McKinsey’s word of mouth muddle

 

McKinsey have just released an
interesting new article called “A New Way of Measuring Word of Mouth
Marketing”.

 

 

The article starts out with a clear
statement of the control shift I’ve been talking about for a long time:

 

“The
sheer volume of information available today has dramatically altered the
balance of power between companies and consumers. As consumers have become
overloaded, they have become increasingly skeptical about traditional
company-driven advertising and marketing and increasingly prefer to make
purchasing decisions largely independent of what companies tell them about
products.

 

This tectonic power shift toward consumers reflects the way people now
make purchasing decisions ….”

 

 

However, this is just a preamble to the real
purpose of the article, which is to introduce a new and better way of measuring word of
mouth marketing.

 

 

The methodology itself seems sensible
enough. Messages sent by trusted, influential people have more influence than
those sent by untrusted, uninfluential people (really?). They have even more influence if their content is
relevant and based on direct experience rather than irrelevant and based on
hearsay. (Wow! What a revelation!)

 

 

Then we enter The Muddle.

 

 

McKinsey call their new methodology “word
of mouth equity”. Now that’s odd, because in normal every day English ‘equity’
has connotations of ownership, when silly old me thought that the whole point
of word of mouth (and McKinsey’s dramatic intro) is that the conversation is ‘owned’
by the people doing the talking. Ah well, what’s a little bit of verbal
gymnastics between friends?

 

 

Using “word of mouth equity”, the article
continues, companies can “empower” themselves (McKinsey’s words, not mine) to “actively
manage” word of mouth to achieve brand goals. That’s odd again, because I
thought that the whole point of word of mouth is that it was empowering the consumer
and couldn’t be ‘managed’ by organisations.

 

 

Thus, with just a few bits of verbal
gymnastics, McKinsey take us to the brink of an abyss – “a tectonic power
shift” that’s “dramatically altering the balance of power between companies and
consumers” – and then gently, reassuringly, take us by the hand to lead us back
to the same-old same-old traditional corporate agenda of ownership and control. As if
nothing had ever happened. Phew! They’re a comforting lot, we must buy more of them!

 

 

But what’s the real price of such intellectual
contortions? Let’s dig a little deeper.

 

 

McKinsey tell us we need “word of mouth
equity” because we need:

 

 an index of a
brand’s power to generate messages that influence the consumer’s decision to
purchase.”

 

 

They’are at it again. Despite all that talk of “tectonic power shifts” they’ve brought us back to the same, tired
nothing-about-marketing-has-really-changed agenda of “brand power” (not
consumer power).

 

 

So let’s ask the oh-so obvious question: why are consumers more ‘influenced’ by word of
mouth than by traditional advertising? Because they want to make a better decision
and they believe that word of mouth recommendations are more helpful on this
front than advertising.

 

 

In other
words, the “power” of word of mouth doesn’t lie in the “message”, it lies in
what consumers find valuable – in this case, help during the decision-making
process. If a brand’s message fails to provide this value its influence will
evaporate, whether it is delivered via boring old traditional advertising or
snazzy, sexy, new, improved, word of mouth.

 

 

To repeat. It’s
not about the delivery channel. It’s not about the “power” of the brand’s
“message”. It’s about consumer value.

 

 

Let’s stick
with this for a moment and follow the logic.

 

 

Step 1: the
essence of good marketing lies in identifying and meeting consumer wants and
needs.

 

 

Step 2: the
consumer wants and needs to make a better purchasing decision …

 

 

So … what is
the obvious Step 3?

 

 

Option 1 is to
say: “Sod what the consumer wants! Find me a powerful “message” that will “influence”
the consumer’s decision in the way that I want!”. This is the road that
McKinsey and a thousand other marketing gurus have taken us down.

 

 

Option 2 is to
say: “therefore brands need to find ways of adding value by helping consumers
make better decisions”.

 

 

Oh dear. We
wouldn’t want that would we? If we help consumers make better decisions, they
might not choose our brand! So let’s return to Option 1, pronto!

 

 

It’s as
though, when push finally comes to shove, there’s a massive No Entry sign forbidding
marketers to explore the path that defines their very mission – of identifying
and meeting customer needs. As a result, they’ve been left to whirl around inside some
sort of perpetual limbo-land for at least a century. McKinsey’s article is just
another example of the endless muddle it creates.

 

 

In my last
post
I suggested that VRM’s stance of looking at relationships and processes (and
not just products or services) from the point of view of the consumer – in
other words, actually accepting that the “tectonic power shift” referred to by McKinsey
really is real – opens up huge new
opportunities. I also said some of these opportunities are counter-intuitive.

 

 

This is the
Big One – the one most marketers find hardest to accept: that they are far more
likely to succeed not by endlessly
looking for “messages” that “influence” consumer decisions but by practising
what they preach and giving consumers what they really want – in this case, genuine
help in making better decisions.

 

 

Can this
really create a ‘win’ for the marketers? How? These are the questions we now need to explore.

 

 

 Alan
Mitchell      www.ctrl-shift.co.uk
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  • http://www.earnest-agency.com Chris Wilson

    Great post. Being a cynic, this is typical McKinsey fabricating a ‘scientific methodology’ that they can then flog to their starry eyed clients.

    One the biggest issues in ‘real’ word of mouth is best found when you replace it with a much under-used term: Reputation. And, how does a brand create a great reputation? It has to start with the experience this brand gives its customers.

    So, marketing needs to start its journey with a proper evaluation of whether this experience is good, bad or ugly. And it should look at this from the perspective of their customers, NOT through some internal navel gazing… (Sorry, cynicism crept in again…).

  • http://www.crowdsurfing.net Martin Thomas

    More bogus empiricism from the snake oil salesmen at McKinsey. Word of mouth is an outcome, not a strategy (i.e. you can’t ‘manage’ it in the same way that you can manage an ad campaign). To repeat Chris’ point, companies that do the rights things enjoy the most positive word of mouth.

  • http://inlevelcom.blogspot.com/ Jacek Chwalisz

    Many marketers like to think they have “everything under control” and they can “manage everything”. Using this article they will sound much more powerful than before:).
    Term “customer need” (or “desire” or “covet”) can be topic of deeper research. We all know Maslow’s pyramid of needs, but from today’s perspective it is kinder garden. We can find that “need” it is a meta term. According Rene Girard anthropological research real source of “need” is cultural imitation (mimesis): people at first are trying to recognize what is desired by others and then they want to follow them to acquire their desire. Sounds complicated, but it works very well (fashion models show us what we should desire) and it could bring more light on word-of-mouth area.

  • Grilla Login

    Jacek, the world is a very sick place if fashion models show us what we desire.

  • http://www.hostuniversal.com R Smith

    McKinsey may well have lost the plot but who can blame them. Consumers are losing confidence in big businesses and brands because they no longer speak for us. They don’t take responsibility for their actions, they are unaccountable in any real or meaningful way. They have no allegiance and no longer provide us with comfort, let alone a bond or a contract.
    Many of us stopped being a ‘consumer’ years ago. We became ‘investors’. Investors in people, ideas, brands, businesses and organizations that are bringing about change – the ‘shift’. I will talk till the lamas come home about the impact of Cafédirect on the coffee growing communities around Machu Picchu (and recognised by Millward Brown as Britain’s favourite brand back in 2006, a brand built with word of mouth in every sense). Or the opportunity to end the drugs wars by investing in farmers who reciprocate with fabulous artisan produce and products that, year in year out get better and better, with an ever widening positive social and environmental impact – like protecting the rainforest (not logging it palm oil or mining it for blood diamonds). Or the rise of women within cooperative business structures around the world. Or the localisation of the global marketplace. Or trailblazers like Dale Vince at Ecotricity, William Foote at Root Capital, Willington Wamameye at Gumutindo, Claribel David at WFTO Asia, Penny Newman, Anita Roddick,.. there are a hundred thousand great stories out there and there will, without doubt, be many millions more. But they are unlikely to be to the advantage of McKinsey clients. Indeed many, if not most, may well be at their cost. Last year Electricité de France attempted ‘cultural branding’ with the Green Britain campaign and were, quite rightly, ridiculed as greenwashers all the way to Gordon Brown’s brother’s office (media director EDF). Now that was a really good story.

  • http://www.huffingtonpost.com/diana-mao/leveraging-social-entrepr_b_547276.html R Smith

    A great example of a great story – Leveraging Social Entrepreneurship to Fight Slavery

  • http://www.mediaburst.co.uk/api/ Dawn Rowley

    Social marketing whether it takes place online or in the real world, is about value and service and content. As you so rightly say the only way to influence consumers to make a choice is by providing them with what they want. It’s not a control issue, it’s a service issue.

  • http://4.ru-girl.com Den Letov

    Excellent article, very interesting information, useful in the future.
    Thanks for the post. Add to bookmarks.

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