The Unstoppable Power of Word of Mouth: A Lesson from IFB

In the vibrant and ever-evolving world of Sales & Marketing, the timeless power of Word of Mouth (WoM) has always held a special allure. Reflecting on my early days in the field, my journey began with a pivotal experience at IFB's marketing head office in Bangalore, back in 1994. It was a time when India was poised to ride the wave of Manmohan Singh’s economic reforms, a period that promised to reshape the market dynamics.

Landing my first job in the private sector with IFB, then in collaboration with the German giant Bosch and known as IFB-Bosch, I was brimming with the lofty marketing theories I had absorbed during my MBA. Yet, it was the simple, yet profound, concept of WoM that truly opened my eyes to the grounding realities of marketing.

The Impact of WoM: Unpacking IFB's Marketing Success

At that time, IFB found itself in a unique position within the washing machine market - a niche, yet uncontested, player in the fully automatic segment. Remarkably, without the heavy artillery of advertising and marketing budgets, IFB commanded a staggering two-thirds market share in this segment. This was an era when Videocon's jingle was the new anthem of the masses, overshadowing even the famous Nirma washing powder jingle. Despite Videocon and other giants like Onida, Godrej, and TVS-Whirlpool venturing into fully automatic washing machines, none could hold a candle to IFB's sales figures.

My role in the Customer Contact Programme (CCP) at IFB offered me a front-row seat to the raw data of consumer feedback (fed into a FoxPro program), which painted a picture that seemed almost too good to be true. Day in and day out, CCP forms flowed into the marketing head office, filled out by service technicians from across the country. The feedback was captured during installation visits, sweetened by the gift of a bottle of Cuffs’n Collars, and included a seemingly simple question:

Q: You bought an IFB washing machine because

• Newspaper Advertisements
• Dealer recommended strongly
• Product demonstration/Sales appeal
• Neighbour/Relative/Friend recommended
• Others (pls specify)

Customer Feedback: The Eye-Opening Data from IFB

In what turned out to be majority of the cases (something like 70 -75%) customers overwhelmingly bought IFB because of the positive reinforcement due to word-of-mouth publicity in their relative/friend/colleague circle.

The company tried, rather unsuccessfully, to carry forward this concept by getting prospective referrals from these customers through the same CCP programme and marketing them directly. It did not succeed because the customer pull it generated was effectively cannibalized by the dealer through undercutting and realizing better price margins to consumer. That the consumer durable market was highly price sensitive and the dealers ravenously undercut each other on product margins helped them.

However the fact that WoM helped the company sell more than its competitors who were bigger brands and had much higher marketing spends in the market stood out in my mind. In the process I learnt a thing or two about database marketing from the marketing Guru ‘A Ramana Rao or ARR as we fondly called him’ who made this concept the cornerstone of company’s marketing strategy and took the company to NumerUno position in the market. That crown went uncontested for many many years.

The Evolution of Consumer Voices: From Personal Networks to Digital Platforms

Fast forward to the present, and the significance of WoM has only magnified, with brands now keen on measuring its impact in a structured manner. The digital era has amplified consumer voices through blogs, forums, social networks, and RSS feeds, among other platforms. Giants like Toyota, J&J, Kellogg's, and Nike have fully embraced WoM, supported by specialists like Chatthreads Corp, Cymfony, Umbria, Trnd, and Buzzador, to navigate this powerful communication and advertising medium. This evolution from a humble, organic form of endorsement to a strategic tool in the marketer's arsenal underscores the enduring power of Word of Mouth in shaping brands and influencing consumer choices in an increasingly connected world.