We’ve written previously about 7 Ways that Customer Service Impacts Retention Rates, and for this post we’ll explore the connection between great customer service and word-of-mouth marketing.
Providing your customer with consistently great service — experiences that they’d write home about — increases what McKinsey calls “word-of-mouth equity,” an index of a brand’s power to generate messages that influence the consumer’s decision to purchase. Here’s an excerpt from a McKinsey Quarterly article:
Word of mouth is inﬂuential throughout the consumer decision journey. It’s also the most disruptive factor. Word of mouth can prompt a consumer to consider a brand or product in a way that incremental advertising spending simply cannot. It’s also not a one-hit wonder. The right messages resonate and expand within interested networks, affecting brand perceptions, purchase rates, and market share. The rise of online communities and communication has dramatically increased the potential for significant and far-reaching momentum effects. In the mobile-phone market, for example, we have observed that the pass-on rates for key positive and negative messages can increase a company’s market share by as much as 10 percent or reduce it by 20 percent over a two-year period, all other things being equal.
Getting your customers to do your marketing for you by investing in exceptional customer experiences can reduce costs and increase conversions. We see customers broadcast stellar customer service interactions across a number of channels — social, blogging, email, and yes, IRL (in real life). In the one-to-many channels, particularly blogging and social networks, a positive recommendation can have exponential effects. And so can a negative review.
As consumer review sites are increasingly unreliable (though we are glad to see action being taken against those manipulating consumer reviews online), a personal recommendation from friend or family member for a site to buy those new Steve Madden boots from, or a hotel to stay at for your upcoming trip to Costa Rica, carries more weight than most forms of traditional advertising. And, word-of-mouth can have positive impacts on growing your community of loyal, repeat purchasers.
Here’s why customer service, good and bad, matters when it comes to word-of-mouth marketing*:
- A dissatisfied customer will tell between 9-15 people about their experience.
- Around 13% of dissatisfied customers tell more than 20 people.
- Negative interactions with a business are spread to twice as many people as positive ones.
- People are twice as likely to talk about bad customer service experiences than they are to talk about good experiences.
- 67% of people spend money after getting recommendations from their friends on online communities like Facebook and Twitter.
- Happy customers who get their issue resolved tell about 4-6 people about their experience.
As noted by Andy Sernovitz, head of the Word of Mouth Marketing Association (WOMMA):
“In the end, word of mouth marketing isn’t very complicated: Give real people interesting things to talk about, and make it easier for that conversation to take place.”
Customer experience isn’t just something that impacts the perception of your brand in the marketplace. It is your brand. So what are you doing to deliver exceptional experiences to your customers?
*Source for word-of-mouth statistics: White House Office of Consumer Affairs, 2012 Global Customer Service Barometer, McKinsey Quarterly, Internet Retailer.