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New Research Shows 20 Percent Drop in Word-of-Mouth Opinion Sharing about Companies and Products since 2008
Colloquy research finds that shrinking budgets are turning consumer extroverts into shrinking violets.
Posted May 12, 2011
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Despite an explosion in consumer conversation technology, Americans have cut back substantially since 2008 on the opinions they share by word-of-mouth (WOM) about companies and their offerings, Colloquy research shows.

Of 3,295 U.S. consumers surveyed by Colloquy, 58 percent said they often have conversations with family, friends, and coworkers about products and services they've used. That's down from 73 percent when Colloquy posed the same question in a 2008, a 20 percent drop off.

Additionally, 57 percent of respondents in the latest survey said they often recommend products and services to others, compared to 75 percent in 2008, a 24 percent decline, according to the research.

The reduction in WOM activity can't be attributed to a shortage of ways for WOM views to spread. There are face-to-face conversations, landlines, cell phones, email, instant messaging, texting, blogs, micro-blogs like Twitter, review sites like Trip Advisor, and of course, Facebook. Colloquy believes the economic downturn is to blame. 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 found two years ago. 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 outlooks brightening said they have conversations about products and services, versus 55 percent for those who see their financial outlooks 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.

"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. 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," said Colloquy partner Jim Sullivan.

Colloquy previously previewed findings from its latest WOM research showing that more than 26 percent of consumers said they are far more likely to spread the word about a bad experience with a product or service than a good one. Among consumers who are highly likely to recommend their favored brands to others and also have a large network of frequently contacted friends and family—a group Colloquy calls WOM champions—31 percent said they are far more likely to share information about a bad experience. Colloquy experts adopted a little-known term, "madvocates," for consumers predisposed to engage in negative WOM practices.

Other findings from the latest WOM survey include the following:

  • 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; and

"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 Colloquy managing partner Kelly Hlavinka. She offered the following tips:

  1. 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.
  2. Involve customers in WOM programs by forming online social sharing communities, panels, and co-development platforms. Do your own social media.
  3. 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.

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