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ROI and Results: How to Quantify Word of Mouth's Sales Impact and Uncover Actionable Insights

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AT&T Mobility and Keller Fay presented new research on the topic of “ROI and Results: How to Quantify Word of Mouth’s Sales Impact” at a recent WOMMA conference. The results could not be clearer: …

AT&T Mobility and Keller Fay presented new research on the topic of “ROI and Results: How to Quantify Word of Mouth’s Sales Impact” at a recent WOMMA conference. The results could not be clearer: “Word of Mouth is a powerful and statistically significant sales driver” for AT&T Mobility.

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  • 1. ROI and Results: How to Quantify Word of Mouth's Sales Impact and Uncover Actionable Insights Greg Pharo| AT&T| Director, Market Research & Analysis, @greg_pharo Ed Keller| Keller Fay Group| CEO|@kellerfay
  • 2. Word of Mouth Matters! “It’s the most disruptive factor in marketing” 2.1 Billion brand impressions via word of mouth each day in America “The revenue growth of brands with the highest advocacy levels is far above the industry average. Over time, the difference separates the leaders from the laggards.”
  • 3. WOM > Social Media What % of WOM happens on social media, blogs or chatrooms IM/Text: 4% Email: 3% Social Media: 2% Offline 88% Online 9% Note: Percentages will not add to 100% because Other is not shown, © 2014 Keller Fay Group, Source: TalkTrack® 2013
  • 4. Marketing Plays Role in Driving WOM © 2014 Keller Fay Group, Source: TalkTrack® 2013 …led by advertising (26%) editorial (17%) point of sale (11%) websites (11%) promotion (10%) direct mail & email (5%) 58% of consumer brand conversations refer to marketing or media
  • 5. AT&T is a Highly Talked About Brand © 2014 Keller Fay Group, Source: TalkTrack® 2013 1. 2. 3. 4. 5. Top 10 most talked about brands in 2013 6. 7. 8. 9. 10. AT&T earns 6.5 Billion annual WOM impressions!
  • 6. AT&T Earns A Lot of WOM… • Does WOM directly influence sales volume, and to what extent? • Where does word of mouth fit into the “owned-earned-paid” media model? • Is it really a metric of interest to companies? But, do these conversations drive sales?
  • 7. Background- AT&T Marketing ROI • AT&T is a leading Wireless services company • Well-developed Marketing ROI program • Uses Market Mix Modeling and other methods to track & optimize media and messaging • AT&T wanted to know if WOM impacts its sales Does Word of Mouth Really Drive Sales?
  • 8. We used a two step approach 1. Structural Equation Model (“Purchase Funnel”) 2. Market Mix Model (Regression)
  • 9. First: Model Consumer Behavior AT&T created both a “Purchase Funnel” model which identifies which attitudinal and behavioral metrics impact sales (gross adds), both directly and indirectly The model also shows what other upstream metrics indirectly impact key drivers of sales
  • 10. Method- Create a Structural Equation Model First: Analytical techniques are used to winnow the myriad of earned media & behavioral metrics – Highly-related metrics were grouped together using a cluster analysis – A short-list of metrics that are most correlated with their group are selected Second: These representative metrics are then input into SEM models – Reduces the burden of incorporating potentially hundreds of metrics – Ensures the earned media impact is not “diluted” by having related metrics in model Used a one-two combo of clustering and SEM
  • 11. Structural Equation Models: Traditional regression assumes no interactions among sales drivers The SEM structure allows multiple interaction among sales drivers Gross Adds Paid Media Brand Health Word of Mouth Gross Adds Paid Media Brand Health Word of Mouth They uncover complex relationships
  • 12. TalkTrack: Source of WOM data • Keller Fay Group’s TalkTrack®, a national syndicated program measuring WOM in all forms – Over 3 in 4 conversations occur face-to-face • The study involves 36,000 online consumers surveyed annually, – Yielding about 1,000 weekly mentions of brands • Respondents are representative of the US population – use a diary to keep track of their brand conversations, then complete an online survey to gather detailed information about these conversations Mode of Conversations Across All Categories Face- to-Face 77% Phone 13% Online 8% Other 2% It measures WOM in all forms
  • 13. Attitudinal Metric #1: Awareness Attitudinal Metric #2: Network AT&T Gross Adds (Sales) WORD OF MOUTH: POSITIVE MENTIONS STRONG Relationship Advertising Message Metric #2 STRONG Relationship Advertising Message Metric #1 Moderate Relationship STRONG Relationship AT&T Media Weight Moderate Relationship STRONG Relationship Competitor Perception Metric STRONG Relationship Structural Equation “Purchase Funnel” Model Concluded that WOM is a strong and direct sales driver
  • 14. The model also identified metrics which influence WOM Word of Mouth- Positive Mentions Strong Moderate Weak Strength of Relationship Customer Service Perception #1 Network Perception #3 Network Perception #2 AT&T Gross Adds (Sales) Willingness to Recommend Additional Insights:
  • 15. Finding from Structural Equation Model:  The number of positive WOM “mentions” in TalkTrack® proved to be one of the more powerful metrics directly influencing “Gross Adds” (sales)  Unaided Advertising Awareness, a top-of-funnel metric, was also a strong driver of Gross Adds  In turn, the Structural Equation Model identified which metrics influence Word of Mouth and Unaided Advertising Awareness  Paid media drivers are also included, as they directly impact Gross Adds, Word of Mouth and brand health metrics Word of Mouth is a major sales driver
  • 16. In contrast, online/social buzz and NPS are weaker signals We’ve tried other metrics besides Word of Mouth: • Online Buzz (social media) • NPS While they provide some insights, they aren’t as strong or reliable for explaining sales as Word of Mouth
  • 17. And it gets even better We also constructed a structural Equation Model for AT&T Disconnects It shows what causes customers to leave AT&T Guess what we found …
  • 18. Structural Equation Model for Disconnects: Negative sentiment WOM is a factor Network Metric #2 Word of Mouth, NEGATIVE MENTIONS Disconnects Network Metric #1 Value / Pricing Factor #4 AT&T & Competitive Media Customer Service Metric #3 STRONG Relationship STRONG Relationship Moderate Relationship STRONG Relationship Moderate Relationship STRONG Relationship
  • 19. The Second Step Introduce Word of Mouth into a Market Mix Model It provides a more precise quantification of the sales impact
  • 20. Market Mix Models TV Radio Cinema Online Display Outdoor Content Search Base Plan Optimized • AT&T constructed market mix models for itself and key competitors • Each model uses Gross Adds as dependent variable • Media, pricing, product innovation, messaging performance, competitive, other relevant marketing/ environmental factors incorporated as ind. variables
  • 21. Market Mix Model resultsWord of Mouth is a powerful and statistically significant sales driver in Market Mix Models • Word of Mouth explained over 10% of sales volume through positive comments, and over 10% of lost/unrealized sales volume due to negative comments • Paid Media remains #1 sales driver, contributing ~30% of sales – but WOM is a close second WOM: Positive & Negative Impact
  • 22. AT&T Conclusions Word of Mouth is an impactful, relevant variable for influencing sales in the Wireless category WOM metrics belong on a CMO dashboard as a key performance indicator WOM drives sales and its impact can be measured
  • 23. Keller Fay Observations • Today, Over Half of WOM is influenced by marketing, including 26% by paid advertising • These numbers ought to grow as marketers adopt WOM as an objective “Conversation” should be a marketing objective © 2014 Keller Fay Group, Source: TalkTrack® 2013
  • 24. Think about providing “triggers” Keller Fay Observations Ways to stimulate WOM • Focus on messages that are “talkworthy” • Target consumers who are able to carry the message • Favor marketing & media channels that will maximize WOM Opportunity for marketers to think of all media as “social” Seek out “influencers”
  • 25. 17.2 18.2 18.4 18.7 21.6 The Blacklist America's Got Talent Dancing with the Stars 60 Minutes The Voice Current Media Focus: “Impressions” Most watched program by demographic target IMPRESSIONS Monthly Audience Size In Millions, Ages 18-49 Source: Nielsen TV/TalkTrack® Fusion, September 2013
  • 26. 17.2 18.2 18.4 18.7 21.6 The Blacklist America's Got Talent Dancing with the Stars 60 Minutes The Voice New Opportunity: Also Focus on “Expressions” Target consumers talking about category/brand IMPRESSIONS Monthly Audience Size In Millions, Ages 18-49 Source: Nielsen TV/TalkTrack® Fusion, September 2013 Sleepy Hollow 16.8 EXPRESSIONS Projected Weekly Auto Conversations in Millions 79.3 81.8 81.8 82.1 92.3 The Blacklist America's Got… 60 Minutes Sleepy Hollow The Voice Sleepy Hollow #7 in terms of “impressions,” but #2 in terms of auto WOM “expressions”!
  • 27. Depicts programs that do not surface on top 10 indexing list among “affluent men” Top Programs Among „Affluent Men Who Are Engaged in Consumer Electronics WOM‟ Shown: Top indexing shows among the top 100 programs reached across broadcast & cable. Bring “Social” Audiences to the Forefront Source: Nielsen TV/TalkTrack® Fusion, November 2013 174 160 159 157 154 154 147 145 145 144
  • 28. Plan for “Expressions” ” Awareness is fine, but advocacy will take your business to the next level. Joe Tripodi, CMO, Coca-Cola
  • 29. Concluding Thoughts • Word of Mouth is an impactful, relevant variable for influencing sales in the Wireless category – And, it’s impact can be quantified • WOM should be a key objective for all marketing • Use messaging, targeting and channels to stimulate WOM • Plan for “expressions” in addition to “impressions” PAY-OFF: CONVERSATION, ADVOCACY, SALES
  • 30. Thank you! Greg Pharo, @greg_pharo Ed Keller, ekeller@kellerfay.com, @kellerfay

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