Word of Mouth Marketing (WMM) feature. June 2007 issue of B2B Marketing magazine.

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As people's power grows to control the marketing messages they are exposed to, through junk mail de-selection and email filtering, the marketing industry has turned its focus to word-of-mouth marketing - on the basis that recipients will let in content from a trusted source. Indeed, figures from nVision suggest that 70% of people are more likely to buy a product if it has been recommended by someone they know.

While this revelation is far from new, the extent to which this is now becoming a science is, implying that word-of-mouth recommendations can be proactively influenced.

This is more than simply generating case study stories from happy customers; it is about encouraging customers to evangelise on a business's behalf, a discipline which now has its own vocabulary and means of measurement.

Fundamental to the current word-of-mouth marketing (WMM) movement has been the pioneering work of US-based management consulting firm, Bain & Co, which looked at the relationship between customer satisfaction, recommendation rates and company growth.

The work resulted in a metric, the Net Promoter Score, which measures how likely customers are to proactively recommend a company, product or service. The beauty of the formula is its simplicity, enabling companies, however small and necessarily frugal in their marketing spend, to quickly assess the word-of-mouth impact they are having on their customer base - so they can do something about it.

Companies simply ask each customer on a scale of 0-10 how likely they are to recommend the company/product/service. From the results, customers are split into three categories: detractors (those who would recommend the company because they're expectations have been missed); the passively satisfied (whose expectations were met, but not exceeded); and promoters (those whose expectations were exceeded and who are therefore likely to proactively recommend the brand/product/service to others).

The Net Promoter Score is arrived at by subtracting the number of 'detractors' from the number of 'promoters'. This information can be used to predict how likely a business is to grow - particularly valuable for small or medium-sized businesses, especially as all of this information is being gleaned from a single, simple question.

At PR and communications agency Kaizo, where WMM is now a formal service offered to clients, this is supplemented by 2-3 add-on questions which dig deeper, asking: "What is the main reason you awarded us this score?" and "What is the one thing you'd recommend we do differently in future?"

"This tells you what you're dong wrong so you can fix it, with clear priorities," says Kaizo director Crispin Manners, noting that when the London School of Economics replicated Bains' research, it found that 'detractors' are 3.5% more powerful than 'promoters', creating an urgency to reduce their numbers quickly.

"What this is saying to SMBs is: ignore the text books when looking for answers on how to run you business, and just ask your customers," Manners urges. "If they have high volumes of customers, they can use a web survey, or if they have a manageable number of personal relationships they can ask clients face to face."

But aside from improving services so that customers turn from complaining to evangelising, how else can marketers influence the statistics?

Proactive WMM involves turning 'passive satisfied' customers into 'promoters', and getting promoters to evangelise more widely, through a system of incentives. Many large companies already do this with case studies - customers are given a discount if they agree to be a reference customer, and take part in press releases, press comment, and formally written testimonials.

Other research has found that certain people within a business are more likely to be advocates (proactive promoters) than others, based on the kind of person they are - we've all worked with people that have a self-adopted role or are considered to be a 'fountain of all knowledge'. The job of marketers is to find and influence these people.

Analysts have determined that the right advocate can stimulate conversations with up to 40 different people about a brand or service they recommend; they in turn will pass the information on to a further 26 people, who will each tell another 14. As this is multiplied up, it's possible to reach as situation where 1,000 advocates are spreading a company's marketing message among an audience of 80,000. Those are hot numbers.

For Andy Green, a partner at brand communications agency Green Communications, word-of-mouth marketing begins much earlier in the process, though. He argues that WMM is as much about non-customers spreading marketing messages as it is about satisfied clients providing spontaneous recommendations based on their experience.

The key here, he says, is the 'stickiness' of the original message, and the effectiveness of the networks through which these are being passed on.

"Jesus didn't have Saatchi & Saatchi working for him, but he had WMM-friendly parables which spread quickly, starting with the 12 disciples," says Green. "In an ideal world, we'd all have 12 disciples to spread the word.

"The challenge is to create messages that live on well beyond the sender," he explains. This might be through memorable phrases, for example. "I can still sing TV jingles from decades ago," Green says. "That's because the content was WMM-friendly." (Think 'Shake & Vac'.)

Then there's the effectiveness of the network. Relying on and encouraging existing happy customers to spread the word is one thing, but companies can also encourage word-of-mouth coverage using business networks. From the British Chambers of Commerce to the Freemasons, organisations have long relied on formal and social networking as a means of swapping business cards and influencing the business world's movers and shakers.

With the online dimension, such networking has never been easier. Most traditional organisations and clubs now have an online dimension, while others have been created specifically to exploit the power of the Internet in bridging distance and networking efficiently with large volumes of primed participants.

Ecademy works particularly well. The network, which has itself been built entirely by word of mouth, has 106,000 members around the world, 66% of which are freelance or small business owners.

"Traditionally, small businesses would split their marketing between Yellow Pages, a bit of PR and a handful of networking events. Ecademy opens a series of new doors to them," says Penny Power, who founded Ecademy in the UK in 1998.

A member's Ecademy profile acts as an online business card, yet is much richer than that, thanks to the ability to link it to an online CV, blog and photos as well as the company's own web site. "This makes it very easy to refer fellow members," Power notes.

Key words make member entries easily searchable, which Ecademy invests a great deal in boosting member Google rankings, propelling them into the broader business limelight.

But what's really remarkable about Ecademy is the proactive help members give each other. "One member I know well is an advocate for 32 other individuals or companies," Power says. "If he is out visiting his own clients, he will have details of all these other services with him and will recommend all of them if it's appropriate. This makes him look well-connected and adds value to the service he is providing, while boosting business for 32 other organisations."

The more proactive Ecademy members are, and the more they help each other, the more membership privileges they gain, and the higher they rise up the network's listings. That 'help' can be as simple and undemanding as rating each other's services on the Ecademy web site, in the recognition that customers buy more willingly from someone who's been repeatedly endorsed.

Membership fees, just £10 a month, are waived if participants invite 10 new members to join the forum each month, encouraging the network to continue growing, and adding in potential new business contacts that all members can benefit from. It's mutual back-scratching at its best, Power says.

Around 6,000 new members join each month, and around 500,000 visitors come to the site, which today features some 80,000 blogs, 56,000 marketplace listings and has led to 18,000 offline events, which are managed by members and bring people together in specific geographical areas. "It's much more than an online organisation," Power notes.

So where could this all lead? For some in the marketing industry, the growth of interest in WMM is a welcome relief, as it represents a return to old-fashioned, core marketing skills and a chance for marketing to be valued again. Firing unwanted messages into an abyss is no good for anyone's morale, less still the environment. WMM, by contrast, is both challenging and rewarding.

Information, theory and advice on WMM:

Web:

http://www.womma.org/ - the US Word of Mouth Marketing Association

Books:

The Ultimate Question, by Frederick Reichheld (developer of the Net Promoter Score at Bain & Co)

Word of Mouth Marketing: How smart companies get people talking, by Andy Sernovitz and Guy Kawasaki

Word of Mouth Marketing, by Jerry R Wilson

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