By Tom Ryan
This article is republished courtesy of RetailWire. Click here to read the full discussion…
According to a new study from Engagement Labs, an estimated 19 percent of consumer sales are now driven by offline and online social conversations. But many retail categories are failing to capture much WOM (word-of-mouth) buzz.
The study, conducted in conjunction with Koen Pauwels, professor of marketing at Northeastern University and BI Oslo, determined that 10 percent of consumer sales are attributed to offline conversations (face-to-face) versus nine percent to online conversations (social media).
However, the study of 170 brands, as well as more detailed analytics on 21, found that certain categories benefited much more from WOM. Tech products were far in front with 29 percent of sales in that category driven by WOM, made up of 15 percent offline conversations and 14 percent online.
Overall, Engagement Labs said that despite the widespread adoption of social media platforms among consumers, many brands are failing to break through, particularly in consumer categories that include beauty, household products, food and beverages. While the study shows that these categories gain sales through social media conversation, their actual performance is well behind that of other categories such as media, entertainment, technology and telecom.
The study didn’t explore why the tech product category scored notably higher but past studies concluded that some brands are facing challenges posting relevant, shareable content online that gains traction among key influencers.
An analysis of the food category, for instance, found that food brands in general had high sentiment scores both online and offline. But many food brands are “Whisper Brands,” performing below average among the 500 brands Engagement Labs tracks, due to low online and offline volume.
Another study found WOM scores by beverage brands, including Coke, improving because they’ve been better at engaging “everyday influencers.”
Both big box retailers and teen retailers earlier this year were found to perform better in offline WOM than on social media, notably Costco and Old Navy. Engagement Labs concluded that discussions around low prices and deals seem to be strong drivers of positive face-to-face WOM.
Discussion Questions: Why do tech products rank particularly high among retail categories in driving both offline and online word of mouth? Are certain retail categories as well as retailers themselves inherently challenged generating online conversations?
Comments from the RetailWire BrainTrust:
Tech is a hot category and always has fancy things to say about how it will change the world. This lends itself to a compelling word-of-mouth campaign. As exciting as pain relief can be, the folks that are talking about the benefits of Naproxen vs. Ibuprofen just aren’t going to be as exciting or compelling as those saying how the iPhone can now recognize your face. Tech also reaches the young and the old, and makes for compelling dinner party conversation.
Having said that, the encouraging parts of this are that unconventional marketing is on the rise and marketers are breaking out of traditional mediums to meet the consumer. Technology has changed how retailers and brands can reach the consumer, so it’s important for marketers to continue to reach out and build those ties.
Health and OTC categories are probably going to be fairly challenged in building online conversations because of the context required to clarify and talk about the benefits of medicinal properties.
Phil Chang, Retail Influencer, Hubba
Tech products are inherently interesting and have a built-in “wow” factor for most consumers. That makes it difficult to duplicate the word-of-mouth effect in other categories based solely on the product. Retailers that focus on the experience of using the product in other categories rather than the product itself will capitalize on word-of-mouth better than others both online and offline. For example, just look at Sephora and Ulta Beauty in the beauty products category. Consumers crave interesting experiences to talk about products rather than just the product itself!
Tech products usually come with a higher price tag which makes customers more risk-adverse. It’s easy to risk a new flavor of crisps and to form your own opinion because they only cost a very small amount. If you’re going to spend hundreds of pounds on a tech item that you may have for a number of years, you’re going to want to do your research and word-of-mouth — whether from friends or online — is part of that.
What’s interesting to consider are the categories that have both luxury and discount offering, such as beauty. Again, you might not think anything of trying another high street mascara, but you’re likely to turn to reviews or word of mouth for a luxury version at a higher price. Generally though getting better at word-of-mouth comes down to understanding your brand and your positioning. For some categories, even if customers strongly recognize your brand they just don’t need word-of-mouth to make their buying decision because it’s based on something else (price, offers, past experiences, etc).
Lots of brands fail with WOM because they haven’t learned how to act like a human. They still see customer engagement as a mechanical one-way street. When brands do take on human-like qualities in their social media engagement and value the kinds of things we do in all our relationships, then they are more successful at generating WOM.
Let’s be honest, creating brand advocates is not just about great products and services these days. It’s about making customers feel good about themselves, making it worth their while, making them feel smart and clever for discovering or being loyal to a brand. People want companies to be open, honest and, most of all, human. Every type of company can do this — there are no retail categories where it’s impossible.
Studies show an interesting truth about word of mouth. The biggest driver of word of mouth is television advertising. The above chart may reflect ad spend more than anything.
And that makes sense. People have to know why they would care to share. Advertising adds an extra advantage: Advertising lets you explain to people what it is that’s important enough to share.
Sometimes word of mouth is viral — but usually it’s not. These days, the only viral successes are set up with extensive paid placement to get them started.
So the more critical question seems to be this: WHAT is the role of WOM in retailer marketing and what other spending is most critical for creating WOM pass along?
Tech does an amazing job of creating messaging around their products such as reviews, specs, and comparisons. All the consumer has to do is click a few buttons and their experience can be shared across a variety of digital channels.
CPG brands don’t really have the same type of messaging. When was the last time you looked up reviews for a Chobani Yogurt?
With the review/socially engaged guru Amazon in the mix though, this could change across the CPG/retail grocer industries.
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