November 8, 2013

5 Invaluable Lessons from Virgin

For many entrepreneurs Richard Branson is the epitome of bold and successful entrepreneurship.  His companies are known around the globe for upturning their categories and challenging the status quo.  While executives and the press clamor to meet the man himself, far less is written about the unique training ground that his companies have been for entrepreneurs, social entrepreneurs, and marketers.  While Harvard Business School gave me an indispensable foundation in general management, Virgin offered unparalleled lessons in building businesses that remain true regardless of industry, audience, or trend.

1.  Your product is your most important form of marketing.
Long gone are the days when an ad campaign could hide a multitude of sins.  In today’s highly connected world, positive and negative word of mouth spreads like wildfire.  Virgin invests in developing stand-out products and services that are measurably different from their competition, and that their customers love with near obsession.  Case in point:  Virgin Atlantic’s Upper Class.  No focus group could have foretold the need for business class travel with mood lighting and a stand-up bar.  Yet by investing in a measurably different, better product, Virgin can spend 1/10th the funds on advertising that its competition does, and carries a much less costly loyalty program.  By focusing on “points of re-evaluation” or experiential touchpoints that differ dramatically from what’s expected in the category, like the spa pool in their airline lounge, or the inflight massage, customers not only begin to think differently about the status quo, but they are  more likely to tell their friends.  The virtuous cycle of word of mouth begins!

Here’s a technology counterpart:  Mint.  By focusing on solving a pain point with delightfully elegant UI, Mint experienced record-breaking adoption that led to its acquisition by Intuit only 3 years after its founding.  Like Virgin, Mint didn’t invest in costly ad campaigns or even multi-touch nurturing- instead press and word of mouth drove incredible adoption because it made managing finances  just.that.easy.

Screen Shot 2012-12-11 at 11.52.42 AM

Virgin Atlantic’s category-defying Upper Class Suite reset the bar for transatlantic business class travel.

Richard Branson celebrates Virgin Atlantic's 25th Anniversary

Richard Branson celebrates Virgin Atlantic’s 25th Anniversary









I will never forget the last time a product literally made me shiver.  It was 5am and my taxi arrived at the curb at the airport.  At that hour, I was clumsily gathering my luggage and fishing for cash.  The cab driver noticed my disheveled state and said “I take cards” and he slid my Amex through a tiny white box attached to his smartphone with great ease.  I signed with my finger and a receipt appeared automatically in my inbox.  “Oh my gosh, what’s that called?” I asked incredulously.  It was Square.  In the next 24 hours, I mentioned it to no fewer than 5 people.  It was so incredibly different than what I expected- so delightfully easy to pay on the go- that I had to spread the word.

In my next post, lesson #2:  you can’t afford to blend.


March 16, 2009

A word about word of mouth

Filed under: customer service,Marketing — aimee @ 9:40 pm
Tags: , , , ,

Most marketers agree that positive word of mouth is an important tool to drive growth. Recent studies underscore this importance: An April 2008 study by Zenith Optimedia found that recommendations from family and friends trumped all other customer touchpoints in influencing purchasing behavior. Not surprisingly, social network users are three times as likely to trust their friends and peers rather than advertising when making purchase decisions. However many misconceptions exist. Let’s debunk a few:

1. Your most valuable customers are your most passionate advocates. Logic would follow that your most loyal and lucrative customers are the most satisfied, and therefore would be most likely to recommend. However a 2007 study by V. Kumar and colleagues published in the Harvard Business Review discovered that customers with the highest lifetime value were not the most likely to refer. Instead, a customer’s referral value (the value of the revenue they generate through recommendation) is not significantly related to their traditional LTV. The authors submit that true customer value is a combination of LTV and CRV, and provide examples in Telecom and Financial Services in which their highest tier customers are actually less valuable than a lower-tier customer with high referral value. Kumar confirmed via email that they’ve replicated the findings across a broad array of industries.

2. Customer satisfaction drives WOM.High customer satisfaction ratings do not guarantee word of mouth. As with many human behaviors, eliciting the action requires a trigger. In this case, the disconfirmation of expectations is most likely to result in recommending or dissuading. At Virgin we often used the phrase “surprise and delight,” and in fact both the element of surprise and delight are necessary conditions to drive positive WOM. If you’re in a category with generally high customer satisfaction, such as commercial banking (pre-2009) and e-commerce, it is more challenging to create an experience which defies customer expectations positively. In categories with low satisfaction, such as airlines in the 1990’s, Jet Blue defied customer expectations of the category by offering friendly service and in-flight TVs. This delta between expectations of the category and actual experience was more likely to result in word of mouth.

3. All word of mouth is equal. I’ve attended several meetings over the years where the ambiguous goal “drive WOM” was uttered. In fact, the type of referrer matters. According to a study by Yankelovich, consumers trust friends above experts in product purchases. 65% trust friends, 27% trust experts, and a mere 8% reported trusting a celebrity. There is some variance by category, as studies have found consumers are more likely to rely on expert opinion in technology more so than other categories.

So, a few questions:
1. Do you truly know who your referrers are?
2. Have you designed industry-defying moments into your customer experience? Investing in a memorable positive point of difference may have higher returns than end-to-end “OK” for both products and services.

Click on the word “comment” below to share your thoughts. Next week: profiles of a few exciting new companies that enable word of mouth.

My nomination of the latest jargon we can live without:trimessaging.

Blog at