The World of Word-of-Mouth (WOM) – The Factors Influencing WOM Communication

Abstract: In this study we try to answer the questions regarding factors that may have influence on Word-of-Mouth (WOM) referrals within the service industry. Aim of this paper is to explore relevant literature in search for factors that may influence WOM communication, create a model of factors that will be tested during the research and finally to gather both the theoretical and empirical data in the new model that describes observed factors. The dissertation is built on an exploratory research and deductive approach to reach insight and better understanding for the phenomenon. Furthermore, we used semi-structured pilot interviews to collect the primary data and we chose to investigate the restaurants as the representatives of the service industry. Both the theoretical and empirical findings build upon Berlo’s (SMCR) communication model. SMCR stands for Source, Message, Channel and Receiver which are presented in correlation to each other under the process of developing, sending and receiving the message. Factors found to be important for the WOM communication are: the message, service and people. The message was found to be relevant for influencing the referrals when generating feeling of engagement and anticipation thru the company’s concept, events and other arrangements. The service was divided into three categories: employees, interior and food. The service works as a channel for the message. The channel should be unique, personal and create a value to be good carriers of the message. The people are the last factor, and they are the receivers of the message sent by the company and the source of the message to be sent further. The people that are most likely to influence referrals are the regular customers, employees, fans and hobbyists as well as people and companies connected to the restaurants in formal as well as informal relationships. Due to the limited amount of time we do not managed to investigate the efficiency of these factors. The further researches on this topic should include the consumers’ perspective. The paper can serve informative purpose to the current as well as future managers of the restaurants which want to explore the possibilities of using marketing technique that not requires large financial investments. Our research outcome is build upon the factors listed in the literature and factors that we found after analysing the empirical findings. We had to reject some of the factors but at the same time we discovered new like: event, concept, personal network and other companies that are used by the restaurants to harness the referrals.