If word of mouth effects are so powerful, why do do few firms focus on them?

There has been no shortage of research around the power of word of mouth. Most new studies barely add to the body of knowledge, we know by now that consumers are twice as likely to trust the word of a friend, colleague, or just about anyone it seems over the thousands of messages marketers throw at us every day. Companies with favorable word of mouth dynamics, such as Amazon, beat the pants off others who don't have it. Silicon valley startups, like google, build their entire business, and disrupt whole industries with growth driven through word of mouth.

And yet.

Faced with what, on the surface, is a superior business model, marketers are slow to shift gears. A 30 second superbowl add ran $3m this year, a record, while TV viewership pretty much stands still. Studies continue to show a slow allocation of funds to these programs - and that's where companies truly signal their intentions.

Superior business models beating existing models by hiding in plain sight are not new. In the 1990's, Dell trumped Compaq with the direct model and, despite years of falling behind, Compaq found it hard to respond. Southwest's business model for airlines is hardly a secret, yet it's new entrants to the market that mimic it, not existing competitors. You could be forgiven that some firms, illustrated by Circuit City, would go out of business before changing their business model.

In all these instances, firms were handicapped by significant switching costs. In the case of Compaq, reliance on an existing dealership network made the adoption of the direct model difficult. An investment in existing fleet, hub and spoke systems and labor agreements have tied the hands of the aviation industry. Perhaps switching costs explain the challenge marketers have in moving to a superior model?

Skills represent such a switching cost in some firms. Marketing leaders brought up through a world of advertising agencies, TV spend and print media have had to work hard to adjust to a digital, web based world. New media is inherently more risky, if only because returns from traditional marketing - whilst relatively poor - are well understood. Few companies can measure word of mouth, let alone guarantee it's positive generation. Customer communities? Viral marketing? Many companies will stick to what they know - even to the point of failure - because the personal risks are too high to experiment, Startup competitors lack that risk intolerance.

Customer experience is not a traditional discipline within the marketing department, not like marcom. Worse, some see it as an operational issue that transfers ownership of demand creation out of marketing and into the functions that directly deliver the experience.

There is another factor, and one I'm loathe to point out as it's far from a general observations. In some marketing departments, spend equals organizational power. And nothing gets budget like advertising. Spending a small fortune on creative for a superbowl ad is a hoot. Working with smart agency people on a campaign is fun, and the agencies take good care of their clients. Nobody wants this to end.

What should marketers do? First, the firm has to accept - at executive levels - that the model has changed and isn't going back. Once we have accepted that the current model won't work, the relative risks of new models drops. This requires a lot of alignment from the top of the firm, given the already low tenure of CMOs. Then, it's time to gain an understanding of the word of mouth capacity in your firm - NPS will do just nicely. If your capacity is too low due to you falling behind your competitors, the priority resource investments need to be around improving that score to the point that you are enabled to compete. This requires tough, cross department tradeoffs, but it's worth recalling the maxim that "nothing kills a bad product like good advertising".

Getting beyond capacity into actual word of mouth effects happens naturally for loyalty leaders and it's hard to force the issue. I'm a huge fan of creative approach to promoter activation such as those communities at Intuit Turbotax and Lego, but those companies build on already strong story. If you can get into pole position, lots of opportunities present themselves to shift the game in your favor.