The WOMOW Blog

Monday, May 2, 2011

The Word-Of-Mouth Revolution is hitting Australia

The secret is out: customer reviews are revolutionising the way consumers make decisions.

Thousands of people are reporting that they've found amazing businesses - often right under their noses - using word-of-mouth on the web. In some senses, it's word-of-mouth as it's always been - but being online, it's more powerful than ever.

According to Rachael, a WOMOW member, customer reviews are giving "the power back to the people", putting more information in their hands and allowing them to make a more informed decision.

It's a revolution that's changing the way customers connect with businesses. In the words of some WOMOW members;

"I use WOMOW to find new businesses to use, as hearing first hand from somebody who has used the business helps me find a reliable, friendly service to use. I often use WOMOW at work, as I organise everything from printing to transport. I found a great printing supply company to get my ink for our office printer, and I am still using them to this day!" Cassie
"Before I go to any business, I usually take a look to see if anyone's given it a rating. This is often for restaurants, but I also use it for service industries too. Not only has it saved me the hassle of finding businesses around my area quickly, it also gives me obviously their reviews so I know whether they will do a good job or not. I'm not one that likes being disappointed, and by using WOMOW, I can easily avoid this." Edward
"Our family has learned to 'WOMOW' any prospective business prior to use, as this seemingly minor action has the potential to have major consequences. After all, avoiding an incompetent and uncaring business will save us all a considerable amount of time, effort and money in the long run. We learn from other people’s mistakes and avoid problematic businesses by 'WOMOWing' them prior to doing business with them." Jayne

While traditional directories are suffering a severe decline, Word Of Mouth On the Web is growing at an alarming rate. In the last 12 months, we've seen searches for reviews on businesses double and many businesses report that online reviews account for a significant proportion of their new customers. In fact, it's estimated that 1 in 4 Australian decision-makers have used reviews on WOMOW to help them find great businesses during the last 12 months.

Consumers are becoming more informed and don't put much trust in traditional advertising;

"While we, as a family seldom trust advertising gimmicks/sources these days, we do however place a great deal of importance on 'personal' reviews." Jayne
"Normal advertising is there to convince us to use their service or product, I love reviews from other people just like me who just want to get good service without having to deal with bad experiences along the way. Reviews are more honest!" Cassie
"Any business can espouse and exaggerate their own virtues, and we would be none the wiser until we actually try them out. Thankfully, through sites like WOMOW, we can get a real description of what the business is like to interact with. Nothing truer spreads like word of mouth." Krystle

Word-of-mouth is becoming a revolution that's changing the ways that customers find out information about businesses, and also changing the ways that businesses market themselves and manage their reputations. Customers are loving being able to establish more of a voice within the business world, and as Edward Wong, a WOMOW member states, "businesses should sit up and take note as it's now all about customer service and if we're not happy, we now have another means to voice our opinion".

It may not be too long before WOMOW is having a similar impact to Yelp.com which is now the 15th most popular site in the United States and has an enormous impact on both consumers and businesses.

Customer Satisfaction at a TWO YEAR High

April 2011 has been a great month for consumers with customer satisfaction reaching a 2-year high. Reviews website WOMOW (Word Of Mouth On the Web), reports that customer satisfaction has been climbing for the last 4 months straight. The graph below shows the trend in customer ratings by month over the last 2 years (May 2009-April 2011). Since a low in December, businesses have picked up their game and are doing a great job. And customers are noticing!

This data shows that customers are least happy around the months of November/December, which could be attributed to pre-Christmas pressure and it's impact on both service levels and customer anxiety. However January sees a slight increase when Christmas stress is removed and demands on service providers are reduced.

The period from February-April is when customer satisfaction is highest, with an increase also occurring around September. This is possibly influenced by school holidays and the associated reduced pressure during these times.

But despite Australian consumers having high expectations of the businesses they use, reviews on WOMOW are overwhelmingly positive with over 93% of reviews scoring a rating of 3 or more out of 5. More than ever, businesses that provide good service are being rewarded with positive feedback and the enormous rewards of word-of-mouth.

This result is both a big tick for businesses, and also a great sign for future performance. With more and more people using reviews to choose their service providers, businesses with great feedback report that customers reviews are a significant source of new enquiries - so the more positive reviews businesses have, the more customers they're likely to attract.

WOMOW.com.au is the number one site in Australia for customer reviews on businesses, with approximately 167,000 reviews posted by its 70,000 members - everyday consumers.

Monday, April 18, 2011

Make Deposits with your Customers' Bank Accounts

Your intention is to run a profitable business, so it makes sense that each transaction you have with customers should be profitable, right? Well maybe, but here's where many businesses go wrong. If you think about the profitability of each transaction, the tendency is to scrimp on value while extracting a maximum price from the customer. But does that make them want to return? Are they going to be blown away with the quality and/or customer service? Do they feel compelled to tell their friends how impressed they are with your business? And most importantly, does it maximise the lifetime value of this customer? No, no, no, and NO!

It's about the Lifetime Value of the Customer

In almost all businesses, customers should be seen as an investment. Yes, they're the source of your income, but if you view your potential income over the next year (or even 5 years), then you'll easily see why you should forget about maximising the return on each transaction.

These types of surprise gifts are often more powerful than incentives as they show genuine care, and encourage the customer to feel favourably towards you and your business. Remember, the lifetime value of your customers comes from;

the average size of their order
the number of times per year they purchase from you
the number (and quality) of the people they refer to you
the length of time they remain loyal to you

But how? (Go out of your way to be nice)

Instead, do something your competition is too scared to do. According to returncustomer.com, you should surprise your customers and make their day with something:

Free – it isn’t a surprise if you have to pay extra for it
Unexpected – surprises come out the blue without warning and without high expectations (they are not an incentive for doing something, they're a thank-you)
Exclusive – is your surprise a special gift for the customer that non-customers can’t get?
Relevant – your surprise should be a good match, companion, or accessory to the main purchase.

Go out of your way to find a reason to give your customer something extra. How about;

You are the nicest customer I've had today, please take this as a token of my appreciation.
I love helping parents/students/pensioners - here's a small gift.
Hey, you're the 50th customer of the week.
Thank you for being the first/last customer of the day.
Because it's your first time here, please take this to remind you to come back.
I know it's your birthday this week - please have this on us.
Thank you for trying us out, it means a lot to us.

But what can you give away? Something that means something to your customer - enough to make them remember you - without sending you broke. Some examples of surprise rewards could be;

Free shipping, delivery, gift wrapping etc
Vouchers for return visits to reward loyalty - e.g. 20% off on your next visit
Vouchers to give to a friend - invite a friend for free
Secret sales - for members/email subscribers only
Privileged information - for customers only (eg industry insights, fashion tips, secret recipes)
Thank you notes/calls/emails - done soon after the purchase, perhaps checking up to make sure everything is O.K
Christmas & birthday cards/small gifts (eg flowers, chocolates, movie tickets, book vouchers, bottle of wine, nice pen, dinner voucher, etc)
Surprise gifts tailored to individual customers. Watch this for an extreme example, but if you've got high-value customers, you probably should tailor some gifts specifically for them. It's not that hard to pick up on their hobbies and passions and find a gift that is relevant and hand-picked for them.

Harness the Power of Reciprocity

Social psychology tells us that it's human nature to respond to a positive action with another positive action. So make sure you leave your customers thinking that they owe you something - because you've gone out of your way or given then something extra. If you consistently give more than is expected, you'll be amazed at how customers will respond.

Go on, make an unconditional deposit with a few of your customers today.