The Influence of word-of-mouth in customer acquisition in service companies: a six markets model analysis

Many authors maintain that word-of-mouth (WOM) from satisfied customers is a significant contributor to customer acquisition, and professional firms and SMEs rely on it. However, we know little about how WOM processes work for service firms, and how managers can influence recommendations. This multiple case study of three service organizations is used to explore the significance of WOM as a contributor to new customer acquisition. Even when organizations focus on and apply sizeable resources to customer relationship management (CRM) in order to achieve customer satisfaction, WOM is weak and very much less significant than anticipated. WOM’s power in attracting new customers lies in organization-influenced WOM and relationship marketing networks. Some of these organization-influenced WOM processes are managed, some are relatively unrecognized, but all may be important contributors to new customer acquisition. We believe a sound understanding of the organizational factors influencing WOM amongst customers and non-customers may help to create more pro-active and productive communications within organizations, and more effective use of WOM in customer acquisition.