Measuring Word of Mouth

This is short article I recieved last weeks; it talks about measuring Word of Mouth !?!
I will let you read it & comment it before I add my comments about it in order not to influence you :)

Here we go:

How can I measure word of mouth?
Andrew Green
ZenithOptimedia

BACKGROUND
At its simplest, Word Of Mouth (WOM) provides an amplifier for marketing messages. If somebody talks about an advertisement they have
seen to another person who has not, message reach has effectively been doubled.
If a newspaper, magazine or TV station runs an item mentioning a product or advertisement this, too, is a form of message amplification,
on a larger scale.
But WOM can also add credibility to a message – a friend or family member talking about a brand or product, or an independent
commentator writing about it, tend to be believed more readily than commercial advertisers talking up their own brands.
As many as 90% of people cite WOM as their preferred source of product information and would be happy to try a brand recommended to
them by a friend.
For these reasons, every marketer wants to generate as much WOM as possible, especially as it is usually free. But unfortunately for them,
generating WOM is not quite as straightforward as buying a page in a magazine or a spot in a television programme.

MEASUREMENT
It is possible to measure WOM, up to a point. Mass-media editorial coverage can be tracked and measured just like an advertising
campaign, using industry readership or viewing research. Distinction can also be made between positive, negative and neutral coverage.
One writer has come up with the idea of 'MIRPs' or Media Impressions Beyond Ratings to describe the combined effect of advertising
ratings purchased and audience s to any news items generated as a result of the campaign.
The arrival of the internet has provided further opportunities to quantify consumer buzz. Blogs, threaded message boards and other User
Generated Media (UGM) can be tracked in detail using standard internet measurement techniques. As with mass-media coverage, analysis
can also be carried out into the extent to which the chatter is positive or negative.
Sites that offer customers the opportunity to rate or review brands can provide useful feedback to marketers on what people are saying
about them. A good review score on a popular site may create waves for a brand, although the opposite can also happen.
A recent US survey of 137 retailers conducted by Forrester found that 96% of retailers who offered customers the ability to rate and
review them via their own websites felt it had been an effective tactic for driving on-line conversion rates.
With big ticket items such as white goods, cars, computers and so on, more and more potential consumers are turning to these product
review sites to see what other people are saying about the various brands on offer.
Sites like Amazon have taken this idea a step further. Customers who buy a particular book, for example, are told about the purchasing
habits of other buyers of the book.

CONSUMER ADVOCACY
Much of the focus on WOM measurement in recent years has been on the subject of consumer advocacy. Fred Reichheld argued in his (2003*) 2006
book The Ultimate Question that the answers to a single question could predict whether a brand would grow or not. The question – “How
likely is it that you would recommend (brand X) to a friend or colleague” – is answered on a scale of 0–10. Those who score a brand highly
(9–10) are called Promoters. Those who score low (0–1) are Detractors; the remainder are Passives.
By subtracting the Detractors from the Promoters, Reichheld came up with a number he dubbed the Net Promoter Sco re. He then went on
to link US companies scoring highly on this measure with better long-term profitability than those who didn't.
His findings were backed up in research by the London Business School4 in early 2005. This study confirmed that WOM recommendation
was linked to brand performance–the higher the proportion of customers likely to recommend a brand, the higher the sales growth.

WARC Media FAQ
March 2007
www.warc.com
But some commentators have criticised the extreme simplicity of the measure. Others have argued that the Net Promoter Score is not
much better than other loyalty metrics at predicting company profitability.

NEGATIVE WOM
Negative WOM can be more important than straightforward advocacy as measured by the Net Promoter Score. As one writer put it: 'a
negative experience decreases loyalty to a greater extent than a positive experience increases loyalty'.
People who have a negative experience may themselves stop using a brand, as well as saying unflattering things about it to others,
whereas people whose expectations are exceeded are already brand users and can only influence new prospects.
One study found that satisfied people were likely to tell five people about their experience while dissatisfied customers told as many as
eleven others.

In this sense, negative WOM measurement tends to do a better job of measuring both customer loyalty and advocacy and, in turn, linking
this to market share and other financial performance data.