Welcome to

I posted yesterday on The new math of customer satisfaction, regarding the power of word of mouth (WOM), but had some further thoughts on a slightly different topic I wanted to continue with today.

To wit: Do all companies need to be equally concerned with customer opinions?  Is the WOM benefit/risk spread like peanut butter, or does it apply more to some firms than to others?

For example, back in Ye Olden Days when Ma Bell monopolized the telephone business, customers could be as ticked as they liked, but the one thing they could not do is go find another phone company. So perhaps the rules don’t apply to monopolies.

In thinking about this, I propose that there is a spectrum of WOM susceptibility, which looks something like this:

Monopoly - Dominant player - Avg player - Weak player - Start-up
(no effect)                            (normal effect)             (maximum effect)

Companies are most vulnerable to bad word of mouth (and will benefit most from good word of mouth) when they are young and just starting up. Why? Because most people are not familiar with the company, and thus haven’t formed an opinion. Once formed, opinions may be near impossible to change. So if the first thing a consumer hears about your company is that ’so-and-so says they are dirty rats’, you are likely forever branded as a rat in their mind.

For this reason, it makes sense to start-ups to pay absurd amounts of attention to customer opinions, and to proactively address every negative issue. On the internet, where you make first impressions daily, and where the user’s first impression will largely be guided by site design and user interface, it makes sense to keep these issues top-of-mind at all times.

I like this spectrum-of-effect idea. It kind of explains why some companies with loads of negative PR (Microsoft? Wal-Mart?) seem to sustain minimal damage, while other companies get the death sentence for one slip-up (Jet Blue, we’re keeping an eye on you!).

In the interest of practicing what I preach… any opinions on the ideas in this post?