Case study: word-of-mouth marketing

A leading high-street retailer wanted to expand its branch network into individual towns. But first it needed to resolve a conundrum: why were some of its branches welcomed by the local community while others encountered fierce resistance?

The experiences of two branch managers were instructive. One, who was leading a branch opening, approached the local vicar. He told him about the store opening plans and asked his advice about where he might make his own home in the area, including the best estate agents and schools. The vicar spread the word and a week later the manager was met by an enthusiastic group of people who knew his name and had answers for many of his questions. The branch opening was ultimately widely supported.

The other manager, who was expanding an existing branch, simply submitted his plans to the Town Council. Yet from the moment the application was received, it encountered hostility from a small number of leading citizens as well as the local press. The expansion had to be postponed for months and the issue became a sore spot within the community and the company.

It was clear that certain individuals in the community held great influence over others and that certain messages worked while others did not. Recent research has confirmed that:

• the opinion of friends, family and trusted sources is the most important factor influencing any individual's decision
• 10% of the population have the greatest influence over the other 90%
• messages with a strong emotional connection and independence from the marketer are most likely to get through.

The retailer wanted to determine how word-of-mouth marketing could help the expansion of the branch network into individual towns. Specifically, the challenge was to illuminate the social networks of local communities, identify the influencers and determine how best to get people talking – and buying.

SOLUTION

To combine strategic control with practical impact, we developed a conceptual model and translated this across a range of initiatives. Each addressed a specific challenge – such as reaching a niche audience, combating local competitor entry, or tapping into a new growth area within the retailer's service and product range.

Conceptual Model

The central components of effective word-of-mouth marketing were defined and brought together in a rigorous and systematic approach that could be applied to a range of challenges, yet targeted the strongest influence points. The model considers:

1. objectives
2. audiences and hubs
3. hot buttons
4. brand/business attributes
5. initiatives
6. implementation
7. measuring success.

Implementation

To demonstrate how the model works in practice, one of the eight initiatives is described here. It was designed to accelerate online and retail sales to new or expectant mothers.

New mothers represent a uniquely valuable segment: playing an important role for the first time, they are keen to canvass opinions and engage in conversations with others. In fact, women speak an average of 15,000 words per day in the UK, compared with a man's 7,000, and first-time mothers are probably the most communicative of all women.

We mapped the networks of audiences and their inter-relationships (e.g. mothers are often connected to the National Childbirth Trust, new mothers' groups, children's schools, previous employers and community organisations) and set priorities according to specific criteria, such as the relative strength of any group's influence and the retailer's ability to reach them.

We identified 'hot buttons' – the local and individual issues that people care and talk about the most (e.g. for mothers, improving the wellbeing of their family and better managing their time) – before selecting the most buzz-worthy features of the brand (e.g. new healthy living range and time-saving services).

This formed the basis of a powerful word-of-mouth marketing programme, which included surprising mothers at the school gate and creating an ongoing dialogue with new mothers' groups. Implementation involved compiling a list of influencers (the most connected mothers) from a variety of sources and lining up the resources to engage them. Finally, we defined criteria for measuring success (e.g. seeing how much people talked and how swiftly they signed up).

IMPACT

This work gave the retailer better understanding of the dynamics of networks and influencers within a local community. It enabled them to penetrate those networks and be more confident of the reception their branch expansion would receive. It also gave them a vehicle for extending the brand beyond the retail branch and online distribution channels, engaging audiences in fresh ways.

The solution was powerful for the following reasons:

• it created a robust platform for addressing a range of potential issues
• it targeted the strongest influence points for stimulating word of mouth
• its effectiveness was not judged solely on a single initiative, but on an overall approach.

The work also demonstrated how word-of-mouth marketing is an important yet complementary marketing vehicle – one capable of providing a better return on investment than traditional vehicles. While most marketing concentrates on mega hubs (e.g. mass media) because they are easy to identify and have obvious influence, the real opportunities are within the local community and informal grassroots hubs that fall below the radar screen.

Importantly, the work enabled the retailer to make sense of the original conundrum about the two branch managers' relative experiences. It became clear that the first branch manager's efforts had worked because he reached an influencer at the centre of a community (the vicar) who was able to persuade local people to view the company's plans sympathetically. The second manager had not fully considered the influence of indirect audiences (e.g. vocal community citizens and the press) on Town Council decisions, and had failed to consult key influencers before moving forward with his plans.

Overall, word-of-mouth marketing gave the retailer a much fuller strategic grasp of its own marketing efforts, while actively promoting the brand through a series of carefully targeted initiatives.

This article featured in Market Leader, Winter 2006.