Word of Mouth - Your Best Strategy in a Tight Economy

Excerpted from
"Word-of-mouth may be the voice of a new era in marketing"

by Kerry Leonard Mar 12, 2008
Over ninety percent of consumers say the number one place they go to get information on products and services are friends, family members or trusted “influencers.” said Rand. Traditional advertising is moving farther and farther down the list.

“The ability to interrupt people into paying attention dwindles by the day,” he said

With sobering economic news streaming in almost daily, people will likely be spending less in coming months. Television advertising may reach a large number of people, but high costs and media fragmentation may not deliver the desired return on investment.

They’re looking for effective. And word-of-mouth, the proponents say, is the answer.

“Were not saying that traditional marketing is over with,” said Geno Church, word of mouth inspiration officer for Brains on Fire, a marketing firm in Greenville, S.C. “People pick and choose what they want to listen to.”

“And that’s where word-of-mouth can help a company in a recession,” he added.

Consumers are exposed to roughly 3,000 commercial messages a day, he said. “Word-of-mouth breaks through that clutter,” he said.

My Take

Do word-of-mouth referrals contribute significantly to your sales? Asking your customers is an excellent first step. Inviting them into your own referral network can begin a self regenerating stream of sales.

My Take on the "Birth of Socialommerce™"

Excerpted from "Social Media and Online Commerce: Birth of Socialommerce™"

By Erik Qualman, Search Engine Watch, Feb 21, 2008

Google's buying into social networking and social search in a big way even though monetization remains problematic.

Despite social network traffic increasing eightfold in 2007, social search engines still account for less than 1 percent of total Internet traffic, according to Hitwise. There's huge upside potential.

Google continues to struggle in its partnership with MySpace. Generating robust revenue streams from its $900 million deal with NewsCorp has been a challenge. Many insiders believe Google is losing money on the deal. Even Google co-founder Sergey Brin admitted, "I don't think we have the killer, best way to advertise and monetize social networks yet."

Some Web pundits aren't sold either. "What you have with social networks is the most overhyped scenario in online advertising," said Tim Vanderhook, CEO of Specific Media.

Socialommerce™ is the next big thing. Google product guru Marissa Mayer recently told The New York Times that social search would be a key component in the future of search.

Social commerce harnesses the simple idea that people value other people's opinions. Nielsen reports 78 percent of people trust their peers' opinions. This is neither a new concept, nor new to the Web (e.g., epinions.com).

What is new: social networks make so much easier to disseminate the information. And people want to disseminate information.

My Take

Thanks, Erik.

Social networks' business models rely on revenue generation from external sources - i.e. advertising. In this way they are like television and radio.

But when you think of TV or radio, what one thing do you dislike most? The ads!

With the revolutionary, participatory capabilities of the Web as a medium, is it not possible to form a social network model whose revenue generation - whose demonstrated economic worth - is intrinsic to its virality and thus its success? That rewards all members of the social network for their successful participation in it to stimulate commerce?

This is what we have been aiming at during the development and beta roll-out of YouGottaCall.com, a "Connect-gine(tm)" (Connection engine) which leverages the real world relationships of its members with each other and their trusted local businesses.

YouGottaCall.com Network Update

Stats: “Size doesn’t matter. Growth rate matters.”

Networks increase their effectiveness with growth. Since launching YouGottaCall.com - the "Connect-gine" we have seen a steady growth in new Members and Trusted Service Professionals (TSPs).

At this early stage we are seeing a rapid doubling in our membership. We hope to soon reach 100 Members and TSPs and look forward to adding new features you’ll be able to use, such as

• EFT to make your referral fees simple

• Reports to show you your referral and sales activity

• Not-for-profits

Thank you for all of your patience and feedback as we improve
our beta product. Please feel free to contact us at any
time with your valuable suggestions and critiques.

Word-of-Mouth in the News

The research of two UConn professors turned up in this article in the Fort Worth Business Press by Darwin Campbell. Please note the following excerpts and our editorial "My Take".

‘Word of mouth’ continues as valuable marketing tool

"Companies may be neglecting a valuable marketing tool: word of mouth. Marketing efforts well-designed toward eliciting referrals should see much greater returns from their advertising expenditures than do companies relying heavily on mass marketing.
"High-volume spenders and good referrers are not generally the same people, and the value of the best referrers can far exceed that of the good spenders.
"...return on investment of $13.60 for each dollar spent on the marketing campaign. ... standard return on marketing investments had previously been $4 to $6 for each dollar spent.
“Viral marketing spreads rapidly when satisfied customers share their positive experiences and bring referrals and business your way.”

My Take

Consumers want to cut through the static and clutter of advertising to find the local businesses their friends and neighbors trust. Local trusted service professionals need to somehow leverage their years spent satisfying their customers into a recurring source of qualified sales leads.

YouGottaCall believes that traditional advertising lacks the ability to distinguish a business's true quality or value. A new media which connects consumers to trusted services will better serve both local businesses and consumers. This new media will use the Web to create a connection engine.

Challenge of beginning a new network...

Selling the First Telephone

It’s 1878. You hear a knock on your door. Surprise! It’s Alexander Graham Bell trying to sell you the first telephone.

AGB: “With this device you can talk with others on their telephones far away?”

You: “How many of these have you sold?”

AGB: “None. You’ll be my very first customer!”

You: “If no one else has one how can I talk with them?”

AGB: “Uhhh…”

You: “No thanks, Al.”

Mr. Bell overcame the initial challenges to growing his network and built the world’s first telephone exchange right here in Connecticut where he also published the world’s first phone directory.

YouGottaCall.com’s business challenge pales in comparison to Bell’s. But our humble user base of local businesses and their customers is already as large as his first exchange in New Haven!

And we’re “Better than free!”™ so we expect to keep on growing.

If you’re in greater Hartford you can join now.