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WOMMA Annual State of WOM Presentation

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Presented at WOMMA's Summit on November 18, 2009 in Las Vegas, NV. For more information visit ChatThreads at www.chatthreadscorp.com

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WOMMA Annual State of WOM Presentation

  1. 1. Annual State of Word of Mouth Address 2009 Walter J. Carl, Ph.D. ChatThreads Corp.
  2. 2. Exponential Growth Of “Social Media”
  3. 3. WOM & Social Media: Clarifying the Relationship •  Social media as sub-set of WOM. 1.  Online WOM activity. 2.  Digital venues where WOM occurs. 3.  Flexible and scalable set of tools to achieve WOM marketing goals.
  4. 4. Scope of Topics Covered 11 Core Entries: Special Section on Social -  Advocacy Measurement Media Success Metrics -  Conversation Volume / Frameworks: Share -  Conversation Impact™ of -  Cost Deflection SM Campaigns -  Cost Per Conversion -  Social Influence -  Influence Marketing (SIM) Score -  Marketing Mix Modeling -  Activities, Reach, -  Ratings & Reviews Relevance, Outcome, and -  Reach Worth (ARROW) Model -  ROI of WOM Case Studies: -  Sentiment Analysis -  SM in Restaurant Business -  Value of a Conversation -  SM in Online Knitting Community -  SM on Facebook for “Smart Pen”
  5. 5. Three Observations #1: What You Can Measure ≠ What You Need To Measure
  6. 6. From “Test & Learn” to “Competitive Resource Allocation” •  Page Views •  Volume of Posts •  People Reached •  Comments on Posts ≠ ROI •  Sentiment Shifts •  Time Spent •  Number of Fans •  Etc.
  7. 7. Proof of Business Performance, Then Optimization
  8. 8. Ways That WOM Adds Value -  Cost 1.  Deflects costs Deflection -  Value of a 2.  Adds revenue Conversation -  ROI 3.  Accelerates impact 4.  Amplifies impact of other media 5.  Offers learning and insight
  9. 9. Three Observations #2: Play the (Accountability) Game, But Don’t Get Played
  10. 10. ROI Is A Short-Term Indicator (Or Is At Least Often Used This Way)… “… customers acquired through marketing contribute more to the firm’s performance in the short run than customers acquired through WOM.” (Villanueva et al., 2008) “… this firm can increase its short-term revenue more through MKT customer acquisition ($6,695) than through WOM customer acquisition ($5,631).” (Villanueva et al., 2008) Villanueva, Julian, Shijin Yoo, and Dominique M. Hanssens. 2008. The impact of marketing- induced versus word of mouth customer acquisition on customer equity growth. Journal of Marketing Research 45(1): 48–59.
  11. 11. WOM Has Ongoing, Long-Term Value “… WOM has a greater financial impact ($23,481 of present value) than MKT ($11,759 of present value).” (Villanueva et al., 2008) “The primary reason for this difference is that customers acquired through WOM tend to stay longer as active customers and thus generate more value over time…” (Villanueva et al., 2008) “… each customer acquired through MKT is expected to bring approximately 1.77 new customers throughout his or her lifetime, whereas a customer acquired through WOM is expected to bring 3.6 customers.” (Villanueva et al., 2008) Villanueva, Julian, Shijin Yoo, and Dominique M. Hanssens. 2008. The impact of marketing- induced versus word of mouth customer acquisition on customer equity growth. Journal of Marketing Research 45(1): 48–59.
  12. 12. Three Observations #3: Innovate Your Research & Measurement As Well As Your Activation
  13. 13. Patterns You Need To See May Be Hidden From View When WOM has a positive effect in year over year changes in business the impact can range from 2% to 7%, with ROIs as high as $5 for every dollar spent. (Marketing Management Analytics) -  Marketing Mix Modeling -  Also see Definitive Social Media ROI link at: tinyurl.com/ waltersentme
  14. 14. Patterns You Need To See May Be Hidden From View Brands that seed products even in random networks of people can increase customer equity by 17%. (Libai et al., 2009) By targeting influential customers, rather than just random customers, brands can increase that social value by 33% (Libai et al., 2009) If Brand A can achieve first-mover -  Agent-Based advantage with their seeding program Modeling over its competitor(s) the gain in customer equity can be as high as 66%. (Libai et al., 2009)
  15. 15. Patterns You Need To See May Be Hidden From View Building Customer Networks for Successful WOM Marketing link at: tinyurl.com/ waltersentme Combining Empirical -  Agent-Based Data with Simulations Modeling link at: tinyurl.com/ waltersentme
  16. 16. Learn More… 11 Core Entries: Special Section on Social -  Advocacy Measurement Media Success Metrics -  Conversation Volume / Frameworks: Share -  Conversation Impact™ of -  Cost Deflection SM Campaigns -  Cost Per Conversion -  Social Influence -  Influence Marketing (SIM) Score -  Marketing Mix Modeling -  Activities, Reach, -  Ratings & Reviews Relevance, Outcome, and -  Reach Worth (ARROW) Model -  ROI of WOM Case Studies: -  Sentiment Analysis -  SM in Restaurant Business -  Value of a Conversation -  SM in Online Knitting Community -  SM on Facebook for “Smart Pen”
  17. 17. Three Observations #1: What You Can Measure ≠ What You Need To Measure #2: Play the (Accountability) Game, But Don’t Get Played #3: Innovate Your Research & Measurement As Well As Your Activation Walter J. Carl, Ph.D. ChatThreads Corp. tinyurl.com/waltersentme

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