SHOW ME THE $$: THE VALUE OF WORD OF MOUTH

Chances are at some point in your life you’ve witnessed a disgruntled customer say something along the lines of “I’m telling my friends never to come here again.” But have you ever wondered just how much impact said disgruntled customers can have?

Samitrex recently conducted a study within the wireless industry that compares the worth of promoters, those who refer a company to their friends, and detractors, those who spread negative WOM or are unlikely to refer a company. The results show that promoters are responsible for about .5 of every new customer obtained through WOM, while detractors account for the loss of 1.3 new costumers, as a result of their negative word of mouth. How does that affect the bottom line?

The chart above shows the total worth of each promoter and detractor. This value is found by combining how much each type of customer typically spends with the company and the indirect value they provide through word of mouth. Each promoter is worth about $1,700 while each detractor is worth -$300. That means detractors are actually costing a company more money then they spend themselves.

“A company’s ability to take action to increase Promoters and reduce Detractors has a significant impact on financial performance” according to Dr. Laura Brooks, VP of Sametrix business development. We couldn’t have said it better ourselves. So, here’s some free advice, courtesy of us here at MGH WOM, on how to start taking that action:

1. It is vital that you do everything in your power to exceed consumers’ expectations when it comes to customer service.
2. It starts with listening. It is possible to transform a detractor into a promoter just by listening to your consumers and addressing the issues at hand. Heck, it’s worked for us before.
3. Use your current promoters to make up for the loss the detractors are causing. An ambassador campaign is a great way to leverage your loyal customers and amplify their positive word of mouth.