New GE Study: Word-of-Mouth Referrals Improve Traditional Marketing Efforts

Marketers have long assumed content shared by friends or other influencers carries more weight than paid placements.  Someone is more likely to visit a restaurant when referred by a friend, the thinking goes, than from a television or radio ad.

Now General Electric has some proof.

In late 2011, the company compared the effectiveness of a paid advertising campaign and paid advertising campaign coupled with online-sharing.   Overall, consumers who saw the ad and received a referral from a friend were 138% more likely to view GE favorably than those who saw the ad alone.

The results of the test were originally published in the January 25th edition of Advertising Age.

“Personal referrals are far and away the most influential form of communications,” said Sparklight Communications President Joseph LaMountain.  “Yet many companies and causes fail to incorporate word-of-mouth into their marketing and communications campaigns.”

For example, organizations can raise significant levels of awareness, or funding, for an issue by asking its supporters to share  information to friends, neighbors and work colleagues.  Yet too often this valuable “human capital” is not effectively mobilized.

Word-of-Mouth is Most Trusted Media Source

There’s a new restaurant in town.  What will convince you to try it: A newspaper ad or a friend’s recommendation?

The recommendation wins hands down, every time.  That’s because a recommendation from a friend is a far more trusted source of information than a paid advertisement.

We know that intuitively, but a new report from Nielsen finds that consumers trust in word-of-mouth appeals has increased dramatically: 18% since 2007.  By comparison, consumers trust in paid television and radio advertising has fallen by 25% or more.

According to Nielsen, “92% percent of consumers around the world say they trust…word-of-mouth and recommendations from friends and family, above all other forms of advertising.”  What puzzles me is why more groups and business don’t jump on this bandwagon and get their people talking!

The Amputee Coalition is an organization using word-of-mouth to raise awareness.  During April, the group has recruited hundreds of companies, medical professionals and individuals to distribute educational materials in their community.  The group is hoping to distribute 1 million cards and generate just as many conversations.

A campaign like this also keeps members engaged with the organization.  All-too-often the only time someone hears from a group is when they’re looking for a handout.  Studies show that the more a volunteer is engaged with a group’s mission, the more money they will give to that group.  Talk about a no-brainer!

How Obamacare Helped Me

In April 2008, I stopped drinking alcohol. When Mimi left her job, and her group health insurance plan, in November 2009 I suddenly became one of the 50 million uninsured Americans. But thanks to the Affordable Care Act – or “Obamacare” if you’re of a particular political persuasion – I now have health insurance coverage.

I have a family history of alcoholism and in 2008 decided I wanted to stop drinking. But it was harder than I thought. So I decided to visit my primary care physician and she prescribed Lexapro, an anti-depressant medication. After one dose, I lost my craving for alcohol. After thirty days, I stopped taking it and haven’t had a drink since.

Good news, right? Not if you want to purchase health insurance on the open marketplace. When we gave up our group health coverage, our insurance company declined to cover me citing my past history of “substance abuse and anxiety.” Fortunately, I was able to continue coverage through COBRA temporarily; that company dropped me after a payment was 3 days late.

For the last 18 months I’ve been without any health insurance coverage. After much prodding, our health insurance company did eventually offer me a policy that cost $1,500 per month with a $10,000 out-of-pocket deductible. I declined, hoping that the health care reform law passed by Congress in 2010 would kick in before I suffered any grave medical problem.

And that’s exactly what happened. This summer, I learned about the Pre-existing Condition Insurance Plan (PCIP) that was created as part of the health care reform law. Organized by the states and federal government, it provides coverage to someone like me who’s had difficulty getting coverage in the past. It’s not free, but at $168 a month it’s affordable.

I’ve worked in health care for nearly 20 years. During that time I’d heard from many people with diabetes, epilepsy and cancer and the difficulties they’d faced in obtaining health insurance. But losing my health insurance because I stopped drinking alcohol? I never thought in a million years my life would be at risk for making the (seemingly) right decision about my personal health.

So the next time you hear people decry “Obamacare” and how it’s taking away your personal liberties, think again. You just may be in my shoes some day.

The Big Flea Thrives on Word of Mouth

The fifth annual MV Big Flea was held last weekend in Alexandria, Virginia.  This year the annual flea market raised an impressive $30,619 from nearly 2,000 attendees.

Since 2007, the MV Big Flea has raised $93,481 for the Mount Vernon Community School PTA. Not bad for a public elementary school where 2/3rds of the kids qualify for free and reduced-price lunches.

But what’s even more surprising is the role word-of-mouth communications have  played in the Big Flea’s success.

“We don’t have a big advertising budget,” said MV Big Flea spokesperson Maria Getoff.  “We’ve spent less than $1,000 on advertising, and about $7,500 total, to organize and promote the event since 2007.  Instead, we’ve relied on inexpensive grassroots and word of mouth communications tactics to spread the word.”

Local community listservs are the MV Big Flea’s primary means for reaching thousands of potential donors and event attendees.  Organizers do their best to to make the messages “sticky” so they have staying power and spread throughout the community (see here and here).

Organizers rely heavily on other online resources: Craigslist to sell items (and promote the event), Freecycle to get rid of the leftovers, a WordPress blog for a website and targeted Facebook ads to raise awareness in the week before the event.

Old fashioned tactics like personal meetings with community leaders, yard signs and photocopied flyers also help spread the word.  As a result, despite a very limited presence in the local media, the MV Big Flea is widely known in Alexandria and attended by thousands each year.

Mark Your Calendar for March 18th!!!

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