Assessing the Value of Word-of-Mouth Campaigns

Talk may be cheap, but that doesn’t mean it’s valueless. And while a brand may have its appreciators, unless those customers are able and willing to share their enthusiasm, word-of-mouth campaigns won’t amount to much more than hot air and wasted breath.

Furthermore, unless a marketer has a way of identifying its advocates and measuring the impact of their actions, it won’t be able to bring hard, quantifiable data to its program evaluations.

According to research from LoyaltyOne’s Colloquy consultancy, 26% of those willing to recommend a brand don’t tend to talk about such things with others. The trick is to find customers at the sweet spot, which Colloquy defines as those who are both impassioned and willing to share their passion. Once found, marketers must keep these customers motivated.

Colloquy calls the 52% of the general U.S. population who fall into this category “champions.” Among consumers belonging to loyalty programs, this figure ticks up to 55%.

At 55%, loyalty program members boast a higher level of “championship” than the young adult demographic segment (50%), which is more wired than other age groups, and the affluent, who tend to boost their status by sharing enthusiasm for products among their peers (53%).

These may seem like small differences, but when marketers start looking at enthusiastic participants they can isolate pockets of truly devoted customers.

For instance, 70% of those with a high degree of participation (defined as eight or more actions of any type, such as making a purchase, going on a Web site or signing up for a subscription service) are champions, compared with 43% who are less involved.

What’s even better about targeting word-of-mouth campaigns to loyalty program members is that marketers have a convenient way of identifying and communicating with them, and — hopefully — influencing and measuring their behavior, according to Colloquy’s editorial director Rick Ferguson.

“You can spend time and effort creating word-of-mouth campaigns, viral video, crowd sourcing, referral or other buzz-marketing initiatives, and you might be able to measure the effect of an individual program,” he says. “There are some off-the-shelf programs and agencies that have done a great job in developing ways to measure the effectiveness of individual campaigns.”

But, Ferguson continues, loyalty marketers have long focused on identifying members and providing a constant stream of messages. This gives them the means to build emotional involvement rather than allowing it to happen passively.

Champions can’t be bought — at least not with money. Programs that rely on cash-back strategies and their ilk, such as gift cards, don’t see the same percentage of champions as those membership schemes that offer rewards with a high perceived value, such as travel and merchandise.

But the most important reward participants can receive is having their influence expanded, Ferguson says. Marketers can achieve this by giving members advance notice of new items, letting them test as-yet-unreleased products before anyone else, or — even better — allowing them to invite friends to test such products before anyone else.

“Our theory is that when you know who these people are in terms of value and their willingness to champion your brand, you can send them forth,” Ferguson says. “It takes a sustained effort to do this stuff in a way that enables you to be confident you’re measuring the right thing. But imagine the potential benefit. You can assess the champions’ worth by the folks they’re bringing into the program. It could have exponential dividends — you might as well put [the best customers] on the payroll.”

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