All Articles Marketing Marketing Strategy What you're getting wrong about customer referrals

What you’re getting wrong about customer referrals

4 min read

Marketing Strategy

Across business categories, we’ve all heard that referrals are the best source of new business for your brand. We agree that what existing customers communicate to others is critically important.  But we believe that most product conversations are not really formal “referrals” or “recommendations,” but rather more likely simple conversations, written reviews, and informal expressions of opinions.

Yes, doctors do make “referrals” of patients to other specialists and a friend or neighbor might “recommend” you try a new restaurant.  But most of what people communicate through emails, phone calls, blogs and review sites, text, and even face-to-face conversations is much softer.  It’s probably better described as “product chatter,” which may or may not contain recommendations to try or buy a product or service.  This word-of-mouth is based on people’s personal experiences and on what they’ve heard from others.  It might be communicated privately. But it might just as easily be offered online to the whole world.

What is really being said about your brand?

Product chatter can be positive, but it can just as easily be negative.  In either case, what is actually being said may very well be a surprise to management.  You see, we’ve found all too frequently that managers think they know what’s being said about their brand.  But, generally, this belief is based on rumors and corporate folktales.

Ask a manager how he or she tracks the ongoing buzz about their brand and you may be told, “I keep my ear to the ground,” “I monitor social media,” or, “We talk about it at staff meetings.”  Such sources hardly provide an objective and truly representative understanding of what’s being communicated.  Consider how your own personal view of word-of-mouth about your brand may be unrepresentative:

  1. Friends and family love you: Most of what is told to you directly comes from people who don’t want to offend you or make you unhappy, so, their news is sanitized.  What you hear from them is probably more positive and less honest than the reality.
  2. You’re a busy person: Some of what reaches you from internal listening posts has been filtered by staff members who feel it’s their job to filter comments because they don’t want to waste your time with the feedback of sources they consider problem customers, disgruntled employees, or rumors started by competitors.
  3. Shooting the messenger: Very few organizations reward employees for being the bearers of bad news.  In many organizations staffers learn that if they want to keep their job it’s better to keep quiet.  (Even if that’s not your culture, chances are most of your staff members worked somewhere else where that was the culture.) So the tone of what reaches you could be considerably skewed to the positive or neutral.
  4. Online is just part of the story: Even if you have a process to monitor social media each and every day, you’ll still get far less than the complete picture.  That’s because research continues to show that 80% of word-of-mouth still takes place through private, unmonitored media (emails, text messages, phone calls, and one-to-one conversations).
  5. Satisfied customers are generally less active: It’s not just negative comments you need to hear.  Positive word-of-mouth lets you know what’s important to customers and their families, what product strengths you can and should be leveraging in sales and marketing, and even which employees deserve recognition for outstanding performance.  But satisfied, happy customers are often quieter and less active in their communications than their angry brethren.  You’ll have to dig to hear their positive impressions.

You might be fooling yourself

Using the voice of the customer to set priorities for improvement or to identify the best leverage points for your sales and marketing efforts makes great sense.  But if you don’t have a truly representative, totally objective process for capturing and analyzing your customers’ voice (i.e. product chatter circulating in all types of media), you could be fooling yourself into making less effective decisions.

Doug Pruden and Terry Vavra are principals at (CEP) Customer Experience Partners, LLC in Darien, Conn. The firm has developed the Buzz BarometerTMtool to help managers objectively quantify both the online and offline word-of-mouth circulating about their brand(s). The Buzz Barometer guides strategic direction based upon analysis of what customers are communicating about their experiences. CEP focuses on issues related to customer retention, growing share of wallet spending, and word-of-mouth measurement and management. Reach Doug and Terry via email.