Tuesday, March 18, 2008

What kind of word-of-mouth advertising drives sales?

— Martha Lagace writes on the HBS blog:

"According to new research by HBS professor David Godes and Yale colleague Dina Mayzlin, word of mouth that is most effective at moving sales forward "is created by less loyal customers, not loyals, and occurs between acquaintances (not friends)." As for whose opinions most make a difference, the researchers found a wrinkle in the common wisdom that opinion leaders are what count. While it is true that opinion leaders carry great weight among very loyal customers, their word of mouth may be less influential among the less loyals. Rather, a wide social network may be the key. Godes and Mayzlin describe more in their article "Firm-Created Word-of-Mouth Communication: Evidence from a Field Test," forthcoming in Management Science."

No surprises here. What has changed over the past few years is the ease with which you can maintain substantive acquaintances. Some of the most successful people I know were successful at building a tremendous social network before email, myspace, friendster, facebook and linkedin. Today's tools suggest the playing field has been levelled and the social skills required to build a successful network have been dimunized by technology. If you can't do it now then you should find a profession that does not require relationship building and social networking skills. But a true differentiator between mediocre and exceptional performance in business is still and will continue to be tied to your willingness to pick up the phone and your ability connect directly with someone. More importantly, to inspire someone that is not already a friend or acquaintance to meet with you. My partner would call this "old fashioned sales skills".

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