Word-of-Mouth Effect Varies with Purchase Stage

Marketers have long known that word-of-mouth can play a huge role in increasing product sales. Even as they spend money on expensive ad campaigns, marketers say that up to 50% of all sales can be connected to word-of-mouth recommendations.  It turns out that word-of-mouth plays a different role at each stage in the product purchase cycle.  A new report in the McKinsey Quarterly explains the details.

The McKinsey study focused on consumer consideration of potential mobile-phone purchases, but consumer behavior could be applied to other product purchases as well. In addition, marketers can segment the purchase cycle into 3 stages and see how word-of-mouth influence compares to other factors. Here are the percentages of consumers who say how these factors play a part in their decision-making:

Initial consideration

  • Advertising: 30%
  • Previous usage: 26%
  • Word of mouth: 18%

Active evaluation

  • Internet information: 29%
  • Shopping: 20%
  • Word of mouth: 19%

Moment of purchase

  • Internet information: 29%
  • Shopping: 20%
  • Word of mouth: 10%

The study also revealed that word ‑of- mouth can act as a disruptive influence on planned consumer purchases. As a result of what a consumer finds in online communities “the pass-on rates for key positive and negative messages can increase a company’s market share by as much as 10 percent or reduce it by 20 percent over a two-year period, all other things being equal.” Marketers can actively manage word of mouth campaigns if they understand the 3 types of word of mouth.

Experiential – This form accounts for over half and up to 80% of all word ‑of- mouth activity. It is based on actual experience with a product or service.

Consequential – This form stems from consumers who discuss a product or service with others based on traditional marketing campaigns they have seen.

Intentional – This form occurs when a marketer deliberately attempts to generate buzz by using a technique such as a celebrity endorser during a product launch.

As marketers attempt to manage word- of-mouth campaigns, they must remember that what is said in any message is the ‘primary driver’. Additional drivers include the person who sends the message and the environment in which the information circulates.

All of these factors play a key role in the success of any word- of- mouth campaign.
[Source: Bughin, Jacques, Doogan, Jonathan, and Vetvik, Ole. A new way to measure word-of-mouth marketing. McKinsey Quarterly. April 2010. Web. 14 Jun. 2010]

Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-owner of several small businesses in the health care services sector.