What drives word-of-mouth business? 'Tacit' interactions.

• Author: Hall, Robert
• Position: Marketing Solutions

What if word-of-mouth--what others are saying about you--drives two-thirds of your business? If so, it influences what new products and services customers try, how they interpret the really good and not-so-good experiences they encounter, and whether they go or stay, expand or shrink their relationship. In earlier periods we have referred to this as "buzz," with a focus on the hot new thing, but that is really too narrow. It also applies to the not-so-hot old things too, and research shows its influence grows daily.

In a world that continues to tempt us with really cool new technology that keeps us even more connected, there is a new reality settling in. Technology is becoming commoditized and what McKinsey calls the "next revolution in interactions" is emerging. Leading this shift is "tacit interactions," which is higher level communication that is more complex, requires greater judgment, deals with higher levels of ambiguity and relies on tacit knowledge. These tactic interactions are at the opposite end of the continuum from "simple transactions." These are the skill sets of sales people and managers who work with customers and employees in relationship roles. According to McKinsey, in the past 50 years the volume and value of these interactions have increased dramatically to about four out of five nonagricultural jobs in most developed countries.

Most industries have invested heavily in technology and processes that help guide and script "transactional" interactions for the cause of efficiency--think call centers, online sales and service, voice response units and highly scripted sales interactions. These investments have provided greater convenience to our customers through enhanced access to basic information and transactions, but they have also often been irritating and have negatively impacted relationship building and the emotional connection we aspire to have. If anything they have created negative word-of-mouth.

Increasingly these standardized transactional interactions have also become commoditized. It is unlikely that your organization's transactional interactions are going to whip the transactional interactions of the competition.

In the battle for committed relationships, you will increasingly duke it out with the competition on the quality of your tacit interactions. Certainly when it comes to word-of-mouth, having a really cool product like an iPhone or the last Harry Potter's book is nice, but most winners will be...