Can Negative Word of Mouth Cost Me Money?

July 5, 2008

Yes it can. According to a 2005 study by Informative Inc., negative word of mouth has 2.4 times more financial impact than positive comments. In fact , the study found that when negative comments increased, operating profits decreased. Likewise, when negative comments decreased, operating profits increased. Moreover, the study found very little correlation between the amount of positive word of mouth and operating profits.

This is an important finding that small businesses should pay attention to. While positive word of mouth may not help us much as you’d like, negative word of mouth can be a killer. Negative word of mouth works like the game telephone. What the last person hears is very much different from what the first person said. Negative incidents relayed by consumers get embellished with each telling. So what may have started out as a five minute wait with a mildly disinterested customer service rep turns into a grueling five hour wait fueled by a cast of incompetent uncaring reps…you get the picture.

So what should a small business do? What I try to do is treat every customer like they are my only customer. And if somehow a customer finds something not to their liking, by all means, small business owner, don’t take it personal. If one customer is dissatisfied with something you do, then there may be others that feel the same way but just have not told you. Try and understand what the cause of the customer dissatisfaction is all about. Get them involved in solving the problem and acknowledge their role. By getting them involved they will see that you respect not just their money but their opinion as well.


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