As brand marketers continue to increase their digital marketing spends relative to the conventional media, their primary goal is to generate virality, buzz or word of mouth online – whether stated or otherwise. Digital marketing effectiveness is often measured by the number of people who viewed a brand’s communication (a video, website or a social media status update), commented or shared it. Of the three behaviors named above, sharing of a brand’s name or communication is what leads to virality or buzz in the true sense, or what is technically known as online word of mouth (WOM).
Back in 2010, a group of consultants writing for the McKinsey Quarterly classified online WOM in three forms as per its origin – experiential WOM that is spontaneously generated by consumers from their personal brand experiences, consequential WOM that is generated as a result of marketing efforts by brand owners, and intentional WOM when brands pay prominent influencers (celebrities for example) to generate positive endorsements through the influencers’ social feeds.
Keeping the intentional WOM out of our discussion, does consumer-generated online WOM matter for brand performance? More specifically, does higher WOM lead to increased sales? Researchers have tried to establish empirical link between online WOM and its impact on sales.
In a paper titled ‘Investigating the Relationship Between the Content of Online Word of Mouth, Advertising, and Brand Performance’, academic researchers from three prominent business schools in the United States suggest that of the three types of online WOM, experiential WOM appears to be most crucial driver of actual sales. In other words, the biggest impact on sales seems to occur when happy consumers post their brand experiences online with in the form of a recommendation. See an example below:
Very happy with the excellent customer service at @Vistaprint Recommended if you need anything printed!
— paymon (@paymon) March 11, 2014
In contrast, the study finds a decreasing link between consequential online WOM generated from a brand’s marketing effort – say a great advertising video that goes viral – and the impact on the brand’s sales. In other words, while consequential WOM is effective (think of it purely as an opportunity to increase the brand salience), its impact wears off over a period of time. Also, consequential WOM that generates from an emotional advertising message is more effective. But here’s a surprising finding: the volume of buzz is found to have no significant impact on sales. In other words, quantity does not matter for actually driving sales, only the quality does.
What are the implications for brand marketers? While they may continue to plan for consequential WOM albeit with greater awareness of the latter’s impact, they must simultaneously identify opportunities to allow and encourage their satisfied customers to post their positive brand experiences online. Going by the study’s findings, it appears that ten customers recommending a brand after a satisfactory experience is far more valuable in terms of driving actual sales than a thousand consumers sharing a video advertisement.
For example, online platforms like Tripadvisor and Zomato (or Yelp in the United States) allow hospitality brands to take advantage of experiential WOM effectively. There aren’t many other similar services in operation for a whole range of other categories; for example there are no wildly popular platforms for experiential WOM for cars, consumer electronic devices or smartphones –categories that are otherwise known to get a lot of intentional or consequential WOM.
As McKinsey consultants said, all companies actively manage their traditional marketing activities with similar knowledge, but with so few companies actively managing word of mouth—the most powerful form of marketing—the potential upside is exponentially greater. The question is for marketers – isn’t this a big enough opportunity waiting to be tapped?