Five facts on why Word Of Mouth marketing is a sound investment

The marketing sector can be a complicated place as new marketing tools and techniques are launched, almost on a weekly basis. Powered by The Drum Network, this regular column invites The Drum Network's members to demystify the marketing trade and offer expert insight and opinion on what is happening in the marketing industry today that can help your business tomorrow.

Rebekah Mackay Miller is UK managing director of TRND.

Word-of-mouth marketing is one of the highest-yielding marketing disciplines. Yes, you read that right. And you can accurately and effectively measure the impact on sales of conversations between ordinary people about your product or service – and not just those that happen online.

There are some commonly held myths around word-of-mouth marketing, or WOM as its often referred to: that it can’t be measured; that only those conversations that happen online and in public can be tracked. Those myths make it difficult to invest in, even though (of course) we all know that, intuitively, we’re more likely to buy something that has been recommended by a friend. But there’s no line on the ROI section of your marketing report for intuition.

Here, we share five facts that will make it easier to invest in WOM:

Fact 1: 91% of all conversations take place offline, not online. Of course they do. Despite how you might feel sometimes if you have teenaged children, people still talk to each other in the real world. What you may not appreciate is that most of the conversations that have an impact on sales happen offline. A study by the Word Of Mouth Marketing Association (WOMMA) found that two thirds of the conversations that result ultimately in a sale happen offline, not online.

Fact 2: It’s possible to achieve huge reach with one-on-one conversations. A recent Freixenet campaign we ran saw the brand creating 1,000 ambassadors to spread the word about a new Freixenet ICE cava, reaching 26,231 people directly through conversations, and with a wider reach of 186,214 prospective customers. That’s 186k reached by credible, personal recommendations. You’re expanding your marketing team to the tune of thousands. While it can feel frightening to a brand to put its message in the hands of consumers that it can’t control, if you get the message right (and make it shareable), you can influence how people talk about your products.

What’s more, you can track the impact of those offline conversations. McKinsey has developed a way of measuring the impact of WOM by looking at a brand’s ‘word of mouth equity’ – its ability ‘to generate messages that influence the consumer’s decision to purchase’. Essentially, this is the average sales impact of a brand message, multiplied by the number of WOM messages. Note that McKinsey defines WOM as conversations that happen without financial incentive (in other words, they’re not paid to promote a product).

Fact 3: WOM drives sales.A study by WOMMA measured the impact of consumer word of mouth in six different categories, and found that online and offline consumer conversations and recommendations accounted for an average of 13% of consumer sales (or $6 trillion in annual consumer spending).

Fact 4: WOM will boost the impact of all your other marketing.Keller Fay reports that not only does it have a direct impact on sales, but it increases the effectiveness of other marketing initiatives, too: 15% of the marketing effectiveness of paid advertising‚ comes as a result of people talking about it or sharing it on social media. And the ROI is easy to prove: on average, £1 spent on WOM will result in £3.93 in sales, according to research we did with ESCP Europe.

Fact 5: WOM works for all products, not just big consumer branded products. People will talk about and recommend all sorts of products that you’d never imagine to be particularly sharable – for health, laundry, pets, sex, cleaning, DIY – you name it. One of our most successful campaigns was an amazingly inspiring one for incontience products. It turns out people really do want to share their experiences and offer help and support to others in the same situation.

So when you’re looking at next year’s marketing plans, think about how you can get your message to people who actively want to talk about your products, and who will influence others to buy. WOM might feel like a step into the unknown. But if you trust your consumers with your message, you could see a significant boost to sales.

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