Definition

Word of Mouth (WOM) is consumer-to-consumer communication about brands; largely about opinions and actions.

WOM involves two parties: the giver and the receiver(s). It is frequently one-on-one communication, but can also be one-to-many (e.g. within an online setting) and is not controlled by the company or brand.

WOM can be an active recommendation for or against, or simply a comment about something a product/service/brand..

Thought to have substantial impact on consumer purchase behaviour and be more credible and trustworthy compared to advertising

Key Findings

• NWOM is less common than PWOM (despite wide beliefs to the contrary). PWOM is three times more common than NWOM.
• Negative word of mouth has the same or less impact as positive word of mouth
• Brands with higher market share get more WOM (Report 63)
• Many comments given about a brand are neutral, rather than being overtly positive or negative evaluations
• While people are poor predictors of whether they will give WOM in the future, their past WOM behaviour can be more revealing
• The WOM recipient audience skews to heavy users of the brand
• WOM has more impact when it is directed to an individual than when it is broadcast
• People who give more negative word of mouth also tend to give more positive word of mouth
• Categories that have higher positive word of mouth also have higher negative word of mouth
• If the category is frequently-used, more PWOM is likely to be generated by a brand’s new customers, rather than by its longer-term customers.
• The usefulness of digital mining or social media monitoring tools to assess the contribution of WOM is questionable at best.
• The role of WOM in building a brand’s customer base is weak. Like loyalty, WOM is largely a function of the category a brand is in, and its market share. It is only when it is higher or lower than expected that it becomes of interest.

Best Practice

• The easier you make it for customers to say something about you the more likely they are to talk about you. Provide interesting, ‘bite-sized’ talking points (often neutral, descriptive facts) that can easily be passed on.
• In frequently-used categories, more PWOM comes from new customers. Stimulate PWOM by providing them “talking points”.
• Many widely held beliefs about negative word of mouth are false (Report 34). Do not focus on reducing NWOM since it is less common and has no more impact than PWOM.
• PWOM and probably NWOM are a function of market share; both are more common for larger share brands. This means that rates of recommendation should be assessed against a market share norm.
• Use market share as a benchmark for interpreting brand level WOM scores. Then you will be able to determine when WOM is normal, higher or lower than expected; and any anomalies can then be investigated. This prevents unnecessary worrying when a small brand gets a lower WOM score than a larger brand.
• Don’t be concerned with negative WOM unless it is substantially higher than expected.
• Don’t over-invest in trying to reduce NWOM and don’t upweight its value in any modelling.