Word-of-Mouth Marketing

Tom Peters

Buying a personal computer or a new washing machine? Getting your car fixed? Need a real estate broker or financial advisor? Or looking for a new phone system for your office?

Where are you likely to go for counsel? Certainly you don’t sit in front of the TV waiting for an ad to appear. You are not likely to “let your fingers do the walking.” You probably ask a respected friend, neighbor, or colleague who’s been down the same route recently.

Now switch sides. If you were the would-be seller of a service or product, how could you tie into that network of friends and experts who advise potential buyers? Most sales—especially of services, complex products and new products—come via word of mouth. As a seller you need not passively sit by. You can be just as organized, thoughtful, and systematic about “word of mouth advertising” as about media buys on network TV or in your local paper.

However, marketers, especially in smaller businesses, tend to over-rely on media advertising and under-rely on the careful development of reputational campaigns, says Silicon Valley marketing expert Regis McKenna.

The principal finding deals with the overriding power of networks: “Individuals do not evaluate an innovation on the basis scientific studies. Most depend mainly on a subjective evaluation of an innovation that is conveyed to them from other individuals like themselves who have previously adopted the innovation. This dependence on the communicated experience of near-peers suggests that the heart of the diffusion process is the modeling and imitation by potential adopters of this network of their network partners who have adopted previously.” Study after study reviewed by Rogers revealed that (1) an innovation takes off after “interpersonal networks have become activated in spreading subjective evaluations” and (2) “success is related to the extent that [the change agent—or marketer] works through opinion leaders.”

At a recent convention of the International Racquet Sports Association, I had a lengthy chat with a premier industry marketing advisor. He lamented the horrible waste of money on advertising by most fitness clubs (that often have minuscule budgets). He suggested that much more emphasis should be placed on newsletters, open houses, and free or inexpensive guest privileges for members. The latter techniques, of course, aim to energize word-of-mouth activity, using currently contented members as the primary carrier of the good news.

The discussion reminded me of a panel meeting on newsletters I attended at the American Booksellers Association meeting last year. Independent booksellers are madly looking for ways to stave off the ever-increasing incursions of chain stores. The independents’ inherent advantage is the opportunity to more intensively develop a loyal, local clientele. But few independents were dispensing newsletters creatively to nurture and expand a cadre of loyal buyers. The device admittedly is expensive and time-consuming, but almost always successful.

A related technique is the systematic use of testimonials. Corporate Woods, outside Kansas City, one of the nation’s most successful and attractive office park developments, solicits testimonials from its prestigious clients and regularly holds picnics and galas (25,000 attended last year’s Fourth of July affair) to urge the network forward—and to cement the feelings of current tenants.

I write, I must add, with the zeal of a true believer. My first book, In Search of Excellence, was launched by an unsystematic (but, in retrospect, thorough) word-of-mouth campaign. A speech and 35-millimeter slide presentation of what became the book’s principal findings first was bound in 1980, two years before the book was published. The 125-page presentation circulated surreptitiously among business executives. We eventually printed 15,000 to meet the underground demand, much to the misguided consternation of our publisher, who was certain we were giving away future sales. We also assiduously courted opinion leaders in the media over several years. Thus, within days of the book’s launch, excellent reviews appeared and the network of 15,000 (plus at least an equal number of xeroxed knock-offs) raced to buy the real thing, often in bulk for their subordinates. We could not have more effectively marketed the first book if we had planned this process meticulously. In fact, Nancy Austin (coauthor of my second book) and I, did just that with the launch of A Passion for Excellence.

The important point is that the process can be systematized. Careful maps of official opinion leaders can be made. Disproportionate selling time can and should be aimed at highly reputable, would-be early adopters of new products and services. Devices such as insider (current user) newsletters and testimonials can be planned and executed meticulously. Events that pair happy customers with their ready-to-sign-on peers can be executed on both a one-shot and ongoing basis.

Are you devoting the bulk of your marketing effort, dollars, and energy to activating a word-of-mouth network? Are all your salespersons devoting a specific—and sizeable—share of time to user network development and expansion? Is every employee a conscientious network developer, among his or her colleagues? If you answer “no” to any of these questions, you may be turning your back on your highest-leverage market-development activity.