Most of us understand the importance of word-of-mouth advertising to our business. We know that spending money on marketing a service or product that has a bad reputation with consumers, and not doing anything about it, is similar to burning money. People will only be reminded of the problems and why they don't want to deal with us.
Conversely, a good reputation, usually the result of good or better yet great customer service plus consistently delivering on our promises when it comes to the products and/or services we sell, increases the power of marketing initiatives we undertake.
What our customers think about us and share with others (word-of-mouth) usually hastens our demise or accelerates our growth.
One of the most cost-effective marketing tools around for cultivating and growing word-of-mouth advertising is social media.
According to the Social Media Report: Q3 2011 produced by Nielsen and NM Incite,"Consumers frequently trust the recommendations of their peers, making social media an ideal platform to spread their ideas and purchase power."
The report points out that "60 percent of social media users create reviews of products and services" and "consumer-created reviews/ratings are the preferred source for information about product/service value, price and product quality".
With daily users of social networking sites numbering an estimated 400 million on Facebook and one hundred million on Twitter, not to mention LinkedIn and all the other sites, word-of-mouth advertising has moved from being something that can create a ripple for your business to the possibility of a windfall or devastating tsunami.
In many ways, this makes the scenario sound much worse than it is. Most businesses have the occasional unhappy customer, product recall or some such thing. The good news is that if these are one-off occurrences you can probably weather the storm quite well - as long as you handle the situation, keeping the customer in mind, rather than ignoring the issue.
However, for those businesses who consistently fail to meet their customers expectations, social media may become their worst nightmare.