People outweigh Media?

After reading about Kiva I immediately pulled up several searches about them on the internet.  Since we have been talking about the current economic crisis, I was interested to see how Kiva was operating during the financial downturn.  Fortune Magazine provided me with the answer.  Although the management team at Kiva feared that the economy would cause the number of donors to decrease, the slowdown never came.  This non-profit organization continues to race to keep up with user demand.

“This is pretty much a fault of management,” says Shah. “We assumed things were really going to fall off. We didn¹t sign up enough microfinance institutions. That turned out to not be the right assumption. There are plenty of poor people out there.”

At only four years old, Kiva has nearly 500,000 users and has lent almost $65 million.  While media attention provided Kiva with a major boost, it has started to wane over the past year.  The real publicity comes from friend referrals and loyal users.  It is remarkable to hear that word of mouth is actually outweighing technology and mass media.  Does this have to do with the fact that Kiva is a non-profit organization?  Or are there other underlying causes?  The article provided us with examples of how Kiva spread like rapid-fire due to a blog on the internet, showing that non-profits still thrive off media attention, but what else could this recent reliance on word of mouth be due to?

After thinking a little deeper about Kiva’s reliance on word of mouth, it all made sense to me.  I have done a lot of volunteering for non-profit organizations, allowing me to witness the positive outcomes firsthand.  While Kiva relied on technology in the beginning to get their name out there, it was really the loyal customers they were after.  Once they were able to get someone to read the stories of their entrepreneurs and form an emotional attachment, they were set.  This is similar to my experiences in volunteering at non-profits.  An ad on TV or in a newspaper is easily looked over, first hand experiences are key.  My volunteering began when my mom’s friend told us about a handicapped horse back riding facility, called Sebastian Riding Associates.  That was step one, word of mouth by a friend.  The second step was actually volunteering, or in Kiva’s case, lending.  Once I volunteered and saw the smiles on the children’s faces and the happiness riding a horse brought to them, I was hooked.   Although Kiva is an internet-based site, they are able to form a connection to their customers through stories and pictures, thus achieving step two.  The lenders are able to specifically choose which entrepreneur to serve, and how much to donate.  From that point they can follow the story, and eventually get repaid for their loan service.  The third and final step is actually the first step all over again, word of mouth.  This time, however, word of mouth starts on the opposite end.  After I volunteered, I was eager to tell everyone about my great experience and not only the happiness it brought the riders, but me as well.

I believe that these three steps are crucial to any non-profit organization.  By creating a happy and loyal user, you are in fact creating a frequent user.  The economic crisis has a major impact on everyone, but people are still searching for that feel-good-feeling that a non-profit provides.  Kiva is also able to attract the time-crunched individual.  Not everyone is capable of traveling to a specific destination and volunteering their time.  Instead, Kiva allows them to lend money.  One last major attraction of Kiva is the lending vs. donating factor.  It seems that people are more willing to serve as a lender since they will eventually receive their money back.  While many don’t want it back, it’s hard to believe that others do not.

Kiva is an extremely interesting and promising organization that has created a special niche and is growing substantially.  I am curious to see the number of companies that emerge in response to Kiva’s particular style.

5 Responses

  1. I totally agree with you, the power of word-of-mouth advertising is something that still impresses me. Last semester in marketing our group chose to focus on Full Throttle which is Coca-Cola’s energy drink. When we were doing our research we look at competitors and Red Bull was obviously top of the list. Red Bull uses a really cool advertising campaign where they go around to bars and restaurants and place empty Red Bulls on tables so people see them and want one. They also do a lot of campus events, giving away free Red Bulls and other prizes. This may not be exactly word-of-mouth spreading, but it shows how powerful people are in the spread of ideas and products.

  2. Another point which you highlight. Word of mouth is given by people for products or organizations they believe to be authentic. And it can backfire just as quickly. So even though many companies are falling all over themselves to get the holy grail of word of mouth, are they ready to be held to that more exacting standard?

  3. […] Best use of theory: Blaire with People Outweigh Media? […]

  4. Jordi-

    I think you bring up an interesting point that many companies forget to consider. It sometimes seems like customers are even more eager to talk about the bad rather than the good, thus hurting an organization even more. The problem is that many companies don’t have control over the good or bad word of mouth. They are basically forced to rely on the success of their organization and good customer relations in order to keep word of mouth on the upswing, rather than down.

  5. This is really interesting when you think about it in context of the discussing we had in class about advertisements. What exactly drives us to choose certain products over others? If Crest, for example, spends x-amount to advertise during the superbowl, would it have been more worth their while to just pay Oprah to throw in a line or two about how she swears by Crest?

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