Open letter to Pharmaceutical CEOs
Re: How to Solve the Current Pharmaceutical Crisis
Dear Pharmaceutical CEO,
You are in the midst of a major crisis. I have a solution.
I’m writing to you because this problem can only be solved at the highest level.
The crisis: Physicians and patients are not paying attention to your messages, causing traditional marketing costs to escalate to an intolerable level. This is raising prices, causing a cascade of other crises.
I’m in a unique position to solve the problem: Thirty-five years ago I revolutionized pharmaceutical marketing by inventing "peer influence groups." We’ve reached the end of an era. It’s now time for another major change.
With a fundamentally new approach you will cut spending on new drug launches from hundreds of millions of dollars to about $25–50 million with a greater effect than with traditional promotional efforts. The saved money will give you a higher profit margin while allowing you to lower drug prices. The launch will be twice as fast, cost one tenth as much and be multiples more profitable. The physician’s adoption cycle will be dramatically shortened. Physicians will use the drug more skillfully and more effectively, further driving its sales.
Here’s the solution: You announce that the next significant product will be launched totally by an organized word-of-mouth campaign, without traditional promotion. The only way that physicians can learn about the drug will be physician-to-physician communication: Instead of traditional advertising and detailing, physicians will be directed to a carefully orchestrated series of materials and events in which: the clinical investigators will communicate their experience with the super experts who in turn will communicate with the experts in each field. They will talk with specialists who will talk with generalists. All of this will be accomplished by a systematic approach that will move the physician quickly through the decision process with physicians’ enthusiastic cooperation, using a mix of teleconferences, web sites, e-mail, webcasts, podcasts, blogs, streaming media, roundtables, meetings, personal communication, etc. that weren’t possible as an integrated system even a couple of years ago.
The benefits are enormous for a pharmaceutical firm with the vision to be first. It will be perceived as the boldest move in the entire history of marketing, while in actuality the risks will be low. Physicians aren’t really listening much, their adoption using conventional promotional techniques is slow, and they mostly get convinced to use new drugs through physician-to-physician channels anyway. It will further be perceived as honest, open, and physician/patient oriented. Everybody wins.
I am not talking about leaving this to chance. I am talking about an organized, systematic approach. It’s based on an extensive analysis of how physicians really make decisions, all elements of which I have already executed successfully and outlined in my book, The Secrets of Word-of-Mouth Marketing: How to Trigger Exponential Sales Through Runaway Word of Mouth.
Why take this bold, new step? Aside from the positive PR that it will cause, there is another very sound and newly measured marketing reason. Word of mouth is 5,000 times more powerful than conventional marketing. It turns out that — contrary to common marketing belief — the more advertising and sales rep activity, the less the word of mouth! The reason is that people do not want to look foolish by telling their colleagues about things that they think they already know about from a huge amount of promotional activity. So, the more you advertise and detail, the more you are shooting yourself in the foot and the less efficient is your marketing.
I realize that this is going to take a huge amount of boldness and vision — an entirely new mindset. There are a lot of turfs that will be shaken up and vigorously defended. It will probably be tried first by a small to middle size David going up against a Goliath. But it might be a large firm that realizes that the old ways of promoting pharmaceutical products are dying, or whose sales force is stretched too thin.
I welcome the opportunity to sit down with you to discuss more of the details. I’m eager to work with a company that has the right kind of drug and is ready to make the right kind of commitment at the highest level, since that’s the only way it will work. I look forward to putting our heads together soon.
Market Navigation, Inc.
Word of mouth is the most powerful force in the marketplace. Yet there was almost no useful literature on the subject until 2001. It was almost totally neglected, primarily because people thought that they could do nothing about it. The following article appeared in my newsletter The Market Navigator in 1991. It has some fundamental and non-obvious insights into why word of mouth is so powerful and how to harness that power.
Peer Influence Groups
There has been a great deal of controversy around so-called Peer Selling Groups or Peer Influence Groups ever since Ron Richards and I co-invented them over twenty five years ago. Lately, the controversy has heated up in the pharmaceutical industry, where they are most widely used. Their existence has become threatened by a ban, by the AMA and the Pharmaceutical Manufacturer’s Association, on paying gratuities to physicians for participating in educational activities. The payment of these honoraria is regarded as a bribe. For those of you in the pharmaceutical industry reading this article, I’m going to offer a proven solution to the problem later on in this article. I’ll whet your appetite by saying that I have never paid an honorarium to a participant in a Peer Word of Mouth group (as I call them) in more than 25 years and thousands of sessions.
It might shock you to know that Peer Selling Groups have become the largest single promotional item in many products’ budgets, particularly in the pharmaceutical industry, in some cases exceeding the money spent on salespeople, advertising, direct mail and sampling combined. They have also been measured to be the most effective selling method for many products more effective than salespeople, advertising, direct mail and sampling. It’s clear that peer selling groups are a major addition to the marketing mix, and are here to stay, because they increase sales, cost-effectively. I might also add that, when done right, they are the most professional, honest and persuasive means of communicating with high level people such as physicians, executives and other accomplished people.
I am both gratified and dismayed at their success. I feel vindicated after all the years I spent trying to convince people that they work. But I am dismayed that peer selling groups are not well understood, and there are some sleazy and unprofessional approaches to them that reflect badly on me as one of the people known to be their inventor.
The time has come to clarify what Peer Word of Mouth Groups are, what they can and can’t do for you, and how to use them most effectively. I’d like to start with a description of some of the marketing problems that you have, and show you how Peer Word of Mouth Groups can solve them. Then I’ll describe how to set them up most effectively, well within ethical guidelines.
What’s at the root of all marketing problems
In order to be persuasive, information must:
- Come from the right source.
- Be presented in the right order
- Be relevant to the particular customer
- Be credible
- Be presented in a context in which the customer is receptive.
However, even the right information presented in the right way is often still not enough. Past a certain point, you begin to spin your wheels.
Once people have heard of your product and its claims (information), they need confirmation and verification — Confirmation from independent sources that the claims are valid, and verification that the product will do the job it promises to do in their particular situation.
The product adoption cycle has two major phases, and you are probably only covering the first phase:
(1) The Information Phase (Awareness and Interest). First there is the learning phase in which information is gathered. This is where the customer considers whether he is interested in the product, what benefits it may have to him, whether it is worth finding out more. The major mental set is: "If the claims are true, would I want it?" This is the phase that marketers address most of the time, to the almost total neglect of the second phase.
(2) The Verification Phase (Trial, Evaluation and Adoption). In the second phase, the customer is trying to find out if the claims are true. The conventional kind of information that marketers try to provide is almost totally irrelevant to this phase.
The fundamental contradiction in marketing
Prospects already have most of the information. They need verification, which they think they can’t get from you, because you are not objective.
They need verification from an objective source.
In their attempts to verify the truth, information must be perceived to be objective in order to be believed.
But most marketing is advocacy.
Advocacy is not perceived to be objective.
Therefore, most marketing is not viewed as objective.
Therefore, most marketing is not believed.
What do I mean by objectivity?
Accurate, complete and clear presentation of the relevant facts and conclusions. In other words, an unbiased evaluation of the advantages, disadvantages and value of the products.
It’s not that they don’t believe that what you are saying is true. In some industries, such as the pharmaceutical industry, there are severe penalties for giving inaccurate information and for lies of omission. There are many ways to slant the truth. It can happen unintentionally and from the most noble motives of enthusiasm for your product and a desire for people to reap its benefits. Everyone realizes this. Most people would no more take at face value a manufacturer’s evaluation of his own product than they would leave a fox to watch the chicken coop.
There are several ways that people try to get the objective information they need. They are:
1. Direct experience with the product
2. Experience of peers who are like themselves
3. Experts’ experience
4. Scientific journals, studies, panels
5. Independent rating and opinion services
e.g., Facts & Comparisons, The Medical Letter, Consumer reports, Infoworld, PC magazine, Dataworld.
So the necessary objectivity is only provided by something that delivers independent experience and evaluation.
You need to get your prospects beyond information gathering…
to confirmation and verification…
which customers get by objective, independent experience and evaluation…
which conventional marketing does not deliver.
So, what keeps most stalled superior products from reaching full market share is not the time it takes people to find out about your product, but the inordinate amount of time it takes the decision makers to get the independent experience to confirm and verify the truth of what you are saying.
So, people are caught in a dilemma. A physician, for instance, will not get experience with a drug unless he has confidence in it, but he can’t get confidence in it unless he has experience with it.
If what holds products back is the time it takes to get experience, the problem becomes how to accelerate that experience-gathering.
How to accelerate experience-gathering
Basically, there are only two ways for your customers to get experience: directly or indirectly (vicariously).
The traditional ways of accelerating the accumulation of direct experience are: demonstrations and free trial
These methods can be extremely effective, as every marketer knows. They are powerful because they provide experience, which can conclusively provide the verification and confirmation that people need to make a decision. But demos and trial also have several disadvantages. Demonstrations are not always possible. For instance, there may not be anything to see in a demo, as in the case of some drugs. Even when the product can be demonstrated, the demo is often inconclusive. Conditions are often artificial, as at trade shows and dealers, so the decision maker does not know whether the product will work the same way in the real world. The demonstrator may have more skill than the customer. From the point of view of the marketer, there is little control over the demonstrator, who may be a dealer or a rep who is not as skilled or motivated as you would like.
Free trial (sampling, equipment loans, etc.), as powerful as they can be, also has its own set of difficulties. There are many things that are impossible or difficult to try or sample: Life insurance, a new surgical procedure, other all-or-nothing major commitments. Often, products that one would think are easy to try, such as new prescription drugs, involve a large perceived risk, or innate caution and conservatism, which make people like physicians and pharmacists want to wait, even when you give samples.
Often, demos and trials tend to make the customer want to try other products as well, increasing the time it takes for a commitment.
In an effort to reduce the risks inherent in direct experience gathering, such as directly trying the product, and also in an effort to broaden the experience to a wider sample, customers and prospects often go to indirect experience gathering. They will seek the opinions of experts, ask their peers and consult independent, respected rating services. They will use the various forms of word of mouth.
Most marketers agree that Word of Mouth is the most powerful force in the marketplace. The conventional explanation is that it is more credible. That’s true as far as it goes. The rest of the story is that it indirectly supplies the independent experience that is necessary for confirmation and verification, which in turn is necessary for opinion change, which is necessary for behavior change.
To summarize, the flow goes like this:
Indirect trial (word of mouth) and direct trial Independent and Direct Experience Objective information Confirmation/verification of your claims/promises Belief/opinion change (persuasion) Action/behavior (motivation).
The problem with indirect experience gathering from your point of view as the marketer is that it is out of your control. In fact, that’s precisely why word of mouth is so valued by the decision maker. Word of mouth is independent of the seller, and so it’s more objective. This is where prospects feel that they can get the real story. Under most circumstances, as soon as you try to control it, it loses its independence and its credibility.
Like a forest fire, Word of Mouth is smoldering, burning or blazing along on its own, the most powerful force in the marketplace, out of your control. You never know when it might strike, or what good or damage it may do. You usually do not know if it’s there, or what form it’s taking, or whether it’s doing good or harm. But word of mouth can be harnessed.
Why conventional promotional media lose effectiveness
Many products are at a point where they just won’t respond cost-effectively to conventional marketing methods. This can happen anywhere from before the product launch to years into the product life cycle.
With some products, it becomes evident before launch that it is too complex for your salespeople, ads, or other conventional selling media to be effective.
Even after a product has been out for a while, you can keep pouring more and more money into conventional media, without much visible result. You can change your ad campaign, media mix, sales message, sales aids, brochures. You may even go to alternative media, such as experts’ endorsements, symposia, sampling, free trials, demonstrations. You keep thinking you haven’t found the right message, or the right way to present it.
You probably have awareness and interest, but little trial and adoption. The only thing that people are adopting is a wait-and-see attitude.
In this day and age, the problem rarely is getting the information about the benefits of your product across to your potential customers. That’s easy. It just takes money for enough salespeople, ads, mailings or PR. But you quickly reach diminishing returns, where throwing more money at the problem produces little result.
Creating interest in your product isn’t so hard either: all it takes is the promise of something different about your product that might actually make a difference to your customer.
Serious trial, evaluation, adoption and expansion of use are other matters entirely. These latter stages of decision making are hellishly difficult to move people through. Conventional marketing methods are relatively ineffective during these stages of decision making. This is where most products are stuck.
Why are conventional methods ineffective in the latter stages of adoption?
Because conventional marketing methods are mostly directed at getting across information: the features, claims and benefits of your product. But information is not enough. The information must:
How we Harnessed Word of Mouth
Word of Mouth has been tamed and made manageable. It’s worth looking at how Ron Richards and I did it because there are some instructive lessons to be learned.
Soon after I invented the telephone focus group, I started mixing together physicians who were using a product successfully with people who were not using it. The latter were often skeptics, laggards, triers who hadn’t adopted, or even ex-users. The reason for this research design (see my article Persuasion Design Laboratories), which I still use today, is to see how physicians who are adopters of a product will attempt to convince their less enthusiastic peers. Their wording, logic and sequencing can then be used in promotional materials. We noticed an amazing thing, as a byproduct of the research: Even when the adopters were vastly outnumbered, they almost always convinced a significant number of the non-adopters to try, or re-try, the product. Even one or two would convince ten or twelve! We followed up and found that the physicians had in fact tried the product and usually had changed their subsequent prescribing.
Most people have noticed this phenomenon in focus groups, and much has been written about it, mostly in the form of criticism of the focus group technique the old "one person can sway a group" criticism. We viewed this as a finding rather than a bias. When the group is swayed, it’s either an opportunity or a threat, you want to know why and how it was done, so that it can be duplicated or defended against.
We kept looking at this group persuasion phenomenon and discovered additional things. It only happened under certain circumstances, and it was virtually always one way: adopters, no matter how few, convinced non-adopters, no matter how many. There was an extraordinary amount of constructive, respectful experience sharing going on, rather than abstract discussion, disagreement or debate. It was as if the non-adopters wanted to be convinced.
We knew that there was a powerful force at work. We quickly rejected the idea that it was "peer pressure," because then the majority would sway the minority. This force was working despite peer pressure.
Ron Richards had a background in sales and was interested in group selling. I came from a background in psychology and was interested in peer learning, problem solving and decision making. In one of our discussions late into the night, we realized that group selling and peer learning were different sides of the same coin. Only this was group selling without a salesperson! People were in an open situation in which they were free to learn from their peers, uninfluenced by outside forces. Since it is very difficult to argue with success, even one successful person would sway a whole group! The main difference between what we were doing and ordinary word of mouth was that we had caused it to happen. We had harnessed word of mouth.
There were other differences between what we were doing and ordinary word of mouth. The moderator, while not injecting information and not exerting influence, could bring up important points that the participants might have left unexamined, or turn the conversation to a more constructive direction by asking for solutions to problems. If the moderator at any time lost objectivity and took an advocacy position, the entire atmosphere of the group was poisoned and the objective examination and experience sharing stopped.
Of course, marketing research ethics precluded us from conducting large numbers of focus groups which had as their primary purpose directly increasing the sales of our clients’ products. We went to Roche, from whose focus groups we had developed many of our insights, and explained the situation to them. We proposed a very simple solution: tell the complete truth. We would invite physicians to groups in which no reference to marketing research was made. The sessions would be described as exactly what they were: open discussions in which physicians could discuss the drug in question with other physicians who had had success with it. Roche agreed to fund a large number of telephone conference sessions on Laradopa, their brand of L-dopa, an anti-Parkinson’s Disease drug which was a very difficult product. On introduction, its sales had skyrocketed, only to disappoint because of many side effects. Sales tumbled. The difficulty in using it was to adjust the dosage between the symptoms of the disease, which would appear when not enough of the drug was given, and the side effects of the drug when too much was given. In fact, for most patients, there was a mixture of symptoms and side effects. Many physicians had tried it and dropped it because of their frustrations in trying to use it. We scheduled many telephone conference sessions, each with about 8 primary care physicians who treated large numbers of Parkinson’s patients but did not use L-dopa, a couple who did, and a neurologist who knew how to use it. Sales tripled almost immediately. It was clear that the changed prescribing was due to our sessions. This was the first use of Peer Word of Mouth Sessions.
Word of Mouth is now a "medium"
We realized that we had turned word of mouth from an out-of-control force into a promotional medium, something that could be included in the promotional mix: It was budgetable, deliverable on a schedule, predictable. In a lot of ways, it was more measurable than other media. Because it was done by telephone conference, we could reach people without the limits of geography, and include experts from anywhere without making them travel.
We also realized that we had invented something that is not just another promotional gimmick. It is as basic as salespeople, advertising, and sales promotion. Each major element of the promotional mix delivers something that you and your customers need in order to make the decision. The basic need that advertising meets is the need to reach large numbers of people efficiently. Salespeople deliver custom made messages interactively. Peer word of mouth sessions deliver experience needed for verification and confirmation objectively.
In the last decade, "Peer Influence" or "Peer Selling" groups have grown enormously. But most of them are done face to face, in the mistaken belief that physicians prefer them that way. Surveys and inviting tests show that, in fact, physicians accept and show up to telephone sessions more than to face to face sessions, provided that certain conditions are met, which I will go into later. In case there is any question about what physicians like better, you have only to look into the honorarium issue. As I stated earlier, I have never paid an honorarium to a non-expert participant in a telephone Word of Mouth Session. I only pay experts, and even that is a very small honorarium. So, the solution to the "honorarium problem," is to design telephone sessions that do not need honoraria.
I have found in twenty years of doing these sessions, that the key is building in and communicating the educational value of the sessions. My attitude has always been, "why should I pay a physician, or other participant, to participate in an educationally valuable session, which is being given to him/her without charge and with great convenience, by phone a session in which the physician can learn from an expert and/or peers, and can broaden his or her experience?"
I’m sorry to say that peer word of mouth, now that it has been harnessed, has been abused in many ways. Sometimes, the sessions are purely promotional in nature, with no fair balance, and biased information. Sometimes, physicians are misled into participating in sessions they think are marketing research groups. Usually, at best, the sessions have not been carefully designed to come from both an educational and marketing point of view.
Over the years, I have learned how to structure discussions which would bring out the best of our clients’ products. I have learned that there is no conflict between the responsible marketing goals of our clients and the educational goals of our participants.
How do you structure the best programs? Very carefully. I find out, through client discussions and focus groups, what the participants need to learn in order to decide to use the product, and use it most effectively. I then ask, how will they best learn these things. You can’t just tell them, because telling is not teaching, and teaching is not learning. I then design and structure a customer driven program (in this case the participants as much as the clients are the customers).
Basically, I figure out what the participants need to learn, in what sequence, from what sources and in what form. Sometimes, we design study materials for review before the sessions, sometimes the sessions have to contain experts, sometimes only peers, sometimes there is a need for a follow up session. Much of this is governed by keeping in mind the basic function of word of mouth: the spread of experience. Particular attention has to be paid to what experience has to be shared, and what will be the most efficient and meaningful way to do this. Sessions for different types of people have to be built in, with flexible, but well thought out agendas.
What actually goes on in the sessions?
Usually, there are about 10 people, all participating from their own unmodified telephones, at home in the evening, from all across the country. The sessions take place over a custom built telephone conference system which has been specially constructed to meet the needs of this type of conferencing and which allows us complete control of the process. The sessions are extremely informal, with participation in the form of questions and discussion. Often we poll the group to find out what topics, questions, issues or concerns were the most important to them. Then the guest expert talks for a few minutes to give general background, then answers the questions brought up in the beginning of the session, then specific cases are discussed. Sessions usually last an hour, but an hour on the phone is equivalent to at least an hour and a half face to face.
The sessions are tested and tuned, so that they are appealing, informative and help the participants translate information into decisions and decisions into action. Then, and only then, should the client commit to hundreds of sessions.
The point I’m trying to make here is that there is no set formula. You have to know what you are doing. Each product is different, each program is different, each session is different and each participant is different. So, session and program design are of paramount importance. I have seen programs which have wonderful educational value, but which did not further the marketing objectives because they did not address the critical thing people need to learn in order to remove the block that is holding them back from using the product. I have seen self-serving programs which met the marketing objectives perfectly, except that no one wanted to come to them, or they were so transparently self-serving and promotional that people were offended. Just as you can’t throw "selling points" on a page and have an effective ad, and just as you can’t recite benefits to a person and have an effective sales call, you can’t throw together groups and have cost effective peer word of mouth sessions.
It is a tribute to the power of word of mouth that even some of the worst programs have caused measurable sales increases. Unfortunately, many of these increases were not lasting. In contrast, a well-designed program in which important things are learned has lasting effects that are superseded only when a better product comes along.
How to design more powerful programs
I’ve already given you many of my trade secrets. Since I believe that the more I tell you, even though competitors will eventually get the material, the more likely you are to realize the kind of substance there is behind my programs and the more likely you are to come to me. After all, many people have written books on how to write a great ad, to the benefit of their competing advertising colleagues, only to have people say, "That’s the guy I want writing my ads."
The Power of Follow-up Sessions
So here goes. The most important next step after the development of the Telephone Peer Word Of Mouth Session was the Follow Up Session. I realized that participants learned a lot in sessions, but there was no follow up to their learning. They had no way to put their experiences in context, to correct mistakes, to explore other issues. Programs offering participants one session were effective, but I wondered what would happen if participants were offered the opportunity to apply their experience and come back to a follow up session. Remember, the major function of word of mouth is broadening one’s base of experience. After the initial session, there was experience going on that wasn’t shared. Might the whole thing cause more than twice as many sales with two sessions, one following up the experience gained after the first session?
I tried to get a couple of clients to let me test the concept. Two refused, saying that physicians would think it too self-serving on the part of the pharmaceutical company, and joking that it was pretty self serving on my part also. Finally, someone let me test it. I struggled with how to get physicians to come back to a follow-up session. Every wording sounded blatantly manipulative and not of benefit to the physician. Then I realized once again the power of customer driven marketing, in this case the physician being the customer. I asked myself, "What’s in it for him or her?"
Then I got excited. I realized that this was a wonderful opportunity for the physician. In the very next group I ran, I pointed out to the physicians that some of them obviously would be starting to use the drug on some patients. But they would have trouble interpreting their results. So, the sponsor was willing to offer the following opportunity: If they each put 5-15 patients on the drug in the next few weeks, and then came back to a follow-up session, they would have 50-150 patients to compare. While it wouldn’t be a double-blind crossover clinical study, it would be better than trying the drug in isolation and trying to interpret the results. We could discuss therapeutic efficacy, and short term side effects. It could probably compress a couple of years of cautious trying into a few weeks or months of equally conservative trial. I made it clear that if they did not try the drug, they were still welcome to come back to ask questions of the others. Then I pulled the headphones away from my ears, expecting to be blasted for such an obviously self-serving suggestion. As you probably guessed by now, they loved the idea! I even asked whether they thought this was self-serving on the part of the pharmaceutical firm. They said that of course it was, but as long as we did not exclude negative comments in the session, they thought that there was no conflict between their interests, the company’s interests and the patients’ interests. I then asked them to estimate how many patients they thought they would be putting on the drug, explaining that their answer was not a commitment, but that it would be helpful to know, so that we could mix people who had a lot of experience with people who had not tried the drug. Most were quite willing to estimate. The number was severalfold higher than the usual first trials. Neither the client nor I believed the numbers. We got the same results in a dozen more groups. We waited an uneasy several weeks. Over half the physicians came back to the follow up sessions. That was a disappointment that I’ll address later. But amazingly, the participants had put only 10-20% less patients on the drug than their original amazingly high estimates. In this case, the client made back multiples more money on the trial between the sessions than he had paid for the entire program. In addition, since the drug performed as promised, they decided to adopt the drug without further dragging their heels. Most said that this was the best, most responsible way to introduce and evaluate a new drug into their practices. Sales jumped.
Now, what about those who didn’t attend the follow up sessions? Did they, after the enthusiasm of the moment, decide that they had been "had"? Did they not like the initial session? Were they dissatisfied in some other ways? I was worried. I knew I didn’t have a business if I was antagonizing half the physicians I was talking with. So we called them to ask why they did not come back to the follow-up session. Less than 1% expressed dissatisfaction. Most said that they had tried the drug just as they had said they would, but that they had such good results that they decided to use it regularly, and didn’t want to spend another hour pooling experiences to make a decision that they had already made! We subsequently compared increases in sales of participants who participate in an initial session only to those who have participated in the two sessions. Over the years, two-session participants have brought in a 10 fold return on investment, while one session participants have brought in three fold not bad, but obviously people who think they are already sold still could use the extra confidence that hearing about the success of their peers inspires.
Why Telephone is Better
A few more points about doing these groups by telephone. Telephone groups stand or fall only by their educational value to the participants and their marketing value to the company. As you probably know from my other writing and speeches, there is no conflict between the two. Marketing is the practice of providing valuable transactions. One of the most valuable things you can do in support of your product is to provide valuable customer education which will make the decision easier and the product more effective.
On the other hand, face to face meetings involve travel to and from the meeting site. Even local meetings require a significant commitment of time. Honoraria of some kind must be paid. Where meetings take place in an exotic location, with the company picking up the tab, the travel and lodging constitute the honorarium. They are widely viewed as constituting a bribe. Since these are no longer allowed, I predict that a variety of schemes will emerge to get around this prohibition. But remember that any incentives other than genuine educational value send the wrong message: that the program needs an incentive either because it doesn’t have the educational value or the objectivity to make you want to spend the time. Do you want your programs imbedded in this context?
In addition, face-to-face groups have the same physicians coming to them time after time, for the honorarium, the meal, the trip, or the social contact. The mix sure changes when the incentive is purely educational! You reach physicians who really want to learn something. Over the phone, that’s all they get.
What’s more, face to face groups are much more expensive. I can do initial sessions with an expert, plus a follow up session for a lower price per physician than one initial face to face group.
How to move the "late adopters"
I discovered that people who characterize themselves as late adopters or even laggards are often among the first to try a product when they have the support of this kind of a system. Often people are slow to adopt because it is their personal policy to wait to see what others’ experience is. When they are offered the chance to try under conditions of low risk with a high potential for being able to evaluate their trial in the context of others’ experience, they frequently jump at the chance. So it is naïve to pigeonhole people as innovators, early adopters, middle majority, late adopters and laggards. They often adopt with different speeds in different circumstances in different product categories. If you know how to create the right conditions which give people the right support, you can get people who would ordinarily have taken 3-5 years to adopt a product, to adopt it in a matter of a few weeks or months.
The power of experts
Another thing I discovered was the power of live experts. I had originally thought that pure experience sharing among peers was best, and for some programs they are. I found that often when experts are introduced, the more typical participants clam up. So we often included experts via tape recorded excerpts, so that the participants would feel free to share their experiences without fear that an expert would tell them that they were wrong. I have discovered many techniques in the last few years, however, to include the power of live experts while getting physicians to express some of the uncertainties that they are ordinarily reluctant to express. Of course, in addition to these moderating techniques, the fact that participants are on the telephone helps, since they are in different cities and are not as concerned about preserving local reputations.
The two step function of experience: I’ve found that there is a two step process in experience gathering via word of mouth. First people want to know what the upside potential of the drug is. They speak of this as its "promise." Here, they look toward the company to make the claim, or promise, and the expert to confirm this upside potential. But that is not enough for a decision because the endorsement of the expert only says to the decision maker that under ideal conditions, in an expert’s hands, the claims are true. Next, the decision maker still has to decide if the promise will be fulfilled in the real world, the more typical world, of his practice. That can only be done by hearing peers on one’s own level, or by direct experience. This process usually takes years to go from initial interest to trial to adoption because it takes an inordinate amount of time to talk to so many people to gather their experiences.
The following flow can compress a many-year process into a few weeks or months: An initial session with an expert, with organized trial after the session, with another session containing an expert to put experience into context and give practical tips and suggestions. That’s how to accelerate the experience gathering and evaluation that people need to adopt your product.
If all this sounds too good to be true, it might be. This kind of approach, in contrast to the promotional "sit them down and make them listen to a sales pitch" approach, only works with products that can benefit from objective scrutiny, but when it works it is the most spectacular, honest, responsible and lasting means of increasing sales you ever saw! If you have a product that fits, you may be able to cut your advertising, sales time and everything else to the bare minimum, or cut them out entirely.
Candidly, I’m very worried about the future of this medium. Experience has already shown that there have been abuses, just as there have been abuses of other media. However, peer word of mouth sessions are in some ways more subject to abuse. No one expects a salesperson, or an ad, or a brochure to be objective. After all, they are advocacy sources. That’s why word of mouth is needed, to give fair balance. So, anything that compromises fair balance and objectivity strikes at the heart of what people are looking for and will backfire in peer word of mouth sessions. It is very easy to lose objectivity, to play down one issue and emphasize another. The moderator can forget his or her role as the guardian of fair balance, openness and thorough examination of the evidence. The expert can become overenthusiastic. The moderator or someone else can give a sales pitch. There are many ways to lose the sense of being a disinterested party, and all of them hurt the program, the product, the medium, and all of them ultimately backfire. All of them make it less likely that the person will participate in the future.
I’m very proud to say that physicians continually want to come back to our sessions, and our acceptance rates keep going up. We continually get letters praising our programs, and many physicians say that our sessions are the best way for them to evaluate new drugs and that they should be offered with every new drug introduction where the manufacturer really believes that the new drug offers real advantages. Recently, a particularly candid salesperson for one of my clients’ products said after talking with physicians who had participated, "More real selling gets done in one hour in your sessions than any salesperson can do in a year."
The most amazing example of the attractiveness of our sessions occurred 45 minutes after the 6:45 PM EST start of the air war against Iraq. The whole nation was waiting anxiously for this event. We had a session scheduled with physicians for 7:30. When we placed reminder calls to them 20 minutes before the session, every physician had heard the news and was tuned into the news media. We told them that we would be glad to reschedule the conference, and would get them all on the line to see what they would like to do. A couple of them asked to be rescheduled, but 10 agreed to get on the line at the time of the conference to decide what to do. When we convened the conference, I said that we would certainly understand it if they preferred to run back to their TV sets and do the conference at another time, but that we were prepared to conduct the conference if they wanted to, with one of my staff members breaking in with bulletins. They said that one hour would not make any difference, especially in a situation that they could do nothing about, so they might as well learn something useful. We ran the session. It was one of the best sessions I have ever heard, with everyone participating actively. After the session, we found out that the guest expert had a sister in Israel and was extremely anxious about the threatened chemical warfare attack.
Fortunately, the medium is also robust. It is live, so if the moderator, an expert, or even another participant loses objectivity, the other participants usually bring them back on track.
Still, I worry that some people will copy the superficial aspects of this medium group discussion of a product without understanding its underlying workings, and thereby turn off many people who could benefit from participating, and denying the process to many products which could benefit.
Identifying the products that could benefit
There are a whole host of marketing situations that don’t respond well to conventional approaches, no matter how creative. These can usually benefit from Peer Word of Mouth Sessions:
If people don’t believe your claims, they usually don’t believe your evidence either. Here, there is no substitute for independent corroboration.
Most breakthroughs (except to announce them, which are best done by ads):
Breakthroughs require departures from present thinking and practice. Most people (except innovators, who studies show aren’t influential, it’s the early adopters who are) wait for everyone else to validate them.
Marginal improvements (where it’s not worth going to something new for only a little improvement):
Here, peers can show that the little differences make a difference in a practical way.
Where the product has to be tried in large numbers or over time:
The process can often be accelerated by Word of Mouth Sessions
Where there is high risk in trying the product:
The risk can often be reduced, shared or put into perspective by talking with peers.
Older or mature products that have a new story which people don’t want to listen to:
Again, peer discussion can get people to take a new view.
Unfair competitive practices, such as spreading rumors, telling lies about your product, etc.:
This is uncontrolled word of mouth at its worst. The right combination of experts and peers can set the record straight.
Governmental or other restrictions on what you may say or claim:
This is a particularly sensitive issue in the pharmaceutical industry, so I’d like to spend some time on it. Companies are restricted from promoting the use of products in any way that differs from the Package Insert, otherwise called the "Full Prescribing Information." They may not talk about other conditions, dosages, frequencies, forms, ways of administering, or anything else that is not in the PI. Direct communications from pharmaceutical firms are considered to be part of the labeling of the product. Anything that is "out of labeling" can, and does, cause the FDA to inflict severe direct and indirect penalties.
While this makes sense on the face of it, in reality there is a severe problem. The medical literature is full of useful information about using drugs in ways that have not been officially approved. Often the approval will never come, because a way of using a drug is found to be so superior that it is unethical to do a study withholding the treatment from the control group. Yet, the approval can only come on the basis of a scientific study.
How can this information be gotten across in a responsible way? The FDA recognizes that they cannot restrict physicians from using approved drugs in unapproved ways, because that would be telling physicians how to practice medicine and there are many situations in which these uses are highly desirable. They also recognize that they cannot interfere in medical communication, i.e. physician to physician information flow. So, companies are allowed to sponsor, fund, or underwrite in the form of grants, medical seminars in which independent experts comment and clarify issues, including non-approved indications and other issues outside of approved labeling.
Peer Word of Mouth sessions, especially those containing experts, fall well within the letter and the spirit of the law. The idea of all the restrictions is to keep companies from presenting one-sided, biased, distorted and unverified information. We make sure that our experts present all sides, and clearly characterize their comments as speculative, or probable but not yet proved, proven beyond dispute, etc. When a non-approved issue is brought up, the moderator or the expert is scrupulous in telling the participants that the use is outside of officially approved labeling. They are still allowed to discuss it, but only in this context of full disclosure. We insist with our clients, and it is written into our contract, that we, together with the experts, will exercise editorial integrity and cover the ground objectively. Experts are instructed to emphasize the negatives as well as the positives of our clients’ products as well as all others discussed. Our moderators remain strictly neutral and are not allowed to disseminate medical information.
It should be stressed that the way we handle non-approved uses is not a way of getting around the law. It is a way of complying with it.
Products not to use peer word of mouth sessions for:
"Me-too" products where a seminar would not add meaningful added value;
Products that can’t be tried and where there is no consensus among experts;
Products that are clearly inferior, without having a compensating superiority for a particular application;
Products which are so much a matter of personal taste and or emotion that rational discussion is irrelevant to the decision.
Products where the decision value is so small (low price + low volume) that the medium will not be cost effective. On the other hand high price/low volume or low price/high volume are often ideal. The principle here is that there has to be enough value in the decision to adopt to justify what the program will cost.
I would be happy to talk with you about whether your product is suitable for Peer Word of Mouth Sessions and show you how to calculate whether the sessions are likely to produce a sufficient return on your investment. If your product looks suitable, my approach is to structure a small pilot program to prove feasibility and effectiveness, before moving to the full scale program.
By George Silverman
President, Market Navigation, Inc.
Note: This article was written in the early 1990's, over a decade before I wrote first edition of my book, The Secrets of Word-of-Mouth Marketing. It was pretty prophetic. It's included here not only for its historical interest, but because it still remains a pretty good summary of word-of-mouth marketing.
Marketers are overlooking the obvious. Word of mouth is far and away the most powerful force in the marketplace. Yet, it is the most neglected. Companies have vice presidents of sales, advertising, and marketing. But there is not a single vice president of word of mouth in any corporation in the country. Why? [Note: there are now some people with titles pretty close!]
Presumably, because most people think that they cannot do much about word of mouth. Most marketers believe that word of mouth is out of their control. They believe that it can be influenced, to be sure, by advertising and other marketing media, but cannot be influenced directly.
The obvious thing that they are overlooking is that word of mouth can be harnessed. It can be directly influenced, causing — under the right circumstances — a stampede of customers to your products that cannot be stopped by your competitors.
Chances are, your product is more influenced by word of mouth than anything else. You and your competitors put huge amounts of information into the marketplace in the form of marketing materials, events, and salespeople. The illusion is that these things directly influence sales. The reality is that all the while, your customers are talking over that information and helping each other decide what to do. Word of mouth is the reality that intervenes between your communication and sales.
Word of mouth is more credible than your most sincere salesperson. It is able to reach more people, faster, then advertising, direct-mail, and even the Internet, because it can spread like wildfire. It breaks through the clutter better than anything:
“Even those deaf to the bragging cries of the marketplace will listen to a friend,” as one highly successful marketer put it.
Even more important than its credibility, reach, speed and ability to break through the clutter, is its ability to get people to act. In study after study, with almost every category of buyer, word of mouth has been shown to be what is known as the proximal cause of purchase — the most recent thing that happened just before purchase. In other words, the purchase trigger.
People tend to make purchases on the advice of trusted peers or experts.
Even more amazingly, word of mouth happens spontaneously, without you having to be there, and, unlike your other media, it doesn’t cost you a dime.
If you could only harness it..
How to harness word of mouth
The idea that word of mouth cannot be controlled as one of the biggest marketing oversights. It will surprise most marketers to find out that word of mouth can be controlled at least as much as advertising, salespeople, public relations, coupons, samples, promotions, and other marketing media and tactics. (Most things in life cannot be completely controlled!)
So how then do we harness word of mouth?
First, there is a lot more about this strange and powerful force than is generally understood about it. We have to know the nature of the beast before there is any chance of taming it, harnessing it, and directing its power. Then we have to have a way to monitor and track it, to sneak up on it and observe it. Then, and only then, can we learn how to speed up, change its direction, and turn it into a stampede toward our product.
Stalking the beast: what is this strange creature?
Word of mouth is one of those things that everybody thinks they understand, yet realize soon that they are talking about a different part of the elephant.
By “word of mouth” I mean informal communications about products, services or ideas between people who are independent of the company providing the product or service, in a medium independent of the company.
In contrast, advertising is a communication of a message that you originate, in a medium that you own or rent. A sales message is a “company line” delivered by representative of the company. Word of mouth is originated by a third party, transmitted spontaneously in a way that is somehow independent of the party being talked about. So in word of mouth, both the message and a medium are independent. In that sense, public relations is actually one form – by no means the only form – of word of mouth.
What makes word of mouth so powerful?
It is this independence that gives it much—though, as we will see later, by no means all—of its power. If you ask most people why word of mouth is so powerful, they will tell you that it is because of its objective, independent, “no axe to grind” nature. Why is that so important? Because a decision maker is more likely to get the whole, undistorted truth from an independent third party then someone who has a vested interest in promoting your point of view. It is this unique credibility that gives word of mouth much of its power.
That explains why word of mouth is often negative. It is the only place where the decision maker is likely to hear about the negatives of the product. So when people ask someone about a product, they are likely to ask, “Had any trouble with X?” Because they know that it is the only source of information where they are likely to get a straight answer.
Another reason that word of mouth is so often negative is that people are three to ten times more likely to tell others about a negative experience than a positive one. Many studies have shown that a satisfied customer is likely to tell approximately three people, while a dissatisfied customer is likely to tell approximately 11 people. This is because the positive experiences are expected and soon forgotten, but the unresolved negatives get people angry and frustrated, energizing word of mouth. Studies have also shown that unexpected extraordinary service also causes strong positive word of mouth. In fact, some of the strongest and most frequent word of mouth results when a dissatisfied customer is turned around by an extraordinary response to their expression of dissatisfaction.
So, as we have seen, word of mouth can be a positive force because of its credibility, but often destructive because of its negativity.
The unknown reason why word of mouth is so powerful
But there is another reason why word of mouth so powerful. This reason is even more important and useful than word of mouth’s independent credibility. It takes some explanation.
When the person is deliberating about purchasing a product, he reaches a point where he wants to try the product. Why? He wants to get real world, but low risk, experience in his situation. Up until then, everything is informal, abstract, somewhat removed from the real world. He has to know how the product “will actually work out in the real world.” He needs experience.
There are only two ways to get experience: directly or indirectly. Now you would think that direct experience—actually trying the product—is the best teacher. But it is the most costly in time, money, and risk of failure. Also, you cannot afford the time and money to try a new product directly too much, so your sample tends to be small.
Indirect experience—that is, hearing about other people’s experience—is actually much better in many ways: someone else is footing the bill and spending the time. You can pool the experiences of several people so as to have a greater sample. If the trial fizzles, their reputations are damaged, not yours.
All in all, indirect, vicarious experience is the better deal. Of course, it is not an either/or situation. You might try the product a little yourself and also talk with others.
By now, you probably see where I'm going with this. Talking with others about the product, comparing experiences and helping each other sort it out is one form of word of mouth. In fact, it is the most powerful form of this most powerful marketing force. It happens just at the point of maximum involvement, just when they are thinking about trying the product, just when they are making their crucial decisions about the product: Will it work? In my situation? Should I make a major commitment here? How should I interpret any negative experiences?
To summarize: the thing that gives word of mouth most of its power is the fact that it is an experience delivery mechanism. And it is successful experience that triggers full adoption behavior more than anything else.
Let me give you a quick example. Let us say a new drug comes out which holds considerable promise for helping to alleviate the symptoms of a disease. Physicians read the studies and talk to the salespeople from the company. That is how they know that the drug holds promise. But how do they know it will work out in actual practice? They try it on a few patients who have not responded well to existing drugs. These, of course, are the patients on whom the drug is least likely to be effective, but it is easiest to justify trial in these cases. Physicians typically try a drug on five of these refractory patients. One gets better, one stays the same, one gets worse, one has other possibly unrelated complications, and one moves to Florida. These results are uninterpretable, so he has to wait for five more low risk situations in which to try the drug. This typically goes on for years, until enough experience accumulates so that physicians can talk with each other and share success stories, tips, and suggestions for coping with problems, and other experiences that make the pool large enough for physicians to form reliable opinions. Then, and only then—after a few years have elapsed—the chain reaction reaches critical mass and explodes into enough word of mouth to cause to drug to grow rapidly into full usage, sometimes in a matter of months.
This pattern of acceptance is similar for most business-to-business, industrial, high-tech, and professional products. It is even true for many consumer products, especially those that are not easily tried. The time frame and other details may be different. But what is the same is the fact that it is the time it takes to accumulate enough favorable experience—and to communicate that experience—to make a reasonable decision is what determines a product’s success and the speed with which it is accepted. It is the content, speed, and sources of word of mouth that mediate the process and act as the accelerator or brake on the speed of adoption.
So, to summarize: speed of experience gathering determines the speed of product adoption. Word of mouth determines speed of experience gathering. Therefore, word of mouth determines speed of product adoption.
Other reasons why word of mouth is the most powerful persuader in the marketplace
There are some other reasons why word of mouth is so powerful. Even though you already know most of them, seeing them all summarized in one place will probably make you realize why word of mouth is even more powerful than most people recognize.
It is more relevant and complete. Word of mouth is “live,” not canned like most company communication. That means it is custom tailored to the people who are participating in it. People are not giving a pitch, they are responding to questions, though most important questions, the ones the decision-makers themselves are asking. Therefore, customers pay more attention to what because it is perceived as more relevant and more complete than any other form of communication.
It is the most honest medium. Because it is custom tailored, and because people are independent of the company, it is the most honest medium. And customers know it. Advertising and salespeople are notoriously biased and not fully truthful. The inherent honesty of word of mouth further adds to its credibility.
It is customer driven. Closely related to the above, word of mouth is the most customer driven of all communication channels. The customer determines who she will talk to, what she will ask, whether she will continue to listen or politely change the subject, etc.
It is a mysterious, invisible force. Despite all of its overwhelming power, like the wind of a hurricane or the neutrons of a nuclear chain reaction, it is invisible. It is sometimes called “underground” communication, or the grapevine. You see its effects all right, much more than likely it is due to your (or your competitors’) active promotional efforts. For instance, you take a bunch of actions, such as sending out a load of materials and ads launching a product. You see an effect in the marketplace. What could be more natural than to think that your action caused the effect? Actually, it is more than likely that your actions sparked a word-of-mouth chain reaction, and it was the word of mouth that caused the effects. Why should you care, as long as you get the desired effect? Because many products succeed despite the marketing supporting it, for different reasons than the product’s most-emphasized benefits. If the advertising and sales force were aligned with the word of mouth, you could have had a faster launch, at a much lower cost. It is what will go down the word of mouth channel—and be amplified by it—that should drive advertising and sales, not the other way around. This is a paradigm shift. It is the Copernican Revolution of marketing: Traditional marketing revolves around word of mouth, not the other way around.
It feeds on itself. Word of mouth is like a breeder reactor. It is self generating, it feeds on itself. It does not use up anything. If 10 people have 10 experiences, that is 100 direct experiences. If they each tell 10 people about their own experiences, that is an additional 1000 (indirect) experiences, which can be just as powerful as the direct experiences. If they each tell ten people, that is an additional 1,000 people who now have 10,000 experiences in their heads. And so on.
It does not take much time for everyone to hear about the wonders of the product, often several times each, which provides additional confirmation (“Everybody’s talking about.”).
Word of mouth is unlimited. A magazine ad, in contrast, may be seen by two or three people who read each copy. So, you have to use mass media to hit a lot of people, because it is limited to just the direct and pass-along readers. Word of mouth is unlimited. In theory, you could tell just the right fountainhead influencer, she would tell 10, who would tell 10, who would tell 10, who would tell 10, who would tell 10, who would tell 10, who would tell 10, who would tell 10. That is 100 million hits! Some topical jokes — I am thinking of some particularly tasteless O.J. Simpson and Hillary Clinton jokes — made the rounds like this (yes, actually starting from one person!) in a matter of a day or two.
It sometimes takes only one influencer to start a stampede. I call this the law of the fountainhead influencer. Of course, in real life, you would try to tell and convince dozens to hundreds of leveraged influencers, thereby increasing the chances of reaching critical mass to sustain the word of mouth chain and explosion. But more about this later.
Why are these fountainhead and leveraged influencers powerful enough to spark a chain reaction? Why don't they tell a few people about the product only to have the whole process peter out? Because they are luminaries, experts, gurus, and mavens. They each have a sphere of influence that may be worldwide, national, or local in nature. Their sphere of influence may number in the dozens up to the hundreds of millions.
These experts have one overriding attribute that gives them their influence: trust. People trust them to filter, distill, and objectively evaluate the overwhelming amount of information, make sense of it, and present it in a recommendation that is most likely to be right.
These tiers of experts and influencers tend to initiate word of mouth, sustain it, give it more credibility and supply the initial bang that can start the chain reaction of word of mouth.
For instance, I have several friends who like to discover new restaurants in the New York area. They read reviews of reviewers (one form of expert) who share their tastes, then fax my wife and I reviews of restaurants that seem to be worth trying. Often, they have already sampled the restaurant, so they can add a recommendation of their own. I know a few people who have never steered me wrong. So, when I need a restaurant in a particular area, I call them. They are my local influencers. The same with movies, novels, business books, computers, cars and so on. This phenomenon of people trying to review things and engage in word of mouth is the basis of the phenomenally popular (and wonderful) Zagat guides to restaurants and hotels. Notice the word of mouth endorsement in the previous sentence. The Zagat guides are an example of the rare phenomenon of word of mouth which is itself sold primarily by word of mouth.
Word of mouth becomes one of the product’s attributes
It is important to also notice that the recommendation by experts becomes part of the product’s attributes. Your favorite movie star or director may come out with a new movie. That is one plus. But is now it is recommended by one of your favorite reviewers, that becomes part of the product. It is now “two sums up” by Siskel and Ebert and four stars by Leonard Maltin. These endorsements and testimonials may be even more important than who is in the movie. Now, if three friends also loved it who share your tastes – especially if they have successfully recommended the movies you have liked in the past – you are going to see it. Notice that testimonials are a major part of almost all movie and book ads.
The important thing to remember here is that the “recommended by” becomes one of the product attributes, often the most important one.
Experts Like To Influence
It should be obvious by now that the source of the word of mouth is critically important. But there are some consequences of the importance of the source that are not so obvious:
One of the reasons that the initial stages of word of mouth are sustained and can be spread so rapidly is that influencers like to influence. That is one of the reasons that they are influencers. If they did not enjoy the process, they would keep their mouths shut and their keyboards still.
They like to talk with each other (and almost always report that they do not get enough of it), they like to influence non-experts, and they like to teach.
So, they are surprisingly willing and even eager to participate in the various kinds of word-of-mouth programs that I will describe later.
Word of mouth saves time and money
Another attribute of word of mouth is that it can be extremely efficient. If you want to buy a product that you do not know too much about, the best way is often to find a few people who have investigated the products, and piggyback on what they have found out.
Example: when I was looking for a supplier to put up my Website, I decided to “ask around.” The first person I asked was a friend and business colleagues who I have known for about 30 years. He has extremely high standards and is even more demanding that I am likely to be of this type of supplier. He told me that he had spent two weeks investigating Internet service suppliers. Prices were similar, but there were wide differences in service, particularly willingness to work along with customers who wanted to do things that no one had ever done before. He had found such a supplier and opened up an account. Since I was thinking about some innovative Web services, this sounded perfect for my needs. My friend warned me that the supplier had a lower level communication link that could potentially cause some bottlenecks, but recommended that I take the chance that they would upgrade soon.
To me it was a “no-brainer.” I called the supplier, verified the prices, and asked when they were going to upgrade their telephone lines. They informed me that it was about two weeks away. I signed up immediately, and had my WebSite up a few days later. They walked me through everything and could not have been better. The point here is that my friend saved me at least a few days (he had taken two weeks) of investigation. If a savvy friend with high standards thoroughly investigated and then had direct positive experience, why should I waste my time looking further? I could not go too far wrong (I can always which are my domain name to a different supplier), and I was extremely unlikely to find anyone better. Even if I could find a “better” supplier, it would only be marginally better. That would not have been worth even an extra minute of my time.
Examples of word of mouth programs and campaigns
There are ways of researching, causing, delivering, amplifying, and steering word of mouth in many different industries, with many different products, and many different kinds of people. Word of mouth works differently in every industry, but—as we will see—there are basic principles that can be modified and adapted for your industry.
Products are routinely made or destroyed by word of mouth. Some examples:
Lexus automobiles regularly conducts open houses for its customers. During a recall, the company contacted each customer individually and arranged to fix the car in the customer’s driveway or the parking lot of the customer’s business. This is an extraordinary customer satisfaction program that directly clauses word of mouth. In addition, the company sends multipage questionnaires to its customers, which not only assess customer satisfaction, but also cause customers to realize how satisfied they are.
Do you think that only a luxury, high profit car company can afford this? Then, how do explain…
Harley-Davidson conducts events around the country, often with the top executives of Harley attending, of course on their own “hogs.”
Netscape Navigator was built entirely upon word of mouth. They initially captured about 90 percent of the Web browser market before they took their first ad. They did it with a combination of giving away the first versions of their product and word of mouth, primarily on the Internet. The market was subsequently taken away from them by Internet Explorer.
Celestial Seasonings Herbal Tea: during their first years, their president, Mo Siegel, enclosed a note each box of tea with words to the effect that they are a small company that cannot afford to advertise. He asked people to tell their friends about his wonderful herbal teas or, better yet, to serve it to all their friends.
PackRat: (how word of mouth destroyed a product.) PackRat was probably the best personal information management software on the market. However, when they released their version 5, it did not work very well. Their loyal customers, many of whom were participating in a forum on CompuServe, tried to help each other through the problems, but then quickly turned against the product when many of them felt that they were not being dealt with in a straightforward manner. They started asking each other what the best product to switch to was, and most decided it was a product called Ecco. Many switched, told their friends, and PackRat was virtually dead while Ecco took off.
The Internet: probably the most important communication advance in human history—even more important than the printing press. It took off almost entirely on its own through word of mouth. No one owns it, it is no one’s product. People told people, who told people. An amazing phenomenon, especially when you think about it from the point of view of marketing. It took off with no marketing, not even a product!
Same thing with Google, Amazon, Firefox, Wikipedia, open source movement, etc.
Apple Computer: its customers became almost a cult. Apple computer is another example of companies—like Noxzema and Hershey—which did not advertise until very late in the game, and relied almost entirely upon word of mouth in the form of dealer recommendations and friends telling friends. [Added: Same with the iPod]
Laradopa: the story of L-Dopa had enough drama to inspire a film, Awakenings. No surprise then, that it stands as an extremely powerful word of mouth case study.
At its inception, Laradopa was viewed with high hopes by the medical community. It promised to remedy dopamine deficiency that was causing devastating effects in the brains of Parkinson’s disease sufferers. As with many “miracle drugs” however, there was the problematic issue of side effects.
Word of mouth threatened to tank this product before it had barely gotten off the ground: the scuttlebutt among physicians was that the side effects of L-Dopa were far worse than the symptoms it was meant to treat. Sales plummeted to one-fifth of their previous level.
Hoffman La Roche engaged me to develop a program teaching physicians how to use the drug effectively. Physicians’ negative word of mouth was revealed through focus groups. Then, group sessions with a prominent neurologist determined how physicians could learn to put L-Dopa to good use.
Through teleconferenced seminars, doctors were taught that all they needed to do was fine-tune the dosage and the promise of the drug would be fulfilled. Sales of L-Dopa jumped more than tenfold. There had been four competing manufacturers in the market, prior to my sessions. Two of them pulled their product off the market, reeling from the aftershocks of the powerful seminars.
Ocuflox: in this case, teleconferenced word-of-mouth sessions were used to transform a superior, but unheralded product, into a dominant market force.
In 1995, a new class of antibiotics was introduced for the treatment and prevention of eye infection. The first version of this antibiotic to reach the market was extremely successful. It seems that ophthalmologists were simply too comfortable with the existing drug to bother switching to Ocuflox, taking an “if it ain’t broke, don’t fix it” attitude. They had not been swayed by the improvements offered in Ocuflox.
That all changed when we implemented word-of-mouth sessions and doctors listened to four clinical investigators who explained the new frontiers in antibiotic use, and why the benefits of Ocuflox were so important. One of the more persuasive advantages was the greater penetration that Ocuflox achieves. It took the word of the mouth of respected professionals to move the doctors into action, and the product into his rightful position as the market leader.
Prilosec: Gastroenterologists were favorable towards this superior anti-ulcer and heartburn medicine. They knew it worked well, but a prominent FDA warning in the prescribing information gave them cold feet. What they needed was a positive signal from the most influential experts in the field, giving them the green light to use Prilosec.
We conducted a series of teleconferences with several of the most respected specialists in the country, together with expert clinical investigators. The information that came from these sessions convinced enough physicians to set into motion the largest sales jump in pharmaceutical history. The numbers exploded from 300 million dollars to 1.3 billion dollars.
What word of mouth can teach us about the rest of direct marketing
As you can see, I tend to approach all marketing from the perspective of word of mouth and how it can accelerate the decision process.
Let me take you on a very useful tangent for a few moments. The word of mouth orientation is just one perspective or viewpoint. There are many other places from which to view marketing, such as from the point of view of advertising, sales, promotion, etc. No particular viewpoint is more valid than any other. Orientations, viewpoints, perspectives, angles, and standpoints are just places from which to look at things from a particular perspective. On the other hand, the ideas and beliefs that come from looking at things from another angle, may be right or wrong, but the place from which you look is just that, only a place.
However, orientations differ greatly in how fruitful they are in helping us know and organize the world. Some are highly illuminating, such as “how would this look to a child, or someone who didn’t understand the field?” “How does this look from my customer’s point of view?” Some are singularly unfruitful lines of approach, or viewpoints: “how can I sell my product?” “How can I get people to use my product?” Unfortunately, these last two are the usual approaches to marketing, but they are narcissistic points of view. They are not wrong, but if they are our only perspectives, they tend to lead us to neglect the customer’s viewpoint, and therefore lead us into ineffective ways of marketing. They can be an invitation to put on blunders.
It is also worth pointing out that the only way to look beyond superficialities, to see through illusion and to create anything worthwhile is to look at it from more than one perspective. Walk around it, look from above and below, get inside it, imagine it differently, reinvented it, etc.
What does this have to do with my word of mouth orientation?
I am suggesting that you keep whenever orientations and perspectives have worked for you in the past, such as advertising and/or sales perspectives. In addition, however, I urge you to look at all of your marketing as a word of mouth generating system. If, for most products, it is the word of mouth that triggers the sales, is it not important to look at what triggers the word of mouth? What if all elements of marketing, such as sales, advertising, direct mail, etc., were not oriented toward directly persuading people to use the product? Instead, what if all your marketing elements were organized around causing people to talk about the product in a way that would get them to use more, and get their friends and colleagues to use more?
Sometimes the “long way ‘round” can be the fastest. In fact, some would argue that going after word of mouth directly is not the long way around. It is what happens anyway: marketing leads to word of mouth, which leads to sales. Why not try organizing everything around word of mouth, since it is the central part of the mix?
There are many ways to accomplish this, such as testimonial ads, materials that describe case studies of how customers use the product successfully, endorsements, product seminars and the like. These are usually very effective, which is why these methods are often overused.
But these techniques, and dozens of others that can trigger massive amounts of word of mouth, are usually used piecemeal. They need to be organized into a campaign, so that each element supports and amplifies each other.
That's what we do in our word of mouth campaign consulting.
What I am urging you to do is to consider a total approach. What if all parts of your marketing were focused singlemindedly on one goal: getting people to talk favorably about your product? I know this is extreme, because you’ll always need things like closing pieces, order forms, etc., but it is very productive to consider marketing from this orientation. When you look at a marketing system from this perspective—as a word of mouth generation system—you will see it in a whole different light that reveals many opportunities.
[For instance, if you look at the marketing communications, you will almost always see elements that could not possibly generate word of mouth. Or, if generated could not survive from one person to another. You will typically see communications that are asserting facts that are unproven, in a brute force attempt to convince skeptics, instead of simple quotes that will remove all doubt.]
I cannot even begin to give you a flavor for how many opportunities are lost, how much more effective most marketing mixes could be made if they were viewed from the perspective of word of mouth. It is routine to be able to increase sales multi-fold (yes, 2-5 times!) by tuning your marketing to the word of mouth note.