Word-of-Mouth Opinion Sharing Down 20%

The tough economy over the last two years may be responsible for a decline in word-of-mouth sharing about brand experiences.

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% said they often have conversations with family, friends and coworkers about products and services they’ve used. That’s down from 73% when COLLOQUY posed the same question in a 2008, a 20% drop off.

Additionally, 57% of respondents in the latest survey said they often recommend products and services to others, compared to 75% in 2008, a 24% decline, according to the research from COLLOQUY, a LoyaltyOne company that provides loyalty marketing publishing, education and 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 and explored the notion by taking a close look at respondents holding favorable and unfavorable outlooks compared to the previous year.

Instead it seems the tough economy over the last two years may be the culprit responsible for the dampened willingness to engage in brand WOM. For example, of respondents who reported their households are doing better economically this year than last, 71% 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, before the recession became “the meltdown.” Yet, among those who now see themselves as worse off, just 56% reported having brand conversations and 55% said they make product recommendations.

Looking to the future, 74% of respondents who see their own financial outlook brightening said they have conversations about products and services, versus 55% for those who see their financial outlook worsening. And 67% of those who see a brighter future said they make recommendations, compared to 55% 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’s WOM survey, featuring completed responses from 3,295 U.S. consumers nationwide, was conducted in December 2010.

In other new results from COLLOQUY’s latest WOM survey:

• 33% of consumers fit the definition of WOM Champions

• Nine out of 10 WOM Champions belong to one or more loyalty marketing programs

• WOM Champions account for 39% 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.

“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:

• 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.

Source: COLLOQUY

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