Under the Influence with Terry O'Reilly - S8E16 - Red Sheep: The Power of Word-Of-Mouth Advertising

Episode Date: April 18, 2019

This week, we explore Word of Mouth Advertising. Most businesses hope good products and excellent service are enough to encourage positive recommendations. But the smartest companies actually have strategies to ignite word-of-mouth chatter. It’s the oldest form of advertising, but it’s the most effective by far. Hosted on Acast. See acast.com/privacy for more information.

Hi, it's Terry O'Reilly. As you may know, we've been producing a lot of bonus episodes while under the influences on hiatus. They're called the Beatleology Interviews, where I talk to people who knew the Beatles, work with them, love them, and the authors who write about them. Well, the Beatleology Interviews have become a hit, so we are spinning it out to be a standalone podcast series. You've already heard conversations with people like actors Mark Hamill, Malcolm McDowell, and Beatles confidant Astrid Kershaw. But coming up, I talk to May Pang, who dated John Lennon in the mid-70s. I talk to double fantasy guitarist Earl Slick, Apple Records creative director John Kosh. I'll be talking to Jan Hayworth,

who designed the Sgt. Pepper album cover. Very cool. And I'll talk to singer Dion, who is one of only five people still alive who were on the Sgt. Pepper cover. And two of those people were Beatles. The stories they tell are amazing. So thank you for making this series such a success. And please, do me a favor, follow the Beatleology interviews on your podcast app. You don't even have to be a huge Beatles fan, you just have to love storytelling.

Subscribe now, and don't miss a single beat. From the Under the Influence digital box set, this episode is from Season 8, 2019. You're under the influence with Terry O'Reilly. When The Who hit the scene in the early 60s, they desperately wanted to make the big time. But they had a lot of competition from other bands, like The Beatles, The Kinks, and The Stones. Perhaps you've heard of them. While The Who was beginning to write some good songs,

they needed a way to break through. Then one night, Who lead singer Roger Daltrey met the manager of the Rolling Stones. His name was Andrew Lug Oldham. Oldham was an ad man. That meant he understood how to package a product. When he discovered the Rolling Stones, he instantly knew he needed to make the band stand out or else they would get lost in the stampede of the British invasion. The Beatles were

the good boys in suits, so Oldham positioned the Stones as the bad boys. And that dangerous image, which Oldham completely manufactured, has stuck to the Stones

to this day. When he met with Daltrey, Oldham gave him some insightful advice. He said, Don't be the black sheep, be the red sheep. Find a unique way to stand out from the pack. Good and bad are already taken.

In other words, the Who needed a way to generate word of mouth. One night while performing a weekly gig at a hotel, the band found themselves on a brand new stage. This new platform was a few inches higher than the one they were used to. At one point, guitarist Pete Townsend was in the middle of a dramatic guitar move when he mistakenly jammed his guitar right through the ceiling. The place went quiet.

Then some girls snickered. So Townsend covered up his mistake by smashing the instrument to pieces, as if he intended to destroy his guitar all along. Townsend later maintained it was art. But as Daltrey says in his excellent and hilarious biography titled

Thanks a Lot Mr. Kibblewhite, Townsend did it because the girls laughed at him. It was an expensive decision because another guitar had to be bought before the next gig. The band also had to pay

for the hole in the ceiling and the Who wasn't making much money back then. The band also had to pay for the hole in the ceiling, and The Who wasn't making much money back then. The next week, drummer Keith Moon kicked his drums over after the last song. And that was it. From then on, the audience expected The Who to break their instruments at the end of their shows. It became their thing. Soon, Pete Townsend was sticking the neck of his guitar right through his amps,

Moon was kicking holes in his overturned drums, and John Entwistle was slamming his bass guitar into the stage like an axe. Word spread quickly that this rock band destroyed their instruments after every performance. The press got excited and started writing about The Who. Fans crowded into bars to watch the spectacle. What started as an accident became a huge drawing card.

The music was good, but a lot of bands were good. The Who was a red sheep because The Who had a great word-of-mouth hook. In the world of marketing, a great word-of-mouth hook makes music at the cash register.

It can put a company on the map, it can generate press, it can create more attention than traditional advertising. If the concept is unique to the map, it can generate press, it can create more attention than traditional advertising. If the concept is unique to the company, it can differentiate it in a busy marketplace. If the idea is repeatable, it can generate

a constant flow of revenue. And best of all, great word of mouth can answer that one big marketing question. Who are you you're under the influence Word of mouth is the oldest form of advertising. It predates just about every other form of communication.

It probably even goes back as far as prehistoric days. Every business wants to generate positive word of mouth because it is the most trusted form of advertising. As a matter of fact, research reveals that 90% of people trust suggestions from family and friends, and 70% even trust the recommendations of strangers. Most businesses hope that a good product

and excellent service is enough to encourage positive recommendations. But the smartest companies actually have strategies to ignite word-of-mouth chatter. Take the home building industry. It's large and very competitive. While attending a building conference not long ago, I noted an interesting stat. Typical word-of-mouth referrals in the building trade hover around 6 to 8%.

But the builders who are obsessed with customer service get 48% of their sales from word-of-mouth. That is a huge difference. A key element of that difference was based on word-of-mouth advertising. And how builders generate word-of-mouth chatter is simple and interesting. For example, one smart builder sends cardboard boxes over to its customers a few weeks before moving day, a gesture their customers greatly appreciate. Another builder sends pizza over at the end of moving day, knowing the family will be tired and hungry.

These two inexpensive ideas are perfect word-of-mouth generators. Both are thoughtful and unusual. Both are relevant to the house-building, house-moving experience. And, best of all, customers are so surprised by those gestures, they tell their friends. And those friends turn into potential customers. When all other things are equal, a builder with the most positive word of mouth will attract the most business. I attended the Cannes Advertising Festival not long ago,

and listened to a very smart advertising creative director from Istanbul talking about her building client. The builder was developing a huge project that was being marketed as Artful Living. There were to be artful apartments, artful offices, artful galleries, and an artful shopping mall. In other words, all of these elements were going to be colorful with highly unique design aspects. But the development was going to take two years to build, so it was imperative to maintain awareness

in order to attract tenants during the construction phase. Put another way, the site needed ongoing word of mouth. So they did something very unusual. They created an artful construction site. To do that, they painted the construction

equipment wild colors. The typical gray cement trucks were painted pink, green, and bright yellow. The giant excavators were covered in psychedelic blues, reds, and oranges. Dreary dump trucks were infused with red and yellow stripes,

purple polka dots, and pink fuel tanks. Each had the words, Artful Living, emblazoned on the sides. Over the course of the construction period, every piece of heavy-duty equipment was transformed into a colorful design object by a group of graphic artists. A print campaign was developed using photographs of the equipment, and a video of the construction site went viral. Just Google Artful Construction to see that amazing worksite.

It was a brilliant idea because it let the public see the development's philosophy of artful living at work. The artful construction idea was covered in online blogs, magazines, and national newspapers. And that unique equipment ignited colorful chatter from the public for two years. As advertising guru Sally Hogshead says, different is better than better. The best word-of-mouth ideas are ones that generate stories that are talked about around

the office water cooler and shared on social media. A few years ago, my wife and I were in Las Vegas and we went to see Penn and Teller. The magicians have been appearing at the same hotel since 1993. As a matter of fact, in 2014, they became the longest-running headline act to play a single hotel in Las Vegas history. Penn and Teller are a unique magic act. They combine dark humor with very entertaining tricks. Penn does all the talking, and Teller never utters a word. He just communicates through mime and facial expressions. Their shows are always packed.

One of the biggest reasons for that is the fact the duo generates powerful word of mouth. At the end of the performance we attended, Penn & Teller ran up the center aisle waving as the audience applauded. Then, the two of them left the theater. But when the house lights came on and we all shuffled out, we were surprised to see Penn & Teller out in the lobby, waiting to greet each and every audience member. They've done it every single time for over 6,000 performances.

Teller even chats with the fans, which shocks people because you never hear him speak on stage. The Penn and Teller audience interaction inspires thousands of selfies, social media posts, and blogs. And that's just the online word of mouse. It's a highly unusual and rare occurrence in Las Vegas. There is another famous magician who performs at another hotel. He charges $100 for a quick meet and greet and charges another $40 for a photo op. But Penn and Teller do it for free, happily. Why do they do it?

Penn says it's simple. Because they love it. Audiences not only get an autograph and a selfie, they get a great story to share. As Teller says, the real question is, why doesn't everybody do this? In a terrific book titled Talk Triggers by Jay Baer and Daniel Lemon, the authors not only tell several interesting word-of-mouth stories, they define what a true word-of-mouth stories, they define

what a true word-of-mouth strategy really is. And it has changed my thinking on this. They make an important distinction between a marketing stunt and a word-of-mouth idea. A stunt is a one-time event. Yes, it generates chatter, but that chatter is temporary. A true word-of-mouth trigger is repeatable. It is something a marketer can do over and over again to ignite conversations and referrals on a long-term basis. For example, take a bank headquartered in Portland, Oregon, called the Umpqua Bank. Umpqua has about 350 branches in the U.S., mostly on the West Coast, with $25 billion in assets. It strives to be a different kind of bank.

As a matter of fact, it wants to make banking a fun experience instead of an errand. To begin with, their banks don't look like banks. They look more like beautiful hotel lobbies. New customers often walk in, then walk back out and do a double take at the Umpqua sign to make sure they are, in fact, in a bank. The locations opt for comfortable chairs instead of desks. All bank employees are empowered to help customers, so you don't find yourself in a lineup

with dozens of banking staff pretending not to see you, as happens at many other banks. They created spaces for customers to actually hang out in. When you get your banking receipts, you get a chocolate too. All of this was new and unusual. But the bank wanted to generate even more powerful word of mouth. They wanted a distinct point of difference people would talk about. Here's what they did.

They installed special silver phones in each of their 350 locations. Above the silver phones were signs that said, Let's talk. And when a customer picked up that phone, they could press one button and be connected directly to the bank president. Not the branch president, the head of the bank's entire operation. They could ask questions, they could make suggestions, they could lodge complaints. Those silver phones generated enormous word of mouth.

People were stunned to discover they had direct access to the bank's CEO. Imagine, for a moment, trying to talk to the president of your bank. But Amquah wanted to prove they were different. When the president was asked why

he makes himself so available on a hotline, he summed up the reason in one sentence. Why hide from your customers? Incredible, long-term, word-of-mouth advertising delivered with silver phones. Which reminds me of a theater in Halifax that delivered word-of-mouth in taxis. And we'll be right back after this message. I've told this next story before,

but I want to mention it again because it's so relevant to this episode. When the late great actor John Neville was the artistic director of the Neptune Theater in Halifax, he came up with a novel idea to generate word of mouth for his theater company,

even though he had almost no advertising budget. When I was working with him once, John told me he used to offer free tickets to taxi drivers and their families. He did it for two reasons. First, John Neville had working-class roots, and he had affection for working-class families who couldn't always afford to go to the theater. Second, he knew cabbies would talk up the shows to passengers. This simple idea had all the earmarks of a smart word-of-mouth campaign. It was meaningful, it was unusual, it was unique to the theater, and it was repeatable.

Every time a new show opened, Neville would give tickets to the cabbies. That word-of-mouth idea had a remarkable effect on the Neptune Theater. Before long, the deficit was gone and subscriptions had doubled. In a book titled The Referral Engine, the author researched over 1,200 small and medium businesses and discovered

over 60% of the owners believe that over half of their revenues came from word-of-mouth referrals. Yet, less than 1% of those companies have a written plan for creating that chatter. It happens by accident. But the companies that have a defined plan for stimulating referrals

are the ones that don't need to spend as much on advertising. Take the Holiday World and Splashin' Safari amusement park in Indiana. It bills itself as the world's oldest family-owned amusement park. The owners always look for ways to stand out from their competition. One day, the CEO walked into his accounting department and said, I have this crazy idea. I want to give away the soft drinks for free. The financial controller said, are you stupid? That was an interesting thing to say to his boss, especially since it was the financial

controller's first day on the job. Nonetheless, he asked that question for a very specific reason. Soft drinks have a nearly 100% profit margin. But the owner wanted to offer his visitors something no other amusement park did. So, they implemented his idea. When the CEO went to an amusement park trade show, the other owners were furious. They asked him, why are you doing this? Ignoring their protests, Holiday World and Splashin' Safari offered patrons free soft

drinks via 924 separate dispensers throughout the park. Drinks were also free at every restaurant on the premises. And it wasn't just soft drinks. The offer included water, Gatorade, coffee, and iced tea. The savings were sizable for families. Most other parks charged about $15 for a single refillable cup. That's big bucks for a family of four. The free drinks created unbelievable word of mouth.

Not only did business increase, the park also experienced unexpected benefits. The petty complaints customers typically would leave on comment cards virtually disappeared. They just didn't complain. The reasons for that were twofold. They were happier and they were hydrated.

The number of first aid reports on hot days went down drastically. And parents loved the feeling of not having to say no to their kids for money reasons. Everyone could have a beverage whenever they wanted. But it was the chatter factor that

was so remarkable. For example, the park has over 1,000 reviews on TripAdvisor that explicitly mention the free drinks. The return on that decision has been substantial. Recently, they added another word-of-mouth feature. When people swam in the water park, their sunscreen usually washed off, and staff noticed most people don't reapply. So the park built a number of kiosks to hold big drums of free SPF 30. Customers are encouraged to keep applying sunscreen, especially on hot summer days.

The free drinks and sunscreen generate massive word-of of mouth. It differentiated Holiday World and Splashin' Safari from their competition. And that's why so many families park themselves at this amusement park. New year, new me. Season is here and honestly, we're already over it. Enter Felix, the healthcare company helping Canadians take a different approach to weight loss this year. Weight loss is more than just diet and exercise. It can be about tackling genetics, hormones, metabolism. Felix gets it.

They connect you with licensed healthcare practitioners online who will create a personalized treatment plan that pairs your healthy lifestyle with a little help and a little extra support. Start your visit today at felix.ca. That's F-E-L-I-X dot C-A. Whether you're in your running era, Pilates era, or yoga era, dive into Peloton workouts that work with you. From meditating at your kid's game to mastering a strength program, they've got everything you need to keep knocking down your goals no pressure to be who you're not just workouts and classes to strengthen who you are so no matter your era make it your best with peloton find your push find your power peloton visit peloton at onepeloton.ca There is a small but very good burger restaurant in Carmichael, California.

It's called Skip's Kitchen. It features excellent hamburgers, fries, and appetizers. It was named one of the best burger joints in the country in 2017. When the restaurant first opened, it realized it had a problem. People would order at the counter, then sit at a table. Skip Wall, the owner, had trouble remembering which table had ordered which meal. So he considered using plastic numbers that customers could prop up on their tables, similar to what other fast food chains do.

But Skip wanted something more visually interesting. So one day he came up with an idea. He would use a deck of cards. When people ordered, he would give them a card. Say it was the three of clubs. He would write their order down on the ticket along with the three of clubs. Then when it came time to deliver the order, Skip would look for the table with the three of clubs. It was a fun and unusual way to keep track of orders.

Business was good. When it was busy, the lineup would go out the door. And that created another problem. Lineups put people in a bad mood. would go out the door. And that created another problem. Lineups put people in a bad mood. Skip needed a hook, a reason for people to be patient while waiting in line. Then he came up with an unusual idea.

One morning, two ladies in their mid-70s came in to order some salads. Skip said, Ladies, I'm going to try something here. Then he fanned out the playing cards on the counter, face down, and said, If you pick the Joker, your entire meal is free. So, one lady picked a card, and it was the Joker. They screamed with delight.

Skip wondered if he had just come up with a terrible idea. But he persisted with it for the rest of the day and customers loved the chance to win. So he tried it the next day and the day after that. Soon, people started jockeying for positions in line. They came in groups. When the restaurant was busy,

customers had a better chance of winning as the deck of cards would get smaller. They would even let people get in line in front of them because it lowered the odds of a free meal

by the time they got to the counter. Suddenly, people didn't mind standing in line anymore. On average, four customers win every day.

Skip gives away approximately 2% of his orders. But when people win, it turns into precious word-of-mouth marketing. Lucky patrons take selfies, post them to Facebook, they write reviews, and tell their friends. The biggest bill Skip has covered was for $117 when a group of 10 scouts ordered lots of burgers, then picked out the Joker. The scouts all ran around the restaurant like they had won the Super Bowl. The entire place was clapping and high-fiving them. That Joker idea not only creates massive word of mouth, it creates return business. As author Jay Baer says, it differentiates the restaurant from all others in town. But here's the truly amazing part.

Since Skip Wall introduced the deck of cards to his restaurant, he hasn't spent a penny on advertising. Word of mouth is the oldest form of advertising. But it's also the most effective by a long shot. And companies with a blueprint for generating word of mouth enjoy a competitive advantage. In each of our stories today, the business owners made it a point to come up with creative ways of surprising their customers and, in turn, customers shared those stories with other people.

Important to note these ideas were not stunts but ongoing, repeatable ideas that customers loved. The amusement park did something no other park dared do. They gave away their profitable drinks for free. But the appreciation from customers turned into non-stop word of mouth. John Neville had virtually no advertising budget, but generated business for his theater company by simply offering free tickets to cab drivers. Neither the Umpqua Bank

nor Penn & Teller spend any money on their word-of-mouth strategies. They just agree that by making themselves available to their customers, their revenues grow. And the inventive use of a simple deck of cards means that Skip's Kitchen

has lineups out the door while spending exactly zero dollars on advertising. All of which proves the golden rule of marketing. Chatter matters when you're under the influence. I'm Terry O'Reilly. This episode was recorded in the TerraStream. Producer, Debbie O'Reilly. Sound engineer, Keith Ullman. Theme music by Ari Posner and Ian Lefevre. Digital content producer, Sydney O'Reilly. If you liked this episode, you might also enjoy an episode titled Marketing Stunts, Season 2, Episode 9. You'll find it in our archives

wherever you download your podcasts. See you next week. Under the Influence. Try it and you'll tell your friends about it. And they'll tell their friends and so on and so on. Hey, I like your style. I'd like your style even more if you were wearing an Under the Influence t-shirt. Just saying. You'll find them on our shop page at terryoreilly.ca slash shop.