Public Relations: Word of Mouth and its value

This is an excerpt of an old study, but worth taking a look into it now that Joël Céré discovered it:

* Companies enjoying higher levels of word of mouth advocacy (higher net-promoter scores), such as HSBC, Asda, Honda and O2, grew faster than their competitors in the period 2003-04.
* Companies suffering from low levels of word of mouth advocacy and high levels of negative word of mouth, such as Lloyds-TSB, Sainsbury's, Fiat and T-Mobile, grew slower than their competitors.
* A 7 per cent increase in word of mouth advocacy unlocks 1 per cent additional company growth.
* A 2 per cent reduction in negative word of mouth boosts sales growth by 1 per cent.
* In monetary terms, for the average company in the analysis, a 1 per cent increase in word of mouth advocacy equated to £8.82m extra sales.
* A 1 per cent reduction in negative word of mouth for the average company in the study resulted in £24.84m in additional sales.
* Companies with above average positive word of mouth and below average negative word of mouth grow four times as fast as those with below average positive word of mouth and above average negative word of mouth.
* A literature review of techniques for optimising word of mouth advocacy and thereby unlocking growth identified eight distinct techniques: Referral Programs, Tryvertising, Empowered Involvement, Brand Ambassador Programs, Causal Campaigns, Influencer Outreach, Advocacy Tracking and Innovation.

The report concludes by suggesting that the net-promoter score as a measure of word of mouth advocacy may be useful not only in predicting sales growth, but also in predicting share performance and employee productivity.

The study "The economics of buzz" was conducted by Dr Paul Marsden and Alain Samson of the London School of Economics and Neville Upton, The Listening Company comparing data from 2003 and 2004.

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Another related post by Emergency Marketing on this topic includes a reference on a Business Week article that has mobilized 600,000 mothers to chat about Procter & Gamble products.

Under the umbrella of Vocalpoint (the largest army of word-of-mouth agents -a community of influential moms created by P&G-), will take on assignments for the company as well as other clients.

A key requirement to becoming part of the Vocalpoint team of "buzzers" is to have a large social network. Vocalpoint mothers generally speak to 25 to 30 other women during the day, while the average mom talks just to five. In return for spreading the word about new products to friends and family, they get product samples and a sense of empowerment by being given a voice back to the manufacturer for which they are pitching products.

The results? For certain products in special test markets, they found sales to be double that of markets without Vocalpoint!

One of the main potential detractors of the program is that P&G does not require its agents to disclose their affiliation with the marketer - leading some to believe that this could result in "the commercialization of human relations and the undercutting of social trust."

Don't like people being paid to promote a brand and not disclosing it. It doesn't seem elegant to me.

Tags: PR, RRPP, Public Relations, Relaciones Públicas, Word of Mouth.