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  Boost Sales with e-WOM 

Villanueva, Julián; Armelini, Guillermo
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When it comes to marketing strategies, companies like Amazon rely heavily on word of mouth. Jeff Bezos, Amazon's CEO, said, "If you build a great experience, customers tell each other... Word of mouth is very powerful." And it was made even more so by the World Wide Web. "Electronic word of mouth" or e-WOM involves customers sharing their opinions and ideas about products via the Internet, whether through an online forum, a blog or an e-mail.

According to Professor Julián Villanueva and PhD student Guillermo Armelini of IESE, all companies should use e-WOM to balance their communication strategy. They stand to benefit in three ways: by increasing their sales, by obtaining new ideas for product development and by improving their level of customer service.

But how should a company develop its e-WOM strategy? Villanueva and Armelini explain in the paper "Electronic Word of Mouth: What Do We Know About This Powerful Marketing Tool?" published in collaboration with the e-business Center PricewaterhouseCoopers & IESE.

While e-WOM follows most of the principles of traditional WOM, it adds two new important dimensions to the concept: unprecedented scalability and speed of diffusion, and persistence and measurability. e-WOM is primarily about interactions among people. To design the right strategy, companies need to know how consumers behave, why they look for information on the Internet, what topics they usually discuss, and what will make them more willing to share their opinions. Companies should understand that WOM is a dyadic process, meaning that there needs to be a desire to transmit something (sender's motivation) and a need for advice (receiver's motivation). When both motivations are triggered at the same time, it becomes very effective.

There are four main elements that e-WOM strategies must take into account. The first is copy design: the creativity of the message and the concept to be transmitted. The second is content layout, which refers to the usability and friendliness of the e-WOM tool by balancing company objectives (promotion, measurability, etc.) with consumer experience. The third is the platform: which technology is the right one to launch the marketing campaign. The fourth and final element involves interactive resources, such as blogs to gather information about customer satisfaction, or online forums and feedback mechanisms to collect information for product development.

Pumping up Sales
At the heart of most marketing campaigns is a single objective: to increase sales. There are many ways to achieve this through electronic word of mouth. The first is called "organic WOM," which "occurs naturally when people become advocates because they are happy with a product and have a natural desire to share their support and enthusiasm." Hotmail, which offered free e-mail when most people had to pay for the service, and Skype, which enabled users to talk for free through the Internet, enjoyed the positive, organic effects of "buzz" or "viral" marketing in which consumers become involuntary salespeople.

The second way to increase sales is "amplified WOM," which "occurs when marketers launch campaigns designed to encourage or accelerate WOM in existing or new communities." They might do so by creating a community of users. For example, Procter & Gamble launched Vocalpoint, a program that enrolls moms to talk about P&G products. Another way to do it is to solicit the support of "influencers," people who tend to sway the opinion of others. For instance, Apple sent emotional messages from influencers about the experience of trying a Macintosh compared to a Windows-based PC.

Another amplified WOM strategy is to identify a social cause and to stick to it. Cause marketing can build a positive image for a company while helping a charity. One such unforgettable campaign occurred in the 1980s when American Express donated $1.7 million to help restore the Statue of Liberty.

Another highly viral marketing tool is e-mail marketing, which must be tightly controlled because badly targeted, irrelevant e-mails tend to irk customers. Blogs, personal diaries that work as a web page, are also enjoying growth. A company can manage its own blog, market through bloggers or advertise on blogs.

Once a company selects an e-WOM strategy, it should combine various resources and platforms to increase the buzz about a product and consequently increase sales. For example, a company could mix an e-mail marketing campaign with embedded videos or songs, which in turn leads the user to the corporate blog.

Don't Forget Advertising
In the phase of implementation, the authors discuss the importance of mixing advertising with WOM in a single campaign. "WOM enhances the effect of advertising by making more people aware of the existence of a firm's product through a process of social interaction," they write. If successful, the firm might influence consumer needs by offering incentives to the sender, such as status, community belonging or financial compensation. It can also create contexts of perceived social risk. For example, it could launch a fad that people like to be part of, which encourages receivers to ask for advice, possibly leading to a sale.

The last step is to check the effectiveness of an e-WOM campaign. Since e-WOM is persistent over time, there are ways to measure it. "We suggest using simple measures such as volume and dispersion, and introducing them into an econometric model that assesses the statistical significance of e-WOM in relation to other explanatory variables of sales," write Villanueva and Armelini.

Indeed, e-WOM is a powerful marketing tool that makes the most of technology to encourage profitability. To be effective, e-WOM should have a "sticky" message that flows through the keyboard of influential people and ends with a sale.

This article is based on:  Electronic word of mouth: What do we know about this powerful marketing tool?
Publisher:  EBCenter - e-business Center PwC&IESE
Year:  2007
Language:  English