. By perception that you can’t measure it. Up against traditional, utilizing equity metrics to gauge the effect WOMM has on brand proven marketing methods, marketers have shied away from and product performance, marketers can determine what’s quantifying WOMM’s impact on the bottom line. No longer. driving or impairing word-of-mouth among their consumers. WOMM is measurable. Some brands have discovered that Brands are able to measure the value of excitement and not by seeing WOMM as a form of media, it becomes a form of just sales. They are also able to predict who will generate content, and they apply proven content management and more sales. For example, one retailer’s WOMM metrics metrics to it. As technology evolves, WOMM-specific metrics revealed that Ipad users were a small percentage of their have also evolved. customer base, but that they would spend twice as much as 3 McKinsey has developed “WOM Equity Metrics” – a process of indexing a brand’s power to generate messages that other customers. Metrics allowed them to hone in and target this group as Influentials. influence the consumer’s decision to purchase. The goal is to As social communities transform how brands do business, understand how and why messages work so that marketers engaging and driving measurable WOMM is becoming can create a coordinated, consistent response that reaches increasingly important, and an inherent part of how social the right people with the right content in the right setting.4 communities work. Word-of-mouth is happening all the Word-of-mouth equity represents the average sales impact of time—your job is to get in the game. a brand message multiplied by the number of word-of-mouth messages. By looking at the impact and volume of messages, resources marketers can test their effect on sales for brands, individual 1. campaigns, and across the enterprise. This equity consists Trust in Business Falling as Consumers Demand Greater Regulation, MarketingWeek 2. A New Way to Measure Word of Mouth Marketing, McKinsey & Co. 3. ibid 4. Unlocking the Elusive Potential of Social Networks, McKinsey & Co. of what’s said, who says it, and where it’s said. All of which About Lithium Technologies: Lithium social software helps companies unlock the passion of their customers. Lithium powers amazing social customer experiences for more than 300 iconic brands including AT&T, BT, BestBuy, Indosat, Sephora, Skype and Telstra. The 100% SaaS-based Lithium Social Customer Experience™ platform enables brands to build and engage vibrant customer communities to drive sales, reduce service costs, accelerate innovation and grow brand advocacy. For more information, visit lithium.com,or connect with us on Twitter, Facebook and our own community–the Lithosphere. Lithium is privately held with corporate headquarters in San Francisco and offices across Europe, Asia and Australia. The Lithium® logo is a registered Service Mark of Lithium Technologies. All trademarks and product names are the property of their respective owners. 9