Financial Value Of Wom[1]

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Financial Value Of Wom[1]

  1. 1. Financial Value of Word of Mouth Michael Lowenstein, CPCM Senior Vice President, U.S. Operations Customer Management Center of Excellence
  2. 2. What Is It ? <ul><li>Informal consumer to consumer conversations/dialogue </li></ul><ul><li>So it’s not new </li></ul><ul><li>But it is potent </li></ul><ul><ul><li>The black economy </li></ul></ul><ul><ul><li>Many commercial case histories </li></ul></ul>
  3. 3. WOM Impacts Most of US Economy <ul><li>13% of US economy largely driven by buzz </li></ul><ul><ul><li>Including fashion, toys, movies, broadcasting </li></ul></ul><ul><li>54% of US economy partially driven by buzz </li></ul><ul><ul><li>Including food and drink, healthcare, electronics, automotive, hotels </li></ul></ul><ul><li>33% of US economy immune </li></ul><ul><ul><li>Including oil, gas, chemicals </li></ul></ul>Source: McKinsey estimates, 1994
  4. 4. Why Is WOM So Valued and Effective Among Consumers/Customers? Integrity of source - close to altruism, so high trust Receptive audience – they’re “like me” or “I want to be like them” Relevant - fit for needs and right time (when sought, likely to be in the market) Genuine passion, engagement and excitement Objective – gives me the good and bad Valuable - reduces purchase risk (social and utilitarian) and speeds up decision (“so much to choose from”) <ul><li>Interesting – fresh, unique messages </li></ul>
  5. 5. A Comparison With Highly Satisfied and Highly Likely to Recommend Customers Source: Proprietary study for NOP World. Based on between 685 to 925 rated brands.
  6. 6. Overall Ability to Predict Usage Across Advocacy Segments 0% 20% 40% 60% 80% 100% Indifferent Fulfilled Committed Active Advocates Used at all Used recently Used most frequently Base – 903 respondents
  7. 7. Difference Between the Advocacy Segments … Share of Spend 0% 10% 20% 30% 40% 50% 60% 70% 80% Indifferent Fulfilled Committed Advocates Average Brand 1 Brand 2 Base – 903 respondents

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