Small companies lead the growing trend of word of mouth marketing, according to Jupiter Research.
Posted Jun 16, 2006
When it comes to word-of-mouth marketing (WoM), large companies could take a page from the little guys' book, according to a new study released by Jupiter Research this week. "Managing Word of Mouth Online" found smaller companies much more adept at leveraging WoM marketing efforts and measuring the results of these practices than large ones. Through the use of free grassroots and more hands-on techniques, and by closely monitoring their customers, the report claims that both big and small companies can reap the advantages and rich return of WoM.
With consumer-driven sites like youtube and myspace becoming more popular, it is more possible for customers to speak to each other. Word of mouth marketing represents a way for companies to intersect and become a part of this dialogue. The study encourages marketers to leverage tools, such as free blogs and message boards to facilitate more widespread conversation about their products.
The report found that more than 90 percent of large companies believe consumer recommendations to have an important impact on other consumers' buying decisions, however, large and midsize companies were found to be far behind small companies in their ability to leverage and measure WoM efforts. Only 16 percent of small companies admitted to feeling unable to accurately measure the effect of their attempts at WoM marketing, compared with about one-third of large and midsize companies that expressed these doubts.
"I definitely think that small companies provide some very good examples that larger companies can follow," says Emily Riley, analyst for Jupiter Research and author of the report. Riley asserts that due to budget constraints and a lower level of risk aversion, small companies are much more willing to deploy grassroots marketing efforts. "What we recommend is that larger companies, rather than protecting themselves online and not allowing employees to talk to customers, open those barriers and provide some interaction to people tied to the product within their company and talk to the real fans online."
Riley says that this sort of openness can have its dangers. On one side there is the risk of negative blasts from customers and irresponsible statements made by employees; on the other, if to many restrictions are placed on employee dialogue, the conversation may come off as contrived, thereby turning away potential customers. These risks may explain why larger companies are holding back on WoM. The study found that only 24 percent of large companies had run a corporate blog within the past year, while 44 percent of small companies had employed this technique. Similarly, 9 percent of large companies, compared to 16 percent of small ones, had created a discussion board.
Although some companies are still wary of WoM techniques, Riley argues that the use of WoM is growing and that its benefits are numerous. "The most important thing is to be diligent in how often you look at what consumers are saying about your product online." She recommends implementing a buzz-monitoring service for larger companies: "If you are consistently there to answer questions and you treat people on an individual levels, as [with] lifetime values, you will reap the rewards immediately."
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