The popularity of blogs and social networking sites has risen dramatically. It has been predicted that 70 percent of all online content will be user-generated by 2010*.
Results of a Millward Brown Advocacy study conducted in 2005 and repeated in 2007 show that despite this rise in online activity, people still place greater trust in brand recommendations from personal contacts such as friends, family or colleagues than those read online. Although online sources, including blogs and message boards, have less influence on consumers, marketers cannot afford to ignore them. The reasons are simple: online sources are more likely to be critical of brands and an online negative comment is just as likely to put a consumer off a brand as one received from a personal contact.
Personal contacts are the primary “go-to” source for information
Millward Brown surveyed 1,000 people in the U.S. and U.K. about the influence that online and offline word of mouth (WOM) had on them when seeking information or advice about a new purchase. The results showed that, in both the U.S. and U.K, the majority of shoppers surveyed turn to friends, neighbors and colleagues for advice.
Despite the fact that people are least likely to go online to research a brand, the use of online sources increased in all categories between 2005 and 2007. But usage is only one dimension in measuring the value of WOM. Because the power of WOM is founded in trust, the study also evaluated sources based on their relevance and ability to convince.
Personal contacts most convincing and relevant.
People are much more likely to trust endorsements given by personal contacts and the independent press compared to online sources. So, although the Web is full of personal opinions and comments about brands, more traditional WOM sources have a greater influence on the choices consumers make. Over half of all respondents said that recommendations from personal contacts were positive, very convincing and very relevant.
The 2007 data showed that more U.K. shoppers are seeking advice before making a purchase. The use of all sources increased in almost all categories compared to 2005. In the U.S., results were much more varied. Except for in company-led sources which U.S. consumers found the least convincing and relevant, the number of people using them dropped in all six categories. The data suggests that as people's trust in corporations and brand owners has declined, more are turning to independent third parties for advice.
While most marketers like to focus on the positive potential of WOM, it also has a negative side. When people develop an emotional attachment to a brand, their feelings will drive WOM — and when a brand disappoints them, that WOM may be negative.
Generally, the amount of negative WOM from all sources has increased, but the largest increase was seen online. Online sources are more likely to offer advice about which brands to avoid. In the U.S., almost half of all those interviewed who used online communities, online contacts and blogs said they had received negative brand recommendations.
And a consumer is just as likely not to buy a brand as a result of a negative comment read online as a negative recommendation from a personal contact. This highlights the importance of monitoring online conversations.
Multiple drivers of brand choice
Although no single source was identified as a clear driver of product or brand choice, WOM has a significant influence on consumers. One in four people chose a brand solely because of a recommendation received from a personal contact. After receiving negative comments about their original choice, 15-17 percent of shoppers changed their mind and bought a different brand.
Influence the many by talking to the few
Maintaining brand loyalty and listening to customers is necessary for continued business success. Marketers need to look for opportunities to build conversations with their customers and with those who may influence their customers. At the same time they must listen to any negative comments and learn from them. Swift remediation of a negative experience is not only the best defence; it may actually result in positive WOM if customer expectations are exceeded.
Article written by Sherri Stevens, Director, Global Innovations, Millward Brown and Pauline Draper, Senior Vice President, Millward Brown Precis.
*Source: IDC and EMC report The Expanding Digital Universe: A Forecast of Worldwide Information Growth Through 2010.