State of Word of Mouth

M & R hMeasurement & Research2008

Walter J. Carl, Ph.D.ChatThreads CorpChatThreads Corp.

Northeastern University

What’s the Value of WOM?

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Sources: Kumar et al. HBR. Oct 10.07., BzzAgent, Satmetrix, ChatThreads

Some Key Approaches

• Customer Value MatrixV Kumar and colleagues; Harvard Business Review

• Net Promoter™ EconomicsSatmetrix

• Social Value of Opinion Leaders• Social Value of Opinion LeadersBarak Libai and colleagues

• Conversation Value™ Model ChatThreads and colleagues

• For each approach: key concept, focus, For each approach: key concept, focus, methodology, and conclusions

• All share in common: CLV + WOM

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Customer Value Matrix

• Key ConceptCustomer Referral Value (CRV)

• FocusAdding New CustomersReducing Marketing Acquisition CostsReducing Marketing Acquisition Costs

• MethodologyValue of customers who joined due to referral

l f h ld h d Value of customers who would have joined anyway• Conclusions

CLV ≠ CRVCLV ≠ CRVDifferent types of WOM recommendationsChampions, Affluents, Advocates, Misers

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Customer Value Matrix

LOWCRV

HIGHCRVCRV CRV

AFFLUENTS CHAMPIONSHIGHCLV

S S OC SLOW MISERS ADVOCATESLOWCLV

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Source: Kumar et al. HBR. Oct 10.07.

Net Promoter™ Economics

• Key ConceptReferral Economics

• FocusAdding new customers due to positive WOMMinimizing lost customers due to negative WOMMinimizing lost customers due to negative WOM

• MethodologyPositively referred x number referred x conversion rate

l f d b f d Negatively referred x number referred x conversion rateReferral impact x overall average spend

• ConclusionsCCRV:CLVFocus on loyalty drivers to move customers along continuum from detractors to promoters

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continuum from detractors to promoters

Social Value of Opinion Leaders

• Key ConceptSocial Value

• FocusAcceleration effect

• Methodology• MethodologyAgent-based modeling with inputs from diary-based self-report methodologyLooks at effect on long range products if customer is absentLooks at effect on long-range products if customer is absentfrom social system

• ConclusionsM ch social al e stems from accelerating p rchase processMuch social value stems from accelerating purchase processActivating influencers can increase value of firm’s revenue due to accelerating adoption

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Conversation Value™ Model

• Key ConceptConversation Value™

• FocusNew customer purchases due to positive WOM

• MethodologyGenerational reach of programCurrent and future purchases at each generationCurrent and future purchases at each generationHow long people continue to recommend

• ConclusionsCross-channel comparisonsUnderstand referral drivers and high-impact conversations to optimize over time

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conversations to optimize over time

Other Approaches

• CPM base rate + premium for unique attributes associated with WOM

• Marketing mix modeling• Value from customer listening and innovation

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What You’ll Hear Today…

• Driving KPIs Through WOM• Global WOM• Online and Offline WOM• ROI• Value of WOM• WOM Planning and Measurement

Award-winning Paper

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Driving KPIs Through WOM

• Customer-Generated Q&A Drives 72% Increase in Conversion for PETCO.com

BazaarVoice

• Understanding the Impact of Product and WOM Campaign Attributes on Generational ReachCampaign Attributes on Generational Reach

BzzAgent

• The Hidden Business Decision MakerThe New York Times

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Global WOM

• The New Dimensions of Word of Mouth: Comparing Use in America and China

BIGresearch

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Online and Offline WOM

• Comparing Offline and Online Word of Mouth: Quantity, Quality, and Impact

Keller Fay Group

• Trends in Informal WOM - Information and UsageMillward BrownMillward Brown

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ROI

• The Impact of “Credible” Reach: How the Scalability of Online Word of Mouth Programs Delivers Better ROIROI

Matchstick

• Metrics that Matter: Developing Key Performance Metrics that Matter: Developing Key Performance Indicators to Measure, Communicate, and Maximize the ROI of Word-of-Mouth

Popular MediaPopular Media

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Value of WOM

• Measuring the Value of Word of MouthChatThreads

• Measuring Conversations: A Proposal to Quantify Public Relations Campaign Results

Golin HarrisGolin Harris

• Net Promoter® Economics: The Impact of Word of Mouth: Exploring the Relationship Between Net P d W d f M h i h C Promoter and Word of Mouth in the Computer Hardware Industry

Satmetrix

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WOM Planning and Measurement

• Socialight: How an Agency Developed a Proprietary Word of Mouth Planning Tool

Denuo

• How Honest We AreFikriMuhimFikriMuhim

• How Innovative, Real-time Research Captures BuzzMesh Planningg

• Making the Case: Measuring the Impact of Organic Word of Mouth

S ti C i tiSerengeti Communications

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WOM Planning and Measurement (cont.)

• Identification, Engagement, and Measurement: Putting It All Together For WOM Marketers

Sysomos

• Measuring the Social Mix: Quality, Quantity, and A Bit of IntuitionBit of Intuition

VML

• Small Business and Word of MouthWebbed Marketing

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Measuring Word of Mouth, Volume 4

http://www.womma.org/research08/

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