Understanding word of mouth

Robert East
Kingston University and the University of South Australia

New brands enjoy a honeymoon period with customers, as research shows positive recommendation comes from current owners, while negative word of mouth tends to come from past owners.

Word of mouth (WOM) is important because of its role in brand switching, new category adoption and social change, and because the internet is the vehicle of new kinds of communication similar to WOM. Previously, little was known about the occurrence and impact of WOM because, unlike advertising and brand purchase, there was little published market research on this subject. Substantial research on WOM has been conducted at Kingston Business School, London, over the past 14 years. This paper covers some of our findings.

In his best-selling book The Loyalty Effect, Fred Reichheld suggests that long-term customers give more recommendations than recent customers. In 2000, we tested this claim for two categories. The results showed very clearly that the longer the period of customer tenure, the less the recommendation – the opposite of Reichheld's claim (see Figure 1).