In our previous blog on measuring WOM we explored best practices and left you hanging with the question on what companies are doing to measure WOM.

In a comprehensive report published by WOMMA, they admitted that there is no simple or direct way to understand the financial payback from measuring WOM investments. Today, most WOM efforts focus on “stroke counting” — page views, number of eyeballs, etc., rather than ROI or financial payback. Some companies have created a solid set of activity-based or output metrics.

For example, if the goal is to create excitement and interest in a new product or offer, a firm might develop relationships with influential bloggers and others as a way to create exponential growth. For this company, the number of blogs that picked up their story or wrote their own story, as well as the velocity (how fast the story is picked) and share of voice (how much talk occurred in the blogosphere), voice quality (what was said and the tone – positive or negative) might be important metrics.

Some companies are using the Net Advocacy scoring methodology for WOM efforts. This methodology enables a company to understand how many customers are advocates versus detractors and how many of your customers are likely to recommend your company to a friend or colleague. The question “How likely is it that you would recommend [your company] to a friend or colleague?” provides insights into whether your customers are likely to spread positive vs. negative word of mouth. It’s important to remember that this approach only tracks what people are saying they would say about you, not what they are actually saying about you.

Ideally, you’d want to be able to measure the percentage of deals generated by word of mouth compared with non-WOM deals.

Be clear on how you will measure Word of Mouth.

Using Return on Reference as a WOM Metric

A new metric being suggested for  WOM is “Return on Reference.” This metric measures the impact of satisfied customers on recruiting new customers and on shaping the impressions of influential people. This approach allows you to determine whether a customer-reference program is able to shorten the sales cycle. Other ideas are to compare the results of lift in campaigns with WOM against campaigns without WOM.

Dr. Walter Carl, assistant professor at the Department of Communication Studies of Northeastern University, measures the “credibility” of word of mouth in six ways:

  1. Credibility effect: Whether the information provided by the participant’s conversational partner made information heard from another source (such as the media) more or less believable;
  2. Thinking change: Whether the episode resulted in a change of thinking or ideas about the product or service and the action a person plans to take;
  3. Inquiries: The likelihood that a person will seek additional information after a WOM episode, such as visiting a Web site;
  4. Purchase likelihood and behavior: The likelihood of the participant to purchase or use the product or service;
  5. Pass-along likelihood and behavior: The extent to which the participant will tell other people about the product or service; and
  6. Relationship consequences: Whether the WOM episode has an effect on the participant’s relationships when they engage with their friends and family, etc.

In the B2B environment, word of mouth historically has manifested itself in the amplified category through conferences, sales calls, and special-interest communities. In the tech sector, customer reference programs are common. For example, potential clients are introduced to existing clients they can grill about how well the product works and meets their needs.

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The Word of Mouth Marketing Association created a framework around word-of-mouth marketing, including defining it, and developing standards, metrics, and measurement tools. They concluded that a WOM “episode” involves these components:

  • Participants: Creators, senders, and receivers who can be measured on their propensity, demographics, credibility, and reach;
  • WOM Unit: A single unit of (media-agnostic) marketing-relevant information;
  • Action: What participants do to create, pass along, or respond to a WOM Unit; actions can be measured on velocity, distribution/spread, and source diversity; and
  • Venue: The medium or physical location where the communication takes place; venues can be measured on total potential population vs. actual audience received.

A single “episode” achieves one in five outcomes, each of which serves as a traceable event:

  1. Consumption: The receiver absorbs the information but takes no action
  2. Inquiry: The receiver seeks additional information
  3. Conversion: The receiver completes a desired action
  4. Relay: The receiver redistributes the WOM Unit to another person
  5. Recreation: The receiver creates a new WOM Unit.

WOM Units can also be broken down into more distinct measurable parts, including:

  • Topicality: The degree to which the marketing message is contained in the WOM Unit;
  • Timeliness: Whether the WOM Unit arrives in time to be relevant to a specific campaign;
  • Polarity: The positive vs. negative content of the WOM Unit;
  • Clarity: Determines if a message is understood by the receiver in the way it was intended by the sender; and
  • Depth: The amount of visual, written, or verbal information included in a WOM Unit presumed to increase message persuasiveness.

It’s not easy to measure WOM, but because WOM can have a very positive impact on your brand marketing plan it’s important to do so. To improve your Marketing metrics, purchase Marketing Metrics in Action or schedule a call with us.

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