WOM and Academic Textbooks

Just as there has been a resurgence of interest in WOM over the past few years by those in industry circles and popular press books we can also see a similar effect for academic textbooks. In the past few months I've received a number of inquiries from faculty at other universities who are interested in syllabi and textbooks for classes on WOM and social media. I also just formally reviewed a book for a publishing company who was attempting to determine if they should work with the authors on publishing their manuscript.

Even more recently a co-authored book on consumer behavior from a colleauge (Robert East at Kingston University in the UK) has been released. It's called Consumer Behaviour: Applications in Marketing and is published by Sage (here's the link at Amazon). As you can surmise by the title it's broader than just WOM, but Chapter 11 is exclusively devoted to the topic, and it is sprinkled throughout the rest of the text as well (most other academic textbooks have sections of specific chapters about WOM, rather than a full chapter, so this is worth remarking on).

Below is a list of the learning objectives in the chapter and then a few specific things I think people will be interested in knowing about. The learning objectives are phrased, like in most textbooks, as "When you have completed this chapter, you should be able to:"

1. Discuss the difficulty of conducting research on WOM;
2. Describe how product decisions in different categories are affected by WOM;
3. Report on the relative occurence and impact of positive and negative WOM in familiar categories;
4. Describe variations in WOM that affect its impact: solicited or volunteered; strongly or mildly expressed; from people who are close or distant from the receiver;
5. Report how WOm relates to the current and past usage of brands and to market share;
6. Suggest how marketers might apply knowledge about WOM.

And I think people will be especially interested that the authors present evidence that clears up some popular misconceptions about WOM. The authors contend the following:

1. It is not true that negative WOM is more common or more powerful than positive WOM;
2. It is not true that most WOM is driven primarily by satisfaction or dissatisfaction (though these are often involved);
3. It is not true that long-term customers usually recommend more than short-term customers.
   

To see the evidence for these and other insights you'll have to read the chapter... I definitely recommend it!

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Tags: WOM word of mouth Word-of-Mouth Marketing marketing communication

Understanding the Buzz That Matters: Negative vs Positive Word of Mouth

There's a new article* out about the relationship between positive WOM (PWOM), negative WOM (NWOM), and revenue growth, following in the tradition of research about the Net Promoter Score. The article is by Alain Samson, from the London School of Economics and Political Science, and was published in the International Journal of Market Research.

Here's the abstract:

This article discusses negative and positive consumer word of mouth (NWOM and PWOM) in a mostly quantitative context. Based on the correlations between WOM and business growth found in Marsden, Samson and Upton’s (2005) ‘Advocacy Drives Growth’ study, possible explanations for the superior predictive power of NWOM are presented. It is suggested that, similar to the Net Promoter® Score (NPS), NWOM is a good measure to capture both loyalty and advocacy among existing customers, while negative information may also have a strong effect on purchase decisions by potential customers. The number of brand choices and brand commitment are addressed across industries. It is proposed that brands (particularly services) in high-commitment/low-choice sectors have to be more sensitive to NWOM, while PWOM may be a better predictor for business growth in low-commitment/high-choice industries. Finally, using data from ‘Advocacy Drives Growth’, a new WOM measure in the form of a ‘Net Advocacy Score’ is presented.

The article is interesting for a couple reasons. First, Samson argues that the impact and utility of PWOM and NWOM depends on two factors: a) the industry (high/low choice and high/low commitment) and b) whether you analyze WOM from the perspective of customer retention (loyalty) or customer acquisition (advocacy).

The second reason it's interesting is because it seeks to extend the utility of the Net Promoter Score (the number of people who would be highly likely to promote or recommend a brand to a friend minus the number of people who would detract from the brand) by incorporating actual WOM behavior rather than just behavioral intentions (i.e., the likelihood of a recommendation, which is what the NPS measures). The new metric is called the "LSE Net Advocacy Score." In short, it combines the Net Promoter Score with reported NWOM, and is calculated as follows:

Net Advocacy Score = NPS - NWOM

(NWOM refers to the percentage of customers reporting making very negative comments in the past 12 months.)

According to Samson, a two-point increase in the Net Advocacy Score roughly corresponds to a 1% increase in revenue growth, at least for industries where there is relatively low-choice and high-commitment brands (in this case, mobile phone networks, retail banks, and supermarkets).

A couple limitations to keep in mind when reading this article. First, it was published as part of a Forum in this journal so it doesn't have a full-blown presentation of the methods and results used in the analysis. Greater detail will be important to validate the evidence presented in this article by other researchers. Also, the relationship between NPS and revenue growth has recently been called in to question by other academic researchers. Since the Net Advocacy Score (proposed in the present study) relies on the NPS in its calculations (NAS = NPS - NWOM), then additional research on the Net Advocacy Score should address the recent critiques of the NPS.

Here's my blog post about the "Advocacy Drives Growth" study.

Here's a link to the "Advocacy Drives Growth" study (PDF).

Be sure to read my other blog posts about the role of negative and positive WOM.

* Samson, A. (2006). Understanding the buzz that matters: Negative vs positive word of mouth. International Journal of Market Research, 48, 647-657.

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Tags: WOM word of mouth Word-of-Mouth Marketing buzz marketing viral marketing marketing communication

Pete Blackshaw's Comment Reponding to "Is Negative WOM More Frequent Online than Offline?"

Pete made some excellent comments in response to my last post "Is Negative WOM More Frequent Online than Offline?". In the interests of promoting dialogue and involving as many others as possible I wanted to "elevate" his comment into a post so that more people might have access to it. Please find his post below (edited only for typos and paragraph spacing to make it easier to read):

Great post, and it truly is an important topic and question. To lend further perspective on my opinion, I do believe consumers are as inclined to provide positive feedback as negative feedback, but as the barriers to providing that feedback increase, the ratio of negative to positive feedback (or recommendation) increases.

This was very clear to me in the early days of developing a consumer feedback portal after leaving P&G. We carefully studied why consumer feedback to companies (and the ensuing "recommendations to others") tended [to be] so negative. The vast majority of consumers (24 or 25) who have a so-called "feedback moment" would fail to provide that feedback because of (1) contact barriers, (2) cyncism that no one would listen or bother to respond, (3) didn't know who to find, etc. Consequently, only the really negative would push through the pipe, and that in turn would cascade (in a highly cathartic manner) to CGM venues like message boards. In so far as it takes time to invest into the feedback process, the emotion behind the negative tends to dominate the exercise.

That said, as CGM venues have become easier and more effortless, we're seeing a growing percentage of neutral to positive commentary, especially in blogs, which are becoming highly transparent mirrors into everyday behavior. Often the "word of mouth" or "recommendation" is incidental or implied, not delibrate.

If what Keller and others suggest is true, I'm even more convinced that companies and brands must be more aggressive in actively inviting -- nay, encouraging -- feedback, and lowering the barriers at all cost to that expression. If a friction-free feedback experience ups the odds of Pampers capturing an evangelist who speaks generously of the brand both offline and via high-impact CGM venues, that's a great payout. I'll think more about this.

Thanks for this Pete! Two comments on your comment:

Your points about customers not able or motivated to tell the company is definitely consistent with other research on this topic. For example, the Customer Dissatisfaction Study released by the Verde Group found that people were 5x more likely to tell friends about a negative experience rather than a company for the following reasons: a) it's not worth customers' time to contact the company; b) customers tried before but had a negative experience in contacting the company; c) customers don't know who or where to contact; d) customers thought it might negatively affect future service; 5) customers didn't think it would do any good. In an interview with Paula Courtney from the Verde Group I learned that about 10% of the people who have a negative experience actually contact the retail store (20-30% in consumer sector).

The other comment is that there is a great research opportunity for a study to be done that demonstrates the hypothesis that 1) there is a growing percentage of neutral and positive commentary in CGM venues, especially blogs, and that 2) this increase is due to CGM venues becoming easier and more effortless to use. Is there some graduate student out there who wants to do a thesis or dissertation on this? ;-)

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Tags: WOM word of mouth Word-of-Mouth Marketing cgm

Is Negative WOM More Frequent Online than Offline?

I'm trying to make sense of two seemingly contradictory positions about the prevalance of positive and negative WOM (PWOM, NWOM). Let's start first with some recent findings reported by Keller Fay from their TalkTrack methodology (opens into PDF).

Their data show that brand-related interactions are more likely to be "mostly positive" (62%) than "mostly negative" (9%) in terms of valence (aka, polarity or sentiment). And the majority of the WOM episodes represented were offline (92% to be exact, including F2F and telephone).

My own research with college-students (obviously not a representative sample) also supports the finding that PWOM is more frequent than NWOM (and a similar percentage of these interactions were in offline settings too).

Further, Robert East from Kingston Business School, has found that PWOM is 3x more likely than NWOM (largely because people have more opportunities to spread positive WOM). Robert's research also suggests the counter-intuitive finding that PWOM and NWOM are not all that different from each other in terms of impacting brand decisions, though this varies by category. Read his study for more details (opens into PDF).

A contrasting picture, however, emerges from Pete Blackshaw in a recent blog post and ClickZ article on defensive branding. Pete contends that in online CGM venues negative experiences are far more prevalent than positive ones. This is especially the case in search, where people are seeking out information online and considering a purchase. It seems that for certain product categories, such as automotive and electronics (two categories mentioned in Pete's post), the search results are often dominated by negative comments. Further, if it's indeed the case that many people use search for researching brands before they buy, then these negative comments can have a great deal of reach with, and potentially impact on, other consumers. So, regardless of whether or not all online CGM is more positive or more negative (anyone know of comprehensive research on this matter?), the important point according to Pete is that search results, at least for certain categories, often include more negative comments than positive comments (and these are the comments more likely to be seen by inquiring consumers).

OK, so let's assume the following for the sake of argument: PWOM is more prevalent in offline venues and online CGM-related search results are frequently more negative. What explains this difference? Is there something about people's communication patterns via online and offline media? Is it somehow easier to share PWOM offline? Is it somehow more gratifying to complain online?

Existing academic research by Sundaram et al. (1998) in Advances in Consumer Research shows that there are four primary motivations for spreading negative WOM: 1) altruism (to help ensure others don't get burned); 2) anxiety-reduction (telling someone else about the negative experience allows the other person to validate the person's reaction as reasonable and appropriate and gets the issue off our chest); 3) advice-seeking (where one person has a negative experience and seeks the aid of another to help them decide how to respond); and 4) vengeance (wanting to get back at the company).

All of these motivations could also apply to CGM/online WOM. And research by Bailey (2004) in the Journal of Marketing Communications certainly suggests that the internet does contribute to negative consumer-to-consumer articulations because it provides a forum where angry customers can make complaints and have a receptive and global audience to validate their negative experience. These articulations invite "that-happened-to-me-too" responses from others and these "me-too" comments may in turn raise the rankings of such posts in search engine rankings (this is speculation on my part but it seems plausible). Coincidentally, see an exchange between my students about bad cell phone service on our class blog and others responding with "me-too" comments (this example includes trashing one service provider while praising another.)

Plus don't forget that WOM articulations communicate more than just information about the product, but also about our own identities (this is what I like and don't like and this is the type of person I am and am not). The internet is a huge forum for this kind of identity-expression (or perhaps more accurately, identity-construction) -- just think MySpace and other social networking and community forums -- and on a societal level we seem to increasingly identify ourselves by our consumption and brand-related experiences.

And further, if you add in the fact that most companies don't do a good job of providing responsive and engaging outlets for people to complain it makes sense that consumers will take things into their own hands and perhaps express themselves where they'll get the largest and most receptive audience (which leads Pete to argue, and I agree wholehearedly, that effective WOM/CGM programs need to include the consumer affairs folks as well as the marketing folks).

But then if you grant the difference between online and offline WOM regarding an issue like positive versus negative sentiment wouldn't it then follow that online WOM isn't necessarily representative of offline WOM and vice versa? Or maybe it's that online search results aren't representative of offline WOM? I'm anxious to see research that looks at CGM across a range of different categories to determine the relative prevalence of comments with positive versus negative sentiment. Is anyone aware of research that does this?

And if it turns out that online WOM does skew more negative than offline WOM then it seems that online isn't representative of offline WOM as many claim. An implication of this, then, is that if companies are only paying attention to monitoring online WOM (which seems extremely important to do and we'd be foolish not to pay serious attention to it), and if consumers are primarily coming across negative articulations in search results, then nobody is getting a full picture of consumer-to-consumer WOM about brands just by looking online.

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Tags: WOM word of mouth Word-of-Mouth Marketing cgm

Why Does Negative WOM on the Internet Hurt? A Case of Consumer Product Reviews

Shahana Sen from Fairleigh Dickinson University is talking about "Why does negative WOM on the internet hurt?: A case of consumer product reviews."

Shahana cites research that shows price is not the key determinant for why people shop online. Instead it's the site experience (which includes whether or not you have register in order to purchase, if it was difficult/easy to compare items, etc.).

Shahana asks: "Since eWOM is from stangers, unlike traditional WOM, do consumers believe and rely on these reviews?" [NOTE: Sometimes WOM can take place between strangers, esp. in point-of-sale situations].

Also, is there a negativity effect? "Are negative product reviews found more credible and more useful than positive reviews?"

For utilitarian products (computer monitors, printers, manuals, PDAs, etc.), people rate negative reviews as more useful more than not useful (61% v. 39%).

For hedonic products (pleasure-providing products: movies, music, etc.), negative reivews are rated useful less often than not useful (28% v. 72%).

She then looked at two different kinds of books -- a computer manual v. a vacation book -- with a controlled experimental design. She found the same results as above.

Readers were more likely to trust the motives of negative reviewers for utilitarian products, but for hedonic prodcuces, readers trusted more positive reviewers.

So, what explains this difference?

Hyptheses: 1) Heterogeneity of tastes (everyone has different tastes for things like movies, restaurants, etc.), and 2) motivated reasoning bias (when looking forward to consuming a hedonic product you are already in an interested state; thus you're pre-disposed towards liking it and thus when you read a negative review you might be more likely to disregard it because you want to support the state that you're already in when seeking the consumption experience).

What's the take-away for marketers?

Websites typically attract more positive than negative reviews. But when you do have negative reviews on your site, don't worry about it, at least for hedonic products. Why? Because readers are likely to discount these negative reviews for hedonic products. Plus, negative reviews on the web site give the site an overall credibility. Of course, you don't want only negative reviews!

Interesting question during Q&A: Are people more likely to seek out reviews for hedonistic v. utilitarian products?

Nice presentation Shahana :-)

Counter-Intuitive Findings About Positive & Negative WOM

Robert East of Kingston University (England) wanted to challenge two traditional assumptions about WOM:

1) Negative WOM (NWOM) is more frequent than positive WOM (PWOM). FALSE
2) NWOM has more impact than PWOM. FALSE

Why is PWOM more frequent than NWOM? Robert claims PWOM episodes are more frequent (3x more than NWOM) because there are 3x as many opportunities to give it (people are more likely to have satisfactory rather than dissatisfying experiences). Also, many people lack negative examples that they could provide (for example, how many people could recommend against a particular dentist when it's more likely you could recommend FOR a dentist).

Does NWOM have more impact than PWOM? Robert says we might think this because NWOM is rarer than PWOM and so we might think rare info is more surprising and informative. But based on survey results, PWOM was reported as having A LITTLE MORE IMPACT than NWOM (but the difference is not statistically significant; 64% reported PWOM impacted their decision on different categories versus 55% claiming the same effect of NWOM).

The most interesting finding, according to Robert, is that PWOM follows market share. For example, Nokia has 40% MS for mobile phones and 40% PWOM. But they also have 24% NWOM. Sony-Ericsson has 24% MS with 21% PWOM and 22% NWOM. NWOM for mobiles relates to market share but is flattened. Check out his presentation for more details.

Positive v. Negative WOM: An Exploratory Study

Jill Sweeney from University of Western Australia conducted a study to learn about similarities and differences between positive and negative WOM. They had six focus groups with 54 different participants providing positive and negative experiences with WOM (critical incident technique).

Here's some of her findings:

- Positive WOM was more associated with cognitions, whereas negative WOM was more associated with emotions.

- Positive WOM is driven by service quality (whethere people had a good experience with the quality of the service received).

- Dissatisfaction stimulates negative WOM, but there was a feeling of satisfaction after making the comment.

Negative WOM spread more quickly initially, but also dissipates more quickly than positive WOM. Negative WOM was also seen to be more powerful in shaping other people's views.

This is the first phase of three studies, with a small sample size, but there are two key points to take-away that support findings of earlier research: Have a good product or service to generate positive WOM, and when there's a negative experience, give people outlets to vent their dissatisfaction early on.