While social media has bloomed as a communications channel over the past three years, its use as a means for consumers to communicate opinions about products and services has no doubt declined: as part of fewer overall conversations on these topics. Not surprisingly the economic downturn is a leading cause of this change.
New research from COLLOQUY shows that the conversations U.S. consumers have had on products and services with family, friends and coworkers, word of mouth (WOM) has slid to 58 percent from 73 percent in 2008. Moreover, 57 percent of respondents in the latest survey said they often recommend products and services to others, compared to 75 percent in 2008.
The reduction in WOM activity can’t be attributed to a shortage of ways for WOM views to spread says COLLOQUY. There are face-to-face conversations, landlines, cell phones, e-mail, instant messaging, texting, blogs, micro-blogs like Twitter, review sites like TripAdvisor and Facebook.
Instead COLLOQUY says it believes the economic downturn is to blame and explored the notion by taking a close look at respondents holding favorable and unfavorable outlooks compared to the previous year. For example, of respondents who reported their households are doing better economically this year than last, 71 percent said they often have conversations with others about the products and services they use.
That’s very similar to what COLLOQUY says it found two years ago, before the recession became “the meltdown.” Yet, among those who now see themselves as worse off, just 56 percent reported having brand conversations and 55 percent said they make product recommendations.
Looking to the future, 74 percent of respondents who see their own financial outlook brightening said they have conversations about products and services: versus 55 percent for those who see theirs worsening. And 67 percent of those who see a brighter future said they make recommendations, compared to 55 percent for those who see their finances tightening.
These findings suggest that worries about current employment and future prospects have crowded out discussions about brands among a significant portion of the consumer population.
(With many households struggling to stay afloat, value-priced brands and shopping based on price rather than brand often naturally take precedence. Also secondhands goods: clothing, furniture, appliances, vehicles become more popular—ed.)
“Consumers on shrinking budgets don’t seem to be in the mood to talk about the hottest new restaurant, the brightest plasma screen or the best airline,” said COLLOQUY Partner Jim Sullivan. “Or, if they are in the mood to talk, they may be sensitive to the possibility that others in more dire straits are in no mood to listen.”
Those that do talk about products and service speak more often and louder when products and services don’t deliver as advertised. When money is scarce individuals cannot afford to waste it.
A COLLOQUY report issued in early March revealed that more than one out of every four consumers (26 percent) said they are far more likely to spread the word about a bad experience with a product or service than a good one. Moreover, this rises to 31 percent of what it calls “WOM Champions”: those who are highly likely to recommend their favored brands to others and also have a large network of frequently contacted friends and family.
At the same time COLLOQUY experts adopted a little known term, “Madvocates,” as an apt name for consumers predisposed to engage in negative WOM practices.
“Negative word of mouth is a function of the bad experience we all may have on occasion,” said COLLOQUY Managing Partner Kelly Hlavinka. “Rather than uncover a separate group of brand curmudgeons, we instead discovered an overlap of positive and negative stances found among all groups.”
“It’s notable that the Madvocacy attitude is significantly more prevalent among word-of-mouth champions than the general population.” Hlavinka added. "One lesson is clear, hell hath no fury like a champion scorned. Since Madvocacy is an attitude that nearly a third of all champions share and are willing to act upon, loyalty marketers must accept their responsibility for the impact their programs can have on generating both positive and negative word of mouth.”
The newest COLLOQUY survey also revealed:
* 33 percent of consumers fit the definition of WOM Champions
* 9 out of 10 WOM Champions belong to one or more loyalty marketing programs
* WOM Champions account for 39 percent of memberships in loyalty marketing programs
* Loyalty marketing program members are three times more likely to be WOM champions than consumers who don’t belong to loyalty programs
Hvalinka offered these tips to marketers:
* Make sure customers not only have an opportunity for a dialogue (not a monologue) with the brand, but with each other. That’s what COLLOQUY calls the ‘trialogue.’ Get the conversations started by asking for opinions and insights, and recognize contributions
* Involve customers in WOM programs by forming online social sharing communities, panels and co-development platforms. Do your own social media
* Be innovative and make sure content is relevant, fresh and rewarding. Start by transforming your marketing mindset from “incentive” to “service.” Be sure to nip any service problems in the bud and head off any negative WOM that can quickly go viral from these well-connected customers
“COLLOQUY’s 2011 WOM study doesn’t reveal a magic bullet to help companies engage with consumers but it does suggest tactics that loyalty marketers searching for truth in a growing sea of urban legends can execute within their social media and Word-of-Mouth strategies,” said Hlavinka.