Read the full story, published by the Tuck School of Business.
Is there anything more satisfying than making a great new purchase—whether it’s a trendy purse or a shiny car—and telling friends and family about it?
Retailers rely on consumer word-of-mouth to build awareness of their products and entice others to buy them. Sometimes, businesses even encourage buyers to post about their purchases on Facebook, Twitter, or Instagram.
“Word-of-mouth is one of the most effective sources of influence on consumer behavior,” says Eesha Sharma, an associate professor of business administration at Tuck and the Paul E. Raether T ’73 Faculty Fellow. In fact, some studies have found that word-of-mouth affects some 70 percent of purchases. “Managers spend a lot of time understanding who the influencers are and thinking about how they can seed word-of-mouth,” she adds.
But understanding word-of-mouth gets more complicated when consumers feel financially constrained.