• Sam Decker

The Word Of Mouth Company

We often equate word of mouth development with marketing-, PR- and advertising-related activities.

However, it seems WOM is the result of early company decisions around product, employees and culture.

Under this hypothesis, perhaps WOM shouldn’t even be contrasted to advertising. Certainly a good company with a good product can feed WOM with marketing-related initiatives. But real WOM is the result of strategies and decisions regarding capital expense, product development, process improvement, cultural direction, and hiring.

Consider the following conceptual model:

Consider Company X. They invest and/or focus on the right things…preferably in their formative stages (although a company can ‘reinvent’ themselves and products). I say focus, because there are cases of huge WOM companies which have little up front investment (ex: Craig’s List). For those companies you can trade capital/costs with a cultural focus on customer-centricity and hiring the right employees. For them, perhaps WOM "initiatives" aren’t even discussed or employed. These companies make the decisions and investments that create a value customers appreciate enough to spread the word.
For Company Y, the employees aren’t right, the product isn’t right, and internal processes aren’t right. In fact, starting at the top and beginning, the culture isn’t right. Any late-stage WOM "initiatives" won’t produce much for Company Y. They will be forced to spend more money on advertising in an attempt to shape perception…which may be voided by negative WOM. As time goes on for Company Y, they will increase costs, leading to increased prices, leading to lower demand and lost market share (i.e. failure).

Now, this model is conceptual and has no official substantiation vis-a-vis a formal "study" or "statistics". But it feels right. That’s my WOM on the topic.