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Nice Companies Make More Money: Andy Sernovitz on Marketing Smarts [Podcast]

Hosted By:
Matthew Grant
Wednesday, July 18, 2012
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"It's sad as hell that just doing the right thing makes us a special company."

That's what Andy Sernovitz told me during this week's episode of Marketing Smarts when I asked him why he said, referring to word-of-mouth marketing, "Marketing doesn't get any easier than this."

I posed the question because, at first blush, generating positive word-of-mouth seems to rely on things that are actually difficult to do, such as creating a truly awesome product or doing something remarkable.

Niceness Counts

Andy quickly disabused me of that notion. Getting people to talk about your company in a positive way is, in actual fact, far simpler than that because, in the end, it relies on doing things that are fairly obvious, such as being nice or providing thoughtful customer service. The problem is that many companies fail to do even those little things because they forget, as Andy puts it, "to be human."

"The stuff that can be so meaningful in word-of-mouth—being nice to people, giving them amazing service, reaching out to folks who need an extra hand and showing that your company cares about them... I mean, these things that are obvious on a deep human level, they get lost in the everyday corporate life,"  Andy said.

Silos Kill

"It's a silo problem," Andy said when I asked why companies fail to address that shortcoming. 

At most companies, two groups of people are responsible for talking to customers, he explained. On the front end, you have the sales folks who are supposed to talk to customers up to the point that they decide to buy something. Once the purchase is made, the responsibility shifts to customer service, the people who customers talk to only when they have a problem.

"There is no middle department," Andy says, "[and because] we don't have a department for it, we don't have a spreadsheet for it…companies have forgotten how it works."

Undervaluing Word-of-Mouth

By "it" Andy means how we get more business from current customers and how we get those customers to become advocates for us because they think we're great. 

Companies find it easy to overlook this side of their business because they "forget to count the cost and value of word-of-mouth." That is, whereas companies assign a dollar value to leads based on the price of pay-per-click ads and the like, they don't "assign that dollar value to folks who just showed up from word-of-mouth." 

As a result, he maintains, "We're probably radically undervaluing the word-of-mouth leads versus just any old lead that walks through the door."

That's a big problem because, frankly, word-of-mouth leads are probably more highly qualified. Why? Usually they're actively searching for a product like yours and they were steered to your company based on a recommendation from a trusted source.

Given interest, intent to buy, and peer-driven good will, what more could you ask for? 

Active Customer Service

Since companies recognize neither the value of word-of-mouth nor the role that customer service plays in generating it, they tend to view customer service as a cost center. That view leads to a commoditized, efficiency-oriented approach where "the goal is 'reduce the amount of time we talk to people.'"

As an illustration of an alternative approach, Andy cited Southwest Airlines' "Pro-Active Customer Service Team," responsible for getting in touch with all those who flew on a Southwest flight where, for whatever reason, they may have encountered a problem (a delay, a cancellation, a mechanical failure, etc.).

What the team does is review all the flights from the previous day; if there was an issue on a flight, they contact the passengers on that flight. "They send out a bunch of emails," Andy says, "[make] a few phone calls, and…minds are blown because the airline is apologizing for things that the customer didn't yet complain about!"

Changing the Conversation

So if you are interested in reaping the rewards of positive word-of-mouth, focus on how you are treating customers. Their experience of your company, your products, and especially your service is what they will remember—and what they will talk about. And when they talk, if you want them to say nice things, treat 'em right!

"How we are treated," Andy says, "changes the conversation."

In fact, it won't just change it, it might just start it.

If you'd like to hear my entire conversation with Andy, you can listen to it using the player above or download the mp3 and listen at your leisure. Of course, you can always subscribe to the Marketing Smarts podcast in iTunes or via the RSS feed. Thanks for listening!

This marketing podcast was created and published by MarketingProfs.

This episode features:

Andy Sernovitz teaches word of mouth marketing and social media. He is the New York Times bestselling author of Word of Mouth Marketing: How Smart Companies Get People Talking. He leads, the community for social media leaders at the worldís greatest brands, and, where marketers and entrepreneurs learn to be great at word of mouth marketing.

Matthew T. Grant, PhD is Director of Content Strategy at Aberdeen Group. You can find him on Twitter (@MatttGrant) or his personal blog.

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  • by Phyllis Stewart Wed Jul 18, 2012 via web

    Your mom was right - the most important thing to remember is the "Golden Rule" - treating customers / prospects the way you want to be treated.

    I agree that having a "good" product or service isn't enough to drive success in business. Excellent customer service, as demonstrated by companies like Zappos and Southwest airlines, makes a big contribution to the bottom line. Unfortunately, it is tricky to measure. How many customers do you lose due to poor customer service? Alternatively, how many good leads are generated by a happy customer?

  • by BrianSmth Mon Nov 26, 2012 via web

    Thanks for sharing such a great article. I am sure that the biggest part of success depends on how much companies are fair with their customers and provide them really high quality products. Itís absolutely not surprising that nice companies make more money, but money isnít the main thing. Being totally commercial is no good, each company should have a soul, personality, respect to consumers and a wish to provide the best products and service. Plenty of people pay attention to this, they all want to be treated well. Customer service should be perfect, because clients (we all can say that using our own experience) always share information about the services and places which they like with their friends, relatives and other people looking for advice.
    Brian from

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