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  • Shriram Iyer

How a Small Business can crack the 'Word of Mouth' Puzzle


We have all either heard or used the phrase, 'It's the thought that counts'. In the world of business, it doesn't count at all. The only thing that counts is this sign - '$' (or whatever currency you are dealing in).

If a small business cannot generate enough revenue and margins over a sustained period, it will not survive. It is as simple as that.

'Word of Mouth' obviously plays a huge role and businesses acknowledge that. But many businesses are under the misconception that WOM is a part of BAU (Business As Usual). That if a business operates as per normal, the WOM effect will kick in naturally and take the business forward. It is a dangerous misconception.

Some businesses do something about it - they conduct market research in the form of customer satisfaction surveys and try to understand the 'voice of the customer'. But even that is not enough.

Why Listening To The Customer Is Not Enough

It is surprising how often senior management in large corporates invest time and money in collecting customer intel and in understanding the consumer's mindset. But there is a yawning gap between the collection and reporting of insights to actual actionable behaviour.

Detailed packs and presentations will not help a business owner grow the business unless the core of customer feedback is actioned upon. The root causes of customer dissatisfaction, for example, need to be implemented, otherwise, the entire exercise of market research is a colossal waste of money and time. And this is a big example of how 'intentions' differ from 'behaviour' - a very important distinction that needs to be understood by business owners.

'Intention' and 'Behaviour' Are Not The Same

Small businesses do not have the marketing budget to conduct extensive market surveys. They certainly cannot afford to not action any market research they might have managed to gather. A simple research question is to gauge the 'likelihood of recommendation' which will only measure intention.

Businesses that do measure intention, tend to get comfortable knowing that their customer base is filled with such 'fans' who display a strong intention to recommend. But intention alone can never translate to financial success for a business. All that matters is action or behaviour.

Bridging the Gap

Bridging this gap is easier than it seems. But it requires a lot of commitment from the business owner. A complacent approach that banks on intention alone, will not work.

The referral process has many touchpoints and business will need to validate the initial referral at every touchpoint, for example, the business website. The validation process more often than not will take place on the web.

The 'stark raving fan' even though has the right intention to recommend might not actually end up doing do. WHY? Possibly because life got in the way and they simply forgot about you (I am serious!). Or they possibly don't know who to recommend you to, so they put it in the 'too hard' basket. Or your 'fan' doesn't want to be THAT guy who spams everyone!

They way to get around this is to run a clever, well structured referral / incentive program that engages the 'fan' and draws them into your world, making them take ownership of your product / service.

The trick is to be able to set up an efficient referral program without blowing your marketing budget. If you run a small-to-medium business and are keen to see how this could benefit you, give me a call and I would be happy to chat further.


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