Why word of mouth works.

This is the second in a five-part series. In this column, we explore why word of mouth is so effective in today's marketplace.

WHY WORD OF MOUTH NOW?

Word of mouth marketing has gained acceptance and prevalence among marketers as an exceptional means to engage customers and prospects and to convert information into useful knowledge.

But what has occurred to help this unique marketing strategy, which accelerates the customers' adoption process, gain so much steam? The answer is simple: information saturation. At this unique point in the information revolution, the modern media that has caused the overload has also made word of mouth much more accessible.

Where conventional marketing tactics have saturated audiences with information, people have added layers of personal "filtering" devices to avoid information overload. Beck Ag Com CEO John Finegan says, "A personalized conversation as is offered through word of mouth marketing offers people the opportunity to validate information relevant to their buying decision. Gaining understanding from third-party experts, advisors and peers in similar situations allows customers to better understand through relevant experience and information."

"Conventional marketing is dumping more information onto people who are actively rejecting and filtering it, distilling and avoiding more overload," says AgCall CEO Gord Butcher. "In an age of overload, relevance is just as important as truth--often more important. That's why word of mouth reduces both the amount of information and the time it takes to process it."

MORE VALUE PLACED ON PEER ATTITUDES, EXPERIENCE

Word of mouth pioneer George Silverman says, "People are exposed to more than 3,000 marketing impressions daily. Research shows us that we act on maybe one of those impressions every five days (1/15,000). When we learn about a product or service from a credible peer, people tend to act on one in three of those impressions. The math tells us that peer influence is 5,000 times more effective than traditional marketing."

AgCall's Butcher adds, "In our experience, peer to peer dialogue is valued. Producers seek out information, probe, question and ultimately listen to their peers, which allows them to act more confidently on their purchase decisions."

WORD OF MOUTH AT WORK IN THE PHARMACEUTICAL WORLD

The prevalence of successful word of mouth marketing was recently highlighted in a Wall Street Journal article: "To Sell Their Drugs, Companies Increasingly Rely on Doctors," July 15, 2005. The article discussed how drug makers have adopted peer influence as an effective means to get their messages across to doctors. The article highlighted that in 2004 there were 237,000 meetings using peers as the lead, compared to 134,000 meetings led by the company salespersons.

A Merck study cited in the WSJ article calculated that the ROI of peer-led discussion groups was 3.6 times the investment, versus 1.96 times for meetings led by a sales representative.

VALIDATION OF WORD OF MOUTH EFFECTIVENESS

Finegan notes word of mouth continues to gain strength as an effective tool for ag marketers. "To date, Beck Ag Com and AgCall have used the power of their clients' customers to filter the overload and offer the opportunity for third-party experiential sharing. Together, Beck Ag Com and AgCall have engaged more than 600,000 clients' customers in word of mouth strategies, which show our clients trust us with their customer base. It certainly validates that our approach works."

He describes part of a recent dilemma posed by a client was the need to get through the overload with several product messages to ensure a new product was used correctly and performed exceptionally. Finegan says, "Our client had tested several product messages and none seemed to 'resonate' with growers. Concurrently, the client's customers were participating in an AgTelecom [R] (ATC) word of mouth marketing tactic featuring the client's product and communicating all of the 'messages' about the product."

One month after participating in the ATC word of mouth tactic, the participants were surveyed, and the results showed that 60 percent of the participants had already purchased the product. "Through the ATC, multiple messages were conveyed, providing growers with adequate validation to drive purchase decisions of our client's product." Finegan concluded, "This was a win for our client and their customers!"

Kathleen Erickson is president of Erickson Communications and Consulting, Clarks Hill, Ind.