Nov 08 2010
Measuring the Value of Word-of-Mouth and Viral Marketing
Rick Ferguson, an acknowledged expert in loyalty marketing wrote an article in November of 2008, with the intention of using examples of word-of-mouth (WOM) and viral marketing campaigns to investigate how to measure the effectiveness of these types of campaigns. In addition, he also made an effort to suggest some key concepts to follow when implementing such a campaign.
The article highlights the recent growth of word-of-mouth marketing and its use primarily through the internet. There’s no questioning its popularity and ability to build awareness, the question remains: do they build market share? Further, can marketers identify brand champions efficiently? And once recognized, how do you target them? Is viral marketing all that’s necessary to create customer advocates?
One example of successful word-of-mouth advertising used in the article comes from every hipster’s favourite beer, Pabst Blue Ribbon (PBR’s). Interestingly, their huge sales spike (9.4%) in 2003 started in Portland, Oregon where PBR’s blue collar image and affordable price made it popular amongst the fixed gear riding hipsters. Word eventually traveled all the way to Chicago. I guess PBR owes every hipsters a new pair of tight jeans. This was a result of getting out to the places where people drank PBR and learning from their brand champions. A customer-centric marketing scheme that resulted in brand evangelists spreading the good word about PBR far and wide.
Another example is Burger King’s subservient chicken, which was an online campaign designed to spread the word about a new chicken sandwich. People could go to the website and issue commands to a guy in a chicken suit. This was a very popular campaign (20 million hits), although the long term value of the campaign is unclear.
These were good examples of successful WOM marketing, but didn’t address how to find the right brand advocates and measure the value of WOM campaigns in terms of ROI.
The last portion of the article talks about Ferguson’s four “Viral Commandments”:
1) Building awareness and trial.
According to the article, what successful WOM campaigns really tap into is people’s desire to be in-the-know. Everyone wants to appear knowledgeable and one that’s why we all love to tell our friends and family about the cool new video/commercial/advertisement we saw. This notion made me think about the Old Spice campaign. Millions of people talked about the ads, but I’m curious many people actually promoted the product or ended up trying it out. And whether something like product trial can be accurately measured.
2) Identify then acquire.
Viral marketing campaigns are only successful if you capture customer identification through something like an e-mail address or customer sign up. This is paramount in order to have accurate metrics that measure not only the reach of your campaign, but also who has tried your product and become a long-term customer. These tactics allow you to focus in on who your brand advocates are.
3) It’s about more than the transaction.
Increasing people’s willingness to buy a product is but one part of viral marketing. There’s also the potential value of getting an increasing amount of people to promote and advocate the product/service.
4) Give your advocates a hug and don’t let them go.
Viral marketing represents a beautiful platform to connect your brand’s biggest fans with the product development cycle. The article gives a great example of Lego, who has utilized their brand advocates to find new product lines with great sales potential. If you know who your advocates are, talk to them, listen to them, and learn from them.
In the end, the author admits that WOM efforts are not a guarantee win and there is still no agreed upon quantitative ROI measurement. However, he does believe that successful WOM techniques will emerge by mixing with loyalty marketing tactics in order to identify the right types of customers to build advocacy for your brand, thereby improving a WOM campaign’s effectiveness and track-ability.
Final Thoughts:
What I find interesting about this article is how little is mentioned about social media marketing or bloggers. Despite the article being a mere two years old, there’s very little mention of social media as a tool for WOM campaigns that go viral (Old Spice anyone?). While I do believe that it’s exceptionally difficult to measure the value of an individual spreading the word about a brand, that doesn’t discount the importance of creating campaigns that do so. Old Spice did a good job of repositioning a seemingly old and faltering brand and creating a buzz around them that went viral. But is it possible to connect this campaign to creating new users? Well, I did some research to see what the results of the campaign were. I found a great article, released in 2010, that expounded the various positives of the campaign and for brevity’s sake, I’ll strictly mention a few statistics:
Sales increased 27% over 6 months since launching (year on year)
In the last 3 months sales were up 55%
In the last month sales were up 107% from the social responses campaign (Twitter responses)
Quick Comparison:
I found another article, written in 2009 addressing some of the same issues and found a few points to note. With all the various tools to spread a message these days, the speed and scale of WOM campaigns has increased drastically. This value, according to some, can’t be measured in terms of dollars and cents. It’s measured in “social capital”. People want to tell others about the latest product or video because it enhances our reputation as trendsetters. It’s the same urge that drives some to grow their friend network on Facebook, or increase page views on their blog. So the strategy is to create campaigns that tap into this urge to acquire social capital. But who are the brand advocates, how do you target them, and how do you measure their effectiveness?
Just like Mr. Ferguson’s thoughts, the article claims that the answer to identifying valuable customers and measuring the ROI of behaviour changes is through loyalty marketers. A good deal of effort is required, but uncovering these consumers is vital. However, according to the article, few loyalty marketers are designing specific mechanisms to measure WOM behaviour within their customer databases. How to find these key customers will be unique for each company, but once you’ve identified them, the goal is to reward them for promoting your brand. Utilize them to spread the word about your brand!