With apologies to my fellow granite stater Robert Frost, he really didn’t go far enough in his condemnation of walls. From where I sit, I can look out on some hundreds of feet of stone walls. I’m not the only one…
In New Hampshire, we have lots of them, and what you see is just the top few feet. They were actually created by farmers who would dig ditches around the land that they wanted to farm. Then they would throw all the rocks they found while they were clearing the field into the ditch. Given that they call this The Granite State, there were a lot of rocks. Eventually the ditches filled up, and the top few feet were turned into what is now an iconic symbol of New Hampshire. Actually, given the publicity Robert Frost generated for them, a lot of people who haven’t ever been close to New England know about them. I doubt that Mr. Frost had measurement in mind when he wrote his famous poem, but there are a great number of professional communicators, PR people, and marketers who should heed his words: “Something there is that doesn’t love a wall.”
But actually they should really really loathe them. Here’s why:
Last week, the Word of Mouth Marketing Association (WOMMA) released a ground-breaking piece of research that proved the impact that word of mouth (aka WOM) has on sales. Granted, it was based on data from just five companies but those companies happened to be AT&T, Discovery, Intuit, PepsiCo and Weight Watchers. The study used econometric modeling of actual sales and marketing data provide by the brands. While the headline was certainly noteworthy “Word of Mouth Drives 13% of Consumer Sales,” the underlying data has huge implications for both consumer and non-consumer companies as well.
First of all, they didn’t just look at sales, they looked at multiple key performance indicators – those metrics that make the participating companies successful. And word of mouth impacted 31% of those results. Why? Because it impacts and is influenced by every aspect of the business. According to the report, two-thirds of word of mouth acts independently of paid advertising and is stimulated by customer service experiences, PR, and earned and owned media.
The data shows that offline word of mouth drives at least five times more sales than paid advertising impressions. And as much as 100 times more sales in higher consideration categories. In fact, the higher the price product or service, the more likely that the revenue is driven by word of mouth.
Another salient fact that will probably be overlooked in this study is the incredibly influential role that customer service plays in word of mouth. Unfortunately, we only need to compare compensation rates for customer service reps to what the same company pays its ad agency to know just how screwed up the priorities are. Even more interesting in this research is word of mouth’s impact on timing. It turns out that word of mouth’s impact happens closer to the time of purchase – in other words, after we’ve done all of our on-line homework, checked out the reviews and compared prices, we turn to people we know and trust for their opinion. Then we go out and buy the product.
Intuitively we know this is true. But I know it from immediate experience. After spending Thanksgiving without power relying on a 15-year-old generator that was no longer capable of coping with our power load, I decided to go online and see if there was a Black Friday deal on generators. There were several. I then went to consumerreports.org to check out their reviews. Two of their highest rated models were in fact on sale. I then asked a friend who is my go-to guy for all things involving motors and gasoline what he would recommend. He warned me away from one model, due to performance and customer service issues and within two minutes had ordered the other one. (Dear weather gods, please don’t send any more ice storms until it arrives.)
I’m currently going through a similar experience finding a new Primary Care Physician. I went to the local physician’s network to find a doctor, and found several that were accepting new patients. I checked them out on HealthGrades.com and found a couple that were very highly rated with great patient comments. Ultimately I made my selection after talking to my women friends who are of similar age and health and who based their experience on their actual experiences with the physicians.
So what does all this have to do with walls you ask?
If the vast majority of sales and revenue is coming from word of mouth – specifically EARNED word of mouth, then why do companies continue to rely on and spend so much money on paid advertising? One reason is that they are like Robert Frost’s neighbor that have been doing it so long they can’t imagine doing anything differently.
“He will not go behind his father’s saying
And he likes having thought of its so well
He says again, “Good fences make good neighbors.”
But in organizations that is simply not true. By erecting cubicle walls and silos between paid and earned media, between PR and marketing, between brand and public affairs, they reduce cooperation and integration and more dangerously, ignore what is really happening in the minds and wallets of their customers. (Now that I think about it, if they’d erected stone walls instead, they’d be better off. At least you can see over them, but I digress…)
Ultimately, I want to ask the same questions that Robert Frost asked:
Why do they make good neighbors? Isn’t it
Where there are cows?
But here there are no cows.
Before I built a wall I’d ask to know
What I was walling in or walling out,
And to whom I was like to give offence.”
Since there are no cows in most corporate offices (and before my friends at Stonyfield Yogurt yell at me, you are the exception and you have almost no walls at all!) every professional communicator should be asking him or herself “What am I walling in or walling out?” You are probably walling in your creativity and problem solving, and walling out resources that you need.
What is the business benefit of all these silos you’ve been erecting? It certainly isn’t efficiency. I’m working with one client that, because of long-standing silos, was wasting at least half a million dollars a year in duplicative research efforts – and getting very little insight from that research.
It certainly isn’t helping the customers or the marketers to keep communications on different floors, different buildings or too frequently in different countries from customer service.
And it certainly doesn’t make measuring results any easier when you have to scour all of corporate headquarters to find the data you need to correlate your results with actual business outcomes.
The point is this: If customer purchase decisions are driven by earned media, customer service and word of mouth, those areas should be a priority. They should be properly funded and properly measured.
I am resigned to the fact that silos in corporations are almost as durable as the stone walls on my property that have survived attacks, fires, and subdivisions. But at least we have a little bit more motivation to start dismantling them.
