Electronic Word of Mouth - Putting Power Back in the Hands of the Consumer
written by Bobby Menbari
Electronic Word of Mouth...referred to in this text as eWOM, is a revolutionary idea that stems from a social practice we as members of a society engage in everyday. Traditionally, amongst small communities, neighborhoods, families, and/or friends, people tend to utilize their specific expertise or experiences to recommend certain goods/services to one another (Negroponte & Maes, 1996). As Chatterjee discusses (2011), this form of recommendation is pertinent to the person inquiring because it has a great deal of relevant value...the opinions typically don't stem from marketing or advertisement, but simply from experience with that particular entity (p.82). For instance, "Oh, I have a guy that can do your window tint"...or..."That new restaurant down the street is terrible...try this one and ask to be served by Eddy"...or perhaps...."Don't buy that television, it died shortly after I bought it...buy this Panasonic model instead". These are all examples of conversations everyone has had and continues to have almost daily...mainly because it is an extremely valuable source of information. Now, imagine that you can acquire this insider info from communities outside your own...or perhaps outside your state...and going even further, even outside your country!! Welcome to the world of eWOM. A savvy world where consumers make the rules and businesses dance to whatever tune we decide to play...and if they don't dance appropriately, they will cease to dance altogether.
The Internet as the 21st Century "Water Cooler"
The internet as we know it today is no longer a specific thing or entity, but rather an integral aspect of our communicative practices...and the way we exchange ideas is not exempt from this undeniable force. As discussed by Kim and Chu (2011), the typical "water cooler" dialogue of sports, politics, and various other word of mouth related topics is now occurring beyond the constraints of time and space...in the form of eWOM (p.48). However, to understand the true value of the resources available to us today, it is useful to reflect on the past. In an article dating back over a decade, Negroponte and Maes (1996) discuss how a consumer's will to thoroughly research a particular good/service was hindered by the sheer challenges of doing so. "Meeting with, speaking to, calling, or finding those who may be interested is too difficult, and you probably wouldn't know who to contact anyway." Concerns pertaining to immediacy are no longer obstacles that need to be overcome...and are rather comical to ponder considering the world we live in today. Although traditional methods of recommendation such as independent expert sources are still dominate in specific categories, by in large, user-generated reviews take the cake (Horrigan, 2008). An aspect of the internet that has helped facilitate this transformation are social networking sites (SNS) and the general integration of a social networking capability in an increasing percentage of popular, user-based web sites.
Expanding your Community...Social Networking Sites
A common haphazard critique of the internet is that it tends to lean towards social alienation...further distancing individuals from one another. However, SNSs such as Facebook, MySpace, and other online communities like Yelp are a testament to quite the opposite. As argued by Kim and Chu (2011), SNSs represent an ideal tool for eWOM as it allows diverse communities to share ideas amongst one another more easily (p.49). What separates eWOM from traditional marketing/advertising is one integral aspect...trust. "That is, the higher level of trust SNS users have in their contacts, the greater the likelihood they will engage in opinion seeking, opinion giving and opinion passing behaviour on SNSs" (p.66). This sense of accountability is not foreign to what communities experienced in the pre-internet era. Traditionally, the best source of information has always been someone whom you trust within your own network and/or a community "expert" on a particular good/service (Wikipedia, 2011). What has changed, however, is the power that these online encounters yield to consumers as a whole. Companies who model their business from the perspective of quantity versus quality are few and far between...and the ones that still operate under this notion are in for a rude awakening.
The Yelp Effect...Marketing vs. Customer Service
From an advertising standpoint, most businesses structure their marketing from a push or pull promotional strategy. A push strategy focuses quite obviously on imposing a particular good/service on a consumer through a variety of retailer based, internal promotions. Whereas a pull promotional strategy creates consumer demand through the costly creation of a perceived value...essentially duping the consumer into believing they truly need that particular good/service. The common denominator in both of these scenarios is that the consumer is consequently, and inevitably, at the mercy of the business. eWOM and SNSs have altered this dynamic indefinitely, leading businesses to reevaluate their dated marketing strategies. As discussed by Vellandi (2009) in an interview with a local business owner, "In the past, he'd spend $50-100k on Yellow Pages advertising, but now spends $0. The Yelp effect on his business was that (in terms of dollars) = increased customer service, lower marketing, and increased sales." This new dynamic has not only altered what businesses focus on, but how they market to their customers...rejuvenating the old adage of "the customer is King". Geoff Donaker, COO of Yelp discusses this very dynamic and the rhyme to Yelp's reason.
Prior to the contagious spread of eWOM, entities such as the Better Business Bureau dominated the independent review market...but unfortunately were not able to adapt within the realm of social networking. Although the BBB was, and to some degree still is a credible source of information...its value is still trumped by that of user-based sites.
"A customer has no need to contact the BBB when they can get online and affect your brand directly through places like Yelp. It means that you better be out there, engaging consumers, and influencing what they say about your business" (Bertoldi, 2010). What has occurred as a bi-product of this new dynamic is the perceived consumer value of a particular business's online reputation as well as a heightened awareness by marketers and businesses alike.
Walking on Egg Shells...the Role of Online Reputation
As a society, we tend to put a great deal of value in our reputations...especially within our own communities. However, in a world of cutting costs and taking short cuts, this concept has traditionally fallen on deaf ears when it pertains to the way most businesses operate; reputation has traditionally taken second seat to profits and volume. "In today's online social media world, businesses of all shapes and sizes must actively participate in online reputation management" (Jantsch, 2008). A MSNBC panel of industry professionals discuss this concept and the role of eWOM as it pertains to businesses.
Due to complications created by the "Yelp effect", businesses are becoming aware of their dated methods of marketing and taking a more active role in social networking sites (Helft, 2011). This revolution has become so prevalent that entire businesses are being creating to provide an one-stop avenue for online reputation maintenance (Jantsch, 2008). So what does this mean for the user? Well, Tuttle (2010) would argue "That's why many business owners are reaching out to disgruntled customers who have trashed the establishment with a revenue killer of a review, begging (bribing?) the review to reconsider by offering free meals, gift certificates, free consultations, and money back for the original transaction."
Marketers have also jumped on the band wagon as their antequated methods are being overlooked by businesses more often everyday. Zhan and Li (2011) discuss how marketers utilize user-generated reviews almost as focus groups, paying close attention to what goods/services were rated positively and for what reasons (p.252). This information is often reported back to the business in question and ultimately used to better the user's experience, but in many cases, leads to "voluntary" user retractions and other suspect behavior. Youn and Lee (2009) elaborate on this very topic; "Determining the quality of online posts has become even more difficult now that marketers have attempted to influence eWOM by compensating consumers to review products and even going so far as to post their own reviews about their products" (p.474). Although sites such as Yelp have failsafes to avoid such occurrences, as it pertains to any form of information found online (present content included), individuals must be aware of how to effectively navigate and sift through the endless sea of information available to them at any given moment...so that ultimately, the power is rightfully put back in the hands of the consumer.
References
Bertoldi, M. (2010, October 14). The future of business ratings. Retrieved from
http://michaelbertoldi.net/yelp-or-the-better-business-bureau-the-future-of-business-ratings/
*Chatterjee, P. (2011). Drivers of new product recommending and referral behaviour on social network sites. International Journal of Advertising 30, 1, 77-101.
Helft, M. (2011, April 7). Facebook promotes social e-commerce. New York Times. Retrieved from http://bits.blogs.nytimes.com/2011/04/06/facebook-touts-social-e-commerce/?scp=9&sq=word%20of%20mouth&st=cse
Horrigan, J. (2008, May 18). The internet and consumer choice. Retrieved from http://www.pewinternet.org/Reports/2008/The-Internet-and-Consumer-Choice.aspx
*Kim, Y., Chu, S. (2011). Determinants of consumer engagement in electronic word-of-mouth (eWOM) in social networking sites. International Journal of Advertising 30, 1, 47-75.
Jantsch, J. (2008, December). Look good online. Entrepreneur Magazine. Retrieved from http://www.entrepreneur.com/magazine/entrepreneur/2008/december/198686.html
Negroponte, N., Maes, P. (1996, October 1). Electronic word of mouth. Wired Magazine. Retrieved from http://www.wired.com/wired/archive/4.10/negroponte.html?pg=1&topic=&topic_set
Tuttle, B. (2010, February 26). Online user reviews: Use them to buy wisely, vent, and get free stuff. Time Magazine. Retrieved from http://money.blogs.time.com/2010/02/26/online-user-reviews-use-them-to-buy-wisely-vent-and-get-free-stuff/
Vellandi, M. (2009, June 30). Yelp: Empowering consumers with local knowledge (WOMM-U). Retrieved from
http://www.melodiesinmarketing.com/2009/06/30/yelp-reviews-word-of-mouth-marketing-case-studies/
Yelp, Inc. (2011). Wikipedia. Retrieved from
http://en.wikipedia.org/wiki/Yelp,_Inc.
*Youn, S., Lee, M. (2009). Electronic word of mouth (eWOM). International Journal of Advertising 28, 3, 473-499.
*Zhan, L., Li, J. (2011). Online persuasion: How the written word drives WOM. Journal of Advertising Research 51, 1, 239-257.