Word of Mouth or Customer Interaction?

By Lachelle Marshall and Scott Stebner

While word of mouth (WOM) is often considered the holy grail of marketing standards, some scholars and practitioners have begun questioning whether there is a hidden, more powerful marketing strategy that lurks online that can greatly impact your profits. This hidden gem is called customer interaction.

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We all  value WOM marketing; it’s free. It’s voluntary and customers can engage with one another with very little participation needed by your business. When a customer makes a recommendation to a friend, it’s seen as a way to connect with different companies and such personal recommendations are regarded as highly trustworthy and accurate. But the most difficult thing about relying on WOM marketing is that many business owners believe, to some extent, that it is out of their control and mostly untraceable.

As such, many practitioners are now looking at customer interaction (CI) and how it not only drives WOM marketing but also leads to more profitable customers.

CI occurs when customers interact with brands on social media by liking, commenting or sharing your content. They can also interact with your digital brand by making comments or providing recommendations to your company through emails, forums, or social media. CI is highly important to marketing because customers who interact with brands are more likely to feel engaged and a part of that brand; this helps create an active and loyal customer instead of a passive one. Active customers who interact with companies also spend more money and make more frequent WOM recommendations to their peers than customers who do not.

Companies are starting to notice how customer interaction can drive sales and develop loyal brand relationships. Perhaps the most well-known customer interaction campaign on the web is the “My Starbucks Idea” campaign.

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This campaign allows customers to submit their recommendations for improving their products or services and allows other customers to vote up or vote down these recommendations. The most popular ideas are often put into practice at stores across the globe with credit given to the customer who submitted it.

While you may not have the resources of Starbucks, there is still a lot to gain from asking for and encouraging customer feedback.

In a recent article by Omar Merlo, Andreas B. Eisingerich and Seigyoung Auh titled “Why Customer Participation Matters”, the researchers compared the profitability of WOM vs. customer interaction.

Here is what they found:

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What does WOM vs. CI look like?

According to Merlo and his team, “active participation, such as a willingness to provide critical feedback and guidance, strengthens the links between customers and companies”. However, just like WOM marketing, customer feedback and interaction can be difficult to track and go
un-noticed.

One added strength focusing on CI has over WOM marketing is that, while WOM is a vital outlet, it is does not fully explain to managers how they can improve their products or services. Having a way for customers to actively participate and give feedback and guidance strengthens the relationship between customers and companies.

Merlo and his team offer six tips for companies wanting to implement customer participation outlets.

1. Don’t be timid of customer participation

  • Customers are more likely to be engaged when companies value their feedback.
  • Encourage and listen to customer feedback. This makes customers feel more appreciated and part of the value creation process.
  • While you don’t have to put into practice everything your customers say, it is important you bring them into the conversation.

2. Start simple and expand over time

  • Make it simple and easy for the customer to participate.
  • This could be through encouraging participation on a social media post or through asking for suggestions via an e-newsletter.

3. Improve your strategies for gathering, storing, and evaluating feedback

  • Make customer participation an essential part of your daily posts and strategy.

4. Integrate customer interaction strategies into your social media

  • Data management and different types of software can be tools to help companies encourage, manage and reward customer participation.
  • Make sure you have a way to keep track of all of the recommendations and participation.

5. Make customers feel as if they are in control

  • Be creative about how to pull customers into the process of feedback by encouraging customers to participate.
  • Start by asking yourself, “Why would they want to take their time and participate? What will they receive from participation?”
  • Don’t make customers feel forced to voice their opinions.
  • Thank them for their feedback.

6. Be creative about how you manage participation and asking for customer interaction

  • If customers are investing their time and money, let them know their involvement can make a difference by not only communicating back with them but also making them feel like you making an effort to act on their feedback
  • Make sure they trust the company will actually listen to their input by answering and participating back.

The Verdict

So which is more effective? According to Merlo and his research team, while both are profitable, customer interaction not only increases profits but it is also the largest factor determining if someone will make a recommendation to a friend.

Did this interest you? Check out the original article by Omar Merlo, Andreas B. Eisingerich and Seigyoung Auh to read more about customer interaction and WOM marketing via social media.

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