Tag Archives for word-of-mouth

Renewed definiton of brand

Skittles.
by photographer PiccoloNamek and
image via Wikipedia

This is the fourth in a series of short posts related to The CMO Agenda research. Informed by recent CMO conversations and CMG Partners‘ collective experience helping top marketers develop marketing strategy, we have compiled a list of seven ideas or jump starters for further conversation. These are meant to spark discussion, ideas, and action as we all enter a difficult 2009.

The transparency and accountability of brands is increasing as new uses of the Internet drive the democratization of voice — shifting knowledge and control from marketers to consumers. This trend is forcing marketers to adopt non-traditional methods of brand management to ensure the brand is consistent not only in communications but through all customer touch points. As one CMO put it, “everything we do communicates.”

If you beleive that the true definition of a brand lies with the perceptions of consumers not with the marketing leaders, then the extreme brand management practice would be for consumers to drive the expression of the brand. Well maybe not, but this is exactly what the maker of Skittles has done (knowingly or unknowingly).

In March, Skittles re-launched their website, which used social media tools for content: Twitter for “Chatter”, Facebook for “Friends”, Wikipedia for “product information” and YouTube for “Media”. This was heralded by some and refuted as a circus trick by others (see a previous post for my take).  Unfortunately, I have not been able to find information on the performance of the campaign.

This example, whether good or bad, does provide a new theory for brand managers and bring to reality the old phrase “a brand is what others say about you, not what you say about yourself.” How will you begin to renew your brand management practices to align with consumer voice?

Mirror post at cmgpartners.com/blog

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Zappos making push into insights business

franchiaccessories.com

source: franchiaccessories.com

Zappos launched zapposinsights.com, a website subscription service that vows to grant insider access to the Zappos culture and employees. Some may ask why… Zappos has made a name for itself in selling shoes online, but most importantly for building a culture that consistently delivers on its promises to customers. The CEO was interviewed by BrandWeek, “Zappos CEO: How to Build a Brand Without Spending Big on Ads“. Through purchasing the subscription, you can ask questions and get answers to how Zappos has tackled issues you are facing or what best practices they have learned along the way.

“We spend most of the money we’d spend on paid advertising and put it into the customer experience and let them do the word-of-mouth marketing for us.” – Zappos CEO Tony Hsieh on brandweek.com

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Net Promoter the Ultimate Question: helpful or hype?

Image from ServiceUntitled

Image from ServiceUntitled

As a marketer, you cannot escape the vast number of books and articles that highlight Net Promoter ® and the power of it. Even the likes of Joseph Jaffe with this recent podcast that highlighted the authors of “Answering the Ultimate Question,” Satmetrix’s Richard Owen and Doctor Laura Brooks. Now,  if talking about Net Promoter ®, I must pay tribute to Fred Reichheld, a Bain Fellow and founder of the loyalty practice. If you were wondering who owns the trademark, Fred Reichheld, Satmetrix and Bain co-own the trademark to Net Promoter ®.

Now the debate: helpful or hype?

ServiceUntitled, a blog that I highly recommend, has a great book report on The Ultimate Question: Driving Good Profits and True Growth by Fred Reichheld. The report recommends the book but cautions that the last half is redundant. Overall there are merits of net promoter but based on the fact it is not a new concept — asking people whether they would recommend your company/product/service to friend or family member.

And thanks to the folk’s at Walker, here is a compilation of academic reviews of the concept:

  • The first independent empirical work addressing Net Promoter was a Harvard Business Review letter to the editor by Neil Morgan and Lopo Rego in April 2004. The authors used secondary resources to conclude:
    1. revenue growth (the financial metric used by Reichheld to prove the value of NPS) is not the best financial metric to predict business success
    2. the predictive ability of customer satisfaction/loyalty metrics varies across industry context
    3. no one customer metric predicts different financial metrics equally well.
  • Brand Strategy published a second independent article about Net Promoter in January 2006 by three London School of Economics economists. Based on an advocacy study of four UK consumer sectors – retail banking, mobile phones, cars, and supermarkets – the authors found NPS and negative word-of-mouth behavior were significant drivers of revenue growth (positive and negative correlations, respectively) but that customer satisfaction and positive word-of-mouth behavior were not significant drivers of future growth.
  • The next empirical test of the Net Promoter concept was published in the September/October 2006 issue of Marketing Sciences and was the first article published in a peer-reviewed academic journal. Identifying six measures of customer satisfaction/loyalty, the authors found that an index of customer satisfaction (loyalty) and a customer satisfaction top-two box score are the best predictors of six popular measures of financial performance followed by the likelihood to repurchase and a measure of customer complaints. NPS was not a significant predictor of any financial performance measure.
  • A forthcoming article in the Journal of Marketing (Keiningham, et al.) presents evidence questioning the link between NPS and business performance. Using two longitudinal datasets, the authors are unable to replicate Reichheld’s assertion regarding the strong link between NPS and business performance.

The entire review can be seen here at the Walker website.

In a CustomerSat Insights interview with Professor Neil A. Morgan, Kelley School of Business, Indiana University, Neil explains the predictive qualities.

Most loyalty models assume that attitudinal loyalty (likelihood-of-repurchase, willingness-to-recommend) translates into behavioral loyalty (actual repurchase, actual recommendations) that translates into supplier’s business performance (sales, margins, stock value, etc.) But our results show that these linkages are weaker than satisfaction for predicting performance. – Neil Morgan

The Bottom Line:

Net Promoter ® is a measure to look and monitor but not the only measure. Ultimately, companies will need a lot more information to actually take action and continuously improve. The concepts of loyalty and satisfaction are complex just like the human behaviors and attitudes we are trying to understand.

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The transition from one-way to two-way communication in marketing

Word-of-mouth is powerful

Word-of-mouth is powerful

Reading “A New Odd Couple: Google, P&G Swap Workers to Spur Innovation” on WSJ.com and attending the Internet Summit 08, there is a new shift in traditional marketing thinking. The old school of thoughts was that a marketer was the beacon or held the megaphone to tout the message to the silent masses. While this still happens in some mediums (e.g. TV), it is no longer a one-way street entirely. Via social networks, blogs, microblogging (e.g. twitter), and mobile communications, consumers have the chance to talk back and in some cases unite for the benefit or detriment of a company, brand, product or service. One recent example for consideration is the Motrin Mom campaign.

I think this trend is interesting, but it is not a new concept! It is human nature to tell others about good and bad experiences and to help those we know whether it is find a plumber or buy detergent. What is new are that tools and technology have “democratized influence”, as Tim Schigel, CEO of ShareThis, stated at the Internet Summit 08. It is now easier and more efficient to spread word-of-mouth and people are now using these tools as their source for information in purchase decisions whether online of offline.

For more visit the Word-of-Mouth Marketing Association 101 site.