WIn a post at Happy Customer, I’ve previously examined 7 Ways that Customer Service Impacts Retention Rates. For this post we’ll explore the connection between great customer service and word-of-mouth marketing.

Providing your customers with consistently great service — experiences that encourage them to evangelize your brand — increases what McKinsey calls “word-of-mouth equity,” a window into a brand’s power to generate messages that influence the consumer’s decision to purchase. A McKinsey Quarterly article reported:

Word of mouth is influential throughout the consumer decision journey. It’s also the most disruptive factor. Word of mouth can prompt a consumer to consider a brand or product in a way that incremental advertising spending simply cannot. It’s also not a one-hit wonder. The right messages resonate and expand within interested networks, affecting brand perceptions, purchase rates, and market share. The rise of online communities and communication has dramatically increased the potential for significant and far-reaching momentum effects.

Investing in delivering exceptional customer experiences in order to encourage your customers to market your brand for you can reduce costs and increase conversions. Today’s digitally-savvy consumers broadcast stellar customer service interactions across a number of channels — social, blogging, email, and in conversations with friends and family. In common one-to-many channels like blogging and social networks, a positive recommendation can have dramatic effects. And so can a negative review.

As consumer review sites are increasingly unreliable (even with action being taken against those manipulating online customer reviews), a personal recommendation from friend or family member for a trusted site to buy a new pair of winter boots, or a hotel for your upcoming trip to the Bahamas, carries more weight than most forms of traditional advertising. In addition, word-of-mouth can also drive repeat purchases.

Here are six reasons why customer service, good and bad, is so important when it comes to word-of-mouth marketing*:

  1. A dissatisfied customer will tell between 9-15 people about their experience.

  2. Around 13% of dissatisfied customers tell more than 20 people.

  3. Negative interactions with a business are spread to twice as many people as positive ones.

  4. People are twice as likely to talk about bad customer service experiences than they are to talk about good experiences.

  5. 67% of people spend money after getting recommendations from their friends on online communities like Facebook and Twitter.

  6. Happy customers who get their issue resolved tell about 4-6 people about their experience.

Customer experience isn’t just something that impacts the perception of your brand in the marketplace. It is your brand. So what are you doing to deliver exceptional experiences to your customers?

*Source for word-of-mouth statistics: White House Office of Consumer Affairs, 2012 Global Customer Service Barometer, McKinsey Quarterly, Internet Retailer.

This article originally appeared on Happy Customer.

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