Conversation Economy and the Increased Value of Word of Mouth

I recently read an article on Fast Company, in which angel Investor Peter Shankman laid down a $5,000 donation bet that Yelp’s business model will fail by next year. He asks why, in the “conversation economy” that we live in, would he rely on the reviews of complete strangers when the feedback from his friends on Facebook and Google+ is so readily available. This term―conversation economy―really got me thinking. Though we’ve always placed a high value on word of mouth, social media has exponentially increased that, not only online, but in the real world. I’ll give you an example.

You can't beat these tacos.

You can’t beat these tacos.

A newer coworker at Main Street Hub recently became friends with me on Foursquare. She then began the obligatory creeping my check-ins to see what’s good (her words), when she came across a check-in at one of my favorite local Austin spots―Elaine’s Pork and Pie, and the accompanying photo. She asked me about it as we were getting coffee one morning, and I began the effusive raving that this little spot deserves. Amazing food, sweet service, and cheap prices. While we were discussing this, another coworker overheard the words “Pulled Pork Tacos,” and became interested in our conversation. Another was passing by and asked if we were talking about Elaine’s Pork and Pie, and also began talking about how much he loved the place. Remember those anti-tobacco Truth commercials, where the little asterisk appears above everyone’s head? Yeah, it’s something like that.

More than ever, now that Facebook’s Graph Search and Google+ Local search have incorporated your friends into what you’re searching for online, word of mouth is king. Positive experiences, check-ins, and good reviews from friends of potential customers (with Facebook allowing a star-rating and has teamed up with OpenTable, as well) can turn into real world dollars and ROI for a business’s bottom line. Just the opposite can happen if those experiences aren’t ideal or if poor experiences go ignored. Businesses simply cannot allow themselves to remain deaf and blind to the conversations that are going on about them. Participation is mandatory.

How has this change to the conversation economy affected your business? Have you had a similar experience like the one I describe above? Have you been to Elaine’s Pork and Pie? (If you’re in Austin, ever, GO. THERE.) Share your thoughts in the comments below.

Now go get your social on!

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10 thoughts on “Conversation Economy and the Increased Value of Word of Mouth

    • Yeah, that’s a really good point. Even as far reaching as my Google+ circles go (obviously, not all people I’ve actually met) I can’t guarantee I’ll have circled someone for everywhere I go. Much to the chagrin on many business owners, Mr. Shankman may be making a donation next year. Great to hear from you, John!

    • That seems to be the idea that Peter Shankman was pushing, too. I’ve read that they’re really pushing local involvement and ad sales, so it definitely is yet to be seen. John does make a good point that we still need some sort of recommendations when we’re out of town and don’t know anyone. Maybe Google+ Local will really step up. Thanks for the comment!

  1. Most people who use yelp are folks that are NOT tech saavy, although they don’t contitute the whole lot. It will be interesting to see what happens to yelp down the road. They have an outmoded model.

    • I think Yelp is trying to bring in more tech-savvy people by introducing their mobile reviews capability, rather than those tech-savvy folks just checking reviews and going. The integration with Apple devices will definitely help Yelp stay in the game for a while, but we’ll see how things go. Thanks for offering up your take!

  2. Yelp needs help. They may be catering to the tech saavy but they don’t have anywhere to run. In a few more years they will sell it to some tech-knob know it all only to see it fall down a fight of stairs with a cell phone.

  3. We give our clients a lot of assistance with Yelp to help them manage negative reviews. Honestly, starting with a response publicly on Yelp is not something we recommend. It is, however, a last resort. We prefer to see our clients reach out to their reviewers by phone as a first step to try and make it right.

    • Reaching out directly is a good idea, Leopoldo. I can definitely agree with that. However, many reviewers use an alias or a different name on sites like Yelp and TripAdvisor, so that can be difficult unless the situation is specific enough to know who it was. What I typically find best is to reach out to the person on that platform, and invite them to further discuss how the situation can be made right. I’ve also found that managing positive reviews can have just as much of an impact on customers, in both good and bad scenarios. Thanks for the insightful comment!

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