This document summarizes key approaches to measuring the value of word-of-mouth (WOM) marketing. It discusses the Customer Value Matrix, Net Promoter Economics, the Social Value of Opinion Leaders model, and the Conversation Value model. Each approach focuses on calculating customer lifetime value and the impact of WOM, using different methodologies like agent-based modeling or measuring generational reach. The document also outlines presentations to be given on driving business metrics with WOM, measuring WOM globally and online vs offline, calculating return on investment from WOM, and planning and measuring WOM programs.

1. State of
Word of Mouth
Measurement & R
M Research
h
2008
Walter J. Carl, Ph.D.
ChatThreads Corp.
Corp
Northeastern University

2. What’s the Value of WOM?
Sources: Kumar et al. HBR. Oct 10.07., BzzAgent, Satmetrix, ChatThreads
Slide 2

3. Some Key Approaches
• Customer Value Matrix
V Kumar and colleagues; Harvard Business Review
• Net Promoter™ Economics
Satmetrix
• Social Value of Opinion Leaders
Barak Libai and colleagues
• Conversation Value™ Model
ChatThreads and colleagues
• For each approach: key concept, focus,
methodology, and conclusions
• All share in common: CLV + WOM
Slide 3

4. Customer Value Matrix
• Key Concept
Customer Referral Value (CRV)
• Focus
Adding New Customers
Reducing Marketing Acquisition Costs
• Methodology
Value of customers who joined due to referral
Value of customers who would h
l f h ld have joined anyway
d
• Conclusions
CLV ≠ CRV
Different types of WOM recommendations
Champions, Affluents, Advocates, Misers
Slide 4

5. Customer Value Matrix
LOW HIGH
CRV CRV
HIGH AFFLUENTS CHAMPIONS
CLV
LOW
MISERS
S S ADVOCATES
OC S
CLV
Source: Kumar et al. HBR. Oct 10.07.
Slide 5

6. Net Promoter™ Economics
• Key Concept
Referral Economics
• Focus
Adding new customers due to positive WOM
Minimizing lost customers due to negative WOM
• Methodology
Positively referred x number referred x conversion rate
l f d
Negatively referred x number referred x conversion rate
b f d
Referral impact x overall average spend
• Conclusions
C
CRV:CLV
Focus on loyalty drivers to move customers along
continuum from detractors to promoters
Slide 6

7. Social Value of Opinion Leaders
• Key Concept
Social Value
• Focus
Acceleration effect
• Methodology
Agent-based modeling with inputs from diary-based self-
report methodology
Looks at effect on long range products if customer is absent
long-range
from social system
• Conclusions
Much
M ch social value stems from accelerating p rchase process
al e purchase
Activating influencers can increase value of firm’s revenue
due to accelerating adoption
Slide 7

8. Conversation Value™ Model
• Key Concept
Conversation Value™
• Focus
New customer purchases due to positive WOM
• Methodology
Generational reach of program
Current and future purchases at each generation
How long people continue to recommend
• Conclusions
Cross-channel comparisons
Understand referral drivers and high-impact
conversations to optimize over time
Slide 8

9. Other Approaches
• CPM base rate + premium for unique attributes
associated with WOM
• Marketing mix modeling
• Value from customer listening and innovation
Slide 9

10. What You’ll Hear Today…
• Driving KPIs Through WOM
• Global WOM
• Online and Offline WOM
• ROI
• Value of WOM
• WOM Planning and Measurement
Award-winning Paper
Slide 10

11. Driving KPIs Through WOM
• Customer-Generated Q&A Drives 72% Increase in
Conversion for PETCO.com
BazaarVoice
• Understanding the Impact of Product and WOM
Campaign Attributes on Generational Reach
BzzAgent
• The Hidden Business Decision Maker
The New York Times
Slide 11

12. Global WOM
• The New Dimensions of Word of Mouth: Comparing
Use in America and China
BIGresearch
Slide 12

13. Online and Offline WOM
• Comparing Offline and Online Word of Mouth:
Quantity, Quality, and Impact
Keller Fay Group
• Trends in Informal WOM - Information and Usage
Millward Brown
Slide 13

14. ROI
• The Impact of “Credible” Reach: How the Scalability
of Online Word of Mouth Programs Delivers Better
ROI
Matchstick
• Metrics that Matter: Developing Key Performance
Indicators to Measure, Communicate, and Maximize
the ROI of Word-of-Mouth
Popular Media
Slide 14

15. Value of WOM
• Measuring the Value of Word of Mouth
ChatThreads
• Measuring Conversations: A Proposal to Quantify
Public Relations Campaign Results
Golin Harris
• Net Promoter® Economics: The Impact of Word of
Mouth: Exploring the Relationship Between Net
Promoter and W d of Mouth in the Computer
P d Word f M hi h C
Hardware Industry
Satmetrix
Slide 15

16. WOM Planning and Measurement
• Socialight: How an Agency Developed a Proprietary
Word of Mouth Planning Tool
Denuo
• How Honest We Are
FikriMuhim
• How Innovative, Real-time Research Captures Buzz
Mesh Planning
g
• Making the Case: Measuring the Impact of Organic
Word of Mouth
Serengeti Communications
S ti C i ti
Slide 16

17. WOM Planning and Measurement (cont.)
• Identification, Engagement, and Measurement:
Putting It All Together For WOM Marketers
Sysomos
• Measuring the Social Mix: Quality, Quantity, and A
Bit of Intuition
VML
• Small Business and Word of Mouth
Webbed Marketing
Slide 17

18. Measuring Word of Mouth,
Volume 4
http://www.womma.org/research08/
Slide 18