How word of mouth marketing really works

so I was talking with Fred
digital marketing a advocacy marketing
expert and we were talking about digital
marketing and how we felt even the good
campaigns were quite miss targeted and
misdirected and we came up with an
analogy so you're back in Piccadilly
Circus and that bus was still there and
he's still playing that Neil Young song
and you like it and you stay you listen
to it it's good you give him put two
pounds in the guitar case and then a
friend tells you about another busker
playing print songs in Covent Garden you
go out of your way to listen and she's
really good and you stay for 20 minutes
and as you leave you put a flavour in
the Hat but then imagine you're back
home and there's a knock on your door
and it's a third busker and they say
hello I've studied your social media
profile and I think you'd like my songs
so can I come in and play you some songs
now that's intrusive and it's really
irritating you close the door no money
that's how a lot of digital marketing
behaves let me give you a personal
example some reason because of my social
profile I get a lot of car advertising
targeted me when I go on digital people
always trying to sell me cars anyone who
knows anything about me and the cars
that I drive will understand this is
really badly targeted it's not just that
it's badly targeted it's very irritating
if I see a car ad on television it's
fine doesn't bother me it's just there
if I'm reading a magazine there's the
car ad it's just part of what's there
but when I'm on my computer and they're
talking at me about these things I'm not
interested it feels much more intrusive
and it's much more irritating and it
gives me an actual negative impact on
the brand that's advertising me because
they're getting it wrong
in my space so but does that mean that
digital marketing is should be ignored
of course not it's very important and
it's very powerful so how can we make
digital marketing more effective
and particularly in the world of
recommendations where the math
recommendation I was talkin to someone
backstage earlier in this mention I was
talking about word of mouth
recommendations later da it's still the
most powerful recommendation I think we
all know that's true and social media
has changed everything with that because
at the click of a button
any of us can share our opinions and
experience with loads and loads of
people and then critically they might
share those with other people again
creating the much spoken about viral
effect and that's very very powerful
economically socially politically it can
make presidents it can tear down regimes
it can raise millions for charity it can
make a new brand or kill off an old
brand or change a television executives
a decision on what to schedule on the
channel so it's it's a very powerful
tool that can mean a lot of money for
businesses and they're prepared to spend
a lot of money to try and harness it to
their for their own benefit so we set
out to find out a bit more about word of
recommendation word word-of-mouth
recommendation how do they actually work
in in in real life so I run a
segmentation of market research business
so inevitably the first thing we think
about and do is use some research to
generate data so we collected a lot of
data from people we spoke to people at
the receiving end of recommendations and
I'll come back to them later but first
let's talk about we spoke to people who
made recommendations so we'd ask people
who'd made recommendations recently and
we asked them that was sort of
recommendations they've made what
category who to whether they were
rewarded why they made the
recommendation what channels these do's
etc and what emerged when we analyzed
that's all the data we collected was
there were eight distinct recommender
types many of them are motivated by
liking the product liking the brand or
being asked in the first place but three
are motivated by reward
and one in particular is one segment
motivated by cold hard cash there one in
seven of recommenders but they take four
pounds out of every five of the rewards
for recommendations so businesses that
are doing the recommend a friend type
promotions they're taking four pounds
out of every five but is that valuable
does it work is it effective and what
about the other recommenders who aren't
motivated by reward is that any more or
less effective so next we spoke to the
people at the receiving end of the
recommendation the word-of-mouth
recommendation because bear in mind as
it's common sense a recommendation is
only as effective as the impact it has
on the person being recommended -
doesn't mean anything if they don't do
anything about it but an effective
recommendation is one that is taken up
and then shared and that's where the
social media thing comes in and we found
those three factors that really dominate
how effective a recommendation is one is
timeliness so if I'm recommending to you
are you in the market at that time for
what I'm recommending the second is
credibility am i credible do I have any
expertise in what I am recommending to
you and the third is the relationship
what rep what relationship do we have
that allows you to trust me or not in
what I'm saying
now the timeliness thing is obvious if
you are in the market for something and
I make a recommendation to you of course
you're going to be more receptive but we
found that a lot of people have taken up
recommendations that they hadn't asked
for sir unsolicited recommendations in
categories they weren't in the market
for now a lot of these are very high
involvement categories like restaurants
music films entertainment that kind of
stuff but for example in insurance
hardly a high interest category one in
10 people had taken an unsolicited
recommendation and acted upon it so we
wanted to understand why that is and
just as a personal example I could
understand that up to a point I've been
a custom
of first direct bank in the UK for about
two or three decades I think and this is
a bank I don't know anything about banks
I don't care that much about banks but
yet I have recommended this particular
Bank to people not just because they
have a better savings rate or a better
current account but because of the
relationship I have with them and the
way they treat me makes me want to
recommend to people so what is it that
can make an unsolicited recommendation
more powerful well it's not just about
business it's about human interactions
about human chemistry if I am a credible
source of information of recommendation
as I make it to one of you and if we
have a relationship that allows you to
trust me it's far far more effective
than any other sort of recommendation so
if we go back to these are mercenaries
the people motivated purely by reward
and cash they actually generate their
recommendations generate the lowest
consideration levels and are very
unlikely to be shared on so any viral
effect is very unlikely
whereas our credible recommenders are
not only more like to be taken up it's
more likely to be shared so it's a lot
more effective than the reward so where
does that leave us
well in my business we're focusing very
heavily on joining up data with real
depth of human understanding because if
we can put those together we stand a
greater chance of finding those
recommenders who are so powerful in
their recommendation and have such a
knock-on effect beyond the initial
recommendation so it's it's potentially
a very powerful thing but what about in
the big wide world well all of us in
this room pretty much are going to be
involved in making recommendations at
some point if you think if you're
applying for a job you're effectively
recommending that people take you if
you're in a meeting and you there's an
action plan you want
to be implemented well you're making a
recommendation there or if you're
managing a business with thousands of
customers or a brand with millions of
millions of consumers you are
recommending that to them that they do
something that you want them to do so
it's quite it's quite a general point so
well targeted recommendations from a
credible source are going to have a lot
more weight and power and if when you're
making a recommendation if you just step
out of yourself rather making a
recommendation at people and this side
seems obvious but in in certainly most
business contexts but also personal
contacts if people make a recommendation
at you it's less effective than if they
stand back and think how do you seem to
the person making the recommendation how
do they perceive you as a recommender if
you consider that you're going to have
much stronger chance of getting that job
persuading people to go to the cinema
that you want them to go to getting your
recommendation through in a meeting or
developing convincing communications for
millions and millions of consumers a
good example might be if you're a
marketing person say and you have quite
low credibility in finance and you want
to make a financial recommendation
you've got to think quite hard about the
way you're going to be perceived if you
want to have a financial recommendation
be taken up but really think how you're
going to be perceived as a marketing
person when you're making it if you if
you put yourself in those shoes your
recommendations you will be accepted and
you will be taken at your word which is
what we want thank you all very much