Generating Positive Word of Mouth
Companies Get Big Because They Practice Honesty
Not a single company listed in the Fortune 500 (America's largest enterprises) cheats or bamboozles its customers. Companies get big because they practice honesty. Without it, no company can benefit from referrals, one of the truly great well springs of business success. This priceless corporate asset cannot be purchased. It can only be earned. It comes to you from "word of mouth."
Before a consumer buys a product for the first time, some unbiased source has generally conveyed satisfaction with the product. Way back in the beginning, Henry Ford captured market share because people told others about the reliability of his cars. Before people go to a movie or out to eat at a new restaurant, they tend to rely on word of mouth. Products, services and companies alike are judged by these influential verbal verdicts.
People like to be in the know, abreast of trends and on top of new events. Further, they enjoy dispensing these insights to others. They love to give advice and will always rush to help or aid others with information.
Word of Mouth is Critical
This advice about the importance of word of mouth advertising is even more true today now that the Internet has greatly increased the power of people to share their opinions with others.
If it seems I am belaboring this simple truth, it is because word of mouth is so critical to start-up ventures. This is especially true for anything new, where every satisfied customer becomes a salesperson. This indispensable asset far exceeds the benefits from any other form of advertising or promotion.
When companies mistreat or short customers, they beat themselves out of their most powerful helper. Unless you can unleash an avalanche of positive word of mouth, you will never advance beyond middling success and stagnation.
Stanley Marcus was instructed in the entrepreneurial skills by his father, one of the founders of Nieman-Marcus. The young Marcus built the company into a prominent, high-quality chain based on lessons that extended beyond the realm of conventional customer service and integrity. He recounts:
Somewhat aghast at a few of the unreasonable complaints and demands which he encountered in his first years in the business, he asked his father, "How can we afford to replace a garment which the customer has clearly abused?" He was referring to a handmade lace ball gown a customer returned after one wearing. "She should have known it was fragile."
His father replied, "Yes, she should have, but since this is the first fine garment she's ever bought she didn't. Explain to her that we will replace it, and tactfully call her attention to the fact that a delicate handmade lace will wear less well than a coarser machine-made lace. She'll know better next time."
Unconvinced, he asked, "How can we afford to take such a loss? The manufacturer won't assume any of the cost." His father replied very patiently, "She 's not doing business with the manufacturer, she's doing business with us. It costs us over $200 to get a new customer of this woman's buying potential, and I'm not going to lose her for the $175 this dress cost us." And then his father added, "When you tell her, do it with a smile." Over the years, this woman spent over $500,000 with them. He had learned one of the most important lessons in his retail career.
Word spread quickly and within a year of its opening the store had built a clientele of satisfied customers who spread the news of this unique store to all of their friends in the area.
Napoleon Hill tells a similar story of another great merchant. Marshall Field was probably the leading merchant of his time, and the great Field store, in Chicago, stands today as a monument to his ability...
A customer purchased an expensive lace waist (blouse) at the Field store, but did not wear it. Two years later she gave it to her niece as a wedding present. The niece quietly returned the waist to the Field store and exchanged it for other merchandise, despite the fact that it had been out for more than two years and was then out of style.
Not only did the Field store take back the waist, but what is of more importance it did so without argument!
Of course there was no obligation, moral or legal, on the part of the store to accept the return of the waist at that late date, which makes the transaction all the more significant.
The waist was originally priced at fifty dollars, and of course it had to be thrown on the bargain counter and sold for whatever it would bring. But the keen student of human nature will understand that the Field store not only did not lose anything on the waist, but it actually profited by the transaction to an extent that cannot be measured in mere dollars.
The woman who returned the waist knew that she was not entitled to a rebate; therefore, when the store gave her that to which she was not entitled, the transaction won her as a permanent customer. But the effect of the transaction did not end here; it only began for this woman spread the news of the "fair treatment" she had received at the Field store, far and near. It was the talk of the women of her set for many days, and the Field store received more advertising from the transaction than it could have purchased in any other way with ten times the value of the waist.
Posted January 31, 2005
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