Groundbreaking WOM research presented at WOMMnext

The Word of Mouth Marketing Association (WOMMA)’s recent WOMMnext conference fulfilled its promise to showcase leading-edge content, especially around research and measurement. Three research presentations in particular revealed substantial progress in the quest toward understanding and proving the high ROI of social marketing:

  • The Keller Fay Group and AT&T shared the results of a structural equation model and market mix model they built to determine the impact word of mouth (WOM) has on AT&T wireless-account sales. To do this, they used Keller Fay’s TalkTrack® data: survey responses from 36,000 consumers a year on their brand conversations, online and off. The result? WOM explained 25% of overall sales — half of that in gains from positive WOM and half in lost accounts from negative WOM. (Phone and cable services, in general, tend to drive a lot of negative word of mouth, unlike categories not requiring much service, such as CPG.) WOM’s contribution to sales was second only to paid media’s, at 30%. At first glance, that might appear to contradict the oft-cited assertion that WOM is the most powerful form of marketing. But once marketers fully optimize their paid media to drive WOM (as they should — studies repeatedly show that advertising is most effective when designed to spark WOM), then WOM’s contribution will rise substantially.
  • Pursway and Sony Electronics described some of the ways they’ve used Pursway’s data-analysis tools to optimize Sony’s influencer marketing programs. By analyzing the behavior and purchases of tens of millions of customers in Sony’s database, Pursway found connections between social interactions (online and off) and sales. In other words, Pursway was able to find thousands of clusters of people in Sony’s database who appear to know each other, and to see who in each cluster bought a particular Sony product first, and who else may then have bought one as a result. Observing such patterns over time, Pursway identified Sony Electronics’ true influencers — actual influence turned out to correlate very little with digital social reach, by the way — and to market to them accordingly. The resulting efforts substantially boosted Sony’s response rates, new customer referrals, reactivated customers and the bottom line.
  • Steve Knox of Boston Consulting Group (BCG) unveiled the firm’s new metric for predicting sales growth: the Brand Advocacy Index (BAI). BCG analyzed data on the brand conversations of over 37,000 consumers around the world. What did they find? The “bad news” for WOM marketers, as Knox put it, is that consumers simply talking about a brand have little impact on sales. But the “good news” is that recommendations have an enormous impact, whether they’re recommendations to buy or not to buy. BCG found that among major brands, the BAI — a measure of positive recommendations and criticisms for a brand — correlates very strongly with sales growth, across many categories and countries.

The visionary researchers at WOMMnext are pushing social marketing forward, laying bare the true impact of earned media and proving its superior power. Stay tuned for reports from WOMMA’s “RMC Forum,” an initiative from the Research & Measurement Council (which I chair). We’ll be bringing in measurement pioneers each month to discuss their latest research, and I’ll be reporting back on some of the most important findings here on the House Party blog.