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Word-of-mouth Marketing Will Change Your Business

By: Tina Hedges and Sarah Chung
Posted: September 3, 2009, from the September 2009 issue of GCI Magazine.

Undoubtedly, word-of-mouth (WOM) marketing gives brands a powerful and influential way to engage their target audience—many of whom are already VIP members of vast information sharing, brand advocate-building communities. For those who began their career on the beauty retail floor, it is has long been known that consumers are vocal with their opinions, but now more than ever, consumers are opinion-publishing moguls—increasingly broadcasting their point of view across numerous mediums and finding enjoyment in being the self-appointed “expert,” doling out advice and converting their friends and family along the way.

A projected 72 million U.S. adults will regularly give WOM advice about products or services in 2011, up from 65 million in 2006, according to eMarketer. There are 3.5 billion WOM conversations occurring daily in the U.S., according to the Keller Fay Group, the vast majority (92%) of which are off-line, specifically 75% face to face and 17% by phone. Yet another researcher, Nielsen, showed that 78% of consumers said they trust word-of-mouth recommendations from other consumers, while only 26% trust banner ads. These figures point solidly to the advantage of a personal recommendation over blogs and ads. “Over the fence, backyard selling” still carries the most weight with consumers, which must account for the continued dominance of direct sales companies, notably Mary Kay and Avon.

But before ruling out the online channel, more than eight in 10 influencers say they often go online to find out more after reading something in a magazine or newspaper, or hearing something on TV or on the radio, according to a recent survey by MS&L Digital. This shows that, while most recommendations are made off-line, influencers rely on the Internet as a critical resource in helping to inform decisions.

While most beauty marketers would be hard-pressed to disagree that a WOM campaign is an effective and necessary marketing tool, many marketers have not yet acted. Even more puzzling, many marketers either don’t know or do not care what is being said about their brands. In a recent CMO Council survey, 56% of senior marketers said their companies have no programs to track or propagate positive WOM. In addition, only 16% said their companies have a routine system in place for monitoring what people are saying about them or their brands online.