From the February 1996 issue of Startups

As a small-business owner, you put a lot of time, effort and money into advertisements: print and radio ads, billboards, promotions, etc. But what are you putting into your word-of-mouth advertisements? Did you even know you could control what people say about your business? Jerry R. Wilson says you can. He's seen business owners make mistakes that cost them customers and, ultimately, their business from negative talk.

"Talk is not a passive, uncontrollable, amorphous intangible, but a measurable, collectible, manageable commodity that can move results to the bottom line like any other marketing tool," writes Wilson in his book Word-of-Mouth Marketing (John Wiley & Sons).

Every business owner knows how easy it is to generate negative comments from clients. Serve one bad meal, bungle one urgent overnight delivery, misplace one important communique or ship one defective product, and you're on damage-control duty indefinitely. The word of that one bad experience gets around to other potential customers, and you may never even get the chance to win their loyalty.

Wilson calls this chain-reaction the Rule of 3-33: "For every three people willing to tell a positive story about an experience with your company, there are 33 others who will tell a horror story."

When you think of the potential audience just one person can reach, you have a good idea of the amount of business negative talk can drive away, and no start-up can afford that.

Simply satisfied clients don't talk up your business, either. You have to go over the top with service or product quality to get customers to rave.

Wilson's not talking about quelling customer complaints. Instead, he says, be glad the customer took the time to complain instead of taking his business elsewhere. When a customer does sound off, don't stop at setting the error straight. Imagine the enthusiastic words that will fly when you do something extra to show you appreciate his business.

The key, of course, is not to wait until someone complains to beef up your service policies. Make your store or service customer-friendly, and put out the extra effort to hook customers on their first visit.

"Without a doubt," says Wilson, "you must dazzle a prospect with that first impression. The first contact he or she has with you must be overwhelming. That first experience is where word-of-mouth marketing comes to a fork in the road."

Don't think that if you fail to capture a customer's repeat business you've only lost one repeat customer. Even if they didn't have a horrible experience with your company, chances are they'll have a great experience elsewhere and talk up that business. And that will draw even more consumers away.

"It costs a lot more to develop a new customer than it does to keep a customer who's tried your wares," writes Wilson. "Once you've made that initial investment, you must capitalize on it by making sure the customer repeats his or her business and becomes a loyal client. That means investing something extra in order to exceed the customer's interests."

Here are just a few of the tactics Wilson's book gives for getting your customers to talk about you positively:


* Ensure you have an after-hours answering machine that will take inquiries and complaints. Promise to return such calls the morning of the next business day.


* Loosen up your exchange and return policy. Yes, there's a cost in handling a greater turnover of merchandise, but there's also a considerable increase in the willingness of people to make the purchase--they know they can always bring things back without a hassle. And they return to shop again!


* Get it right before the first time. Ever thought about taking time to examine your product in detail with your customer before they both leave your place of business? Consider doing this if you find an unacceptably high rate of return and exchange on your merchandise.


* Give thanks for promptness. Every deadbeat gets past-due and pay-up-or-else letters. When did you last thank those who pay you promptly? Do this at least once a year. It's just another way of letting people know you care about them, and it's a chance for them to talk about you.


* Brighten somebody's day--every day. Borrow from entrepreneur Stew Leonard, who grosses $90

million a year from just one grocery store. Leonard's secret is in making a trip to his store the highlight of the customer's day. If ever there are more than two people in the checkout line, somebody steps up and serves cookies and ice cream to the customers to keep them happy while they wait.


* Step out of your comfort zone. If you want to stretch the quality of your service to make it remarkable, so that it is exceptional enough for customers to remark on it, you'll have to take a few risks. This is not to say that you must walk up to the edge of the cliff and jump off. You simply push at the walls of the box you have built around yourself. Gradually, at your own pace, you will enlarge that comfort zone. --Lynn L. Norquist