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[12 comments]

WOM ROI still elusive

May 19, 2014

According to a survey of over 300 marketers across a variety of industries, nearly two-thirds (64 percent) believe social marketing is "more effective than traditional marketing." Yet, few think they can effectively measure the ROI of online social media (34 percent) or offline WOM (22 percent).

The end-result is that measurement problems are preventing greater usage of word of mouth marketing. The top three cited obstacles are difficulty in measuring offline WOM (89 percent), not being able to show ROI (85 percent), and difficulty measuring online social media (79 percent). Other obstacles are a lack of company coordination (75 percent) and lack of understanding about WOM marketing (64 percent).

The American Marketing Association (AMA) and the Word of Mouth Marketing Association (WOMMA) sponsored the first of its kind survey.

In an interview with Business 2 Community, David Smith, director of research & analytics at House Party, a social media marketing company, cited weak measurement tools as the reason only 43 percent of marketers listed "direct sales" as a major objective of their WOMM/social media campaigns. Coming in much higher were driving brand awareness (82 percent) and increasing engagement (69 percent). He added, "If marketers were better able to measure a sales impact, they'd feel more comfortable listing that as an objective."

Demonstrating the particular challenges around quantifying offline WOM ROI, organizing parties or events earned the highest level of satisfaction overall, with nine in 10 marketers saying they were "very" or "somewhat" satisfied using this tactic. Yet only 30 percent of all respondents surveyed utilized such events.

WOMMA plans to unveil a landmark study on ROI at its November summit.

Other findings from the survey:

  • Online social media is considered a "major spending area" by only 26 percent of marketers with "offline word of mouth" ranked at 21 percent. That's well behind customer service (54 percent), e-mail marketing (40 percent), customer relationship management (39 percent) and digital advertising (36 percent);
  • Yet 70 percent will increase spending on social media, more than any other emerging marketing channel with digital marketing (59 percent), e-mail marketing (53 percent) and CRM (47 percent) also rating high. Offline WOM is expected to expand 29 percent.
  • The most-used WOM tactics were building/managing profiles (82 percent), monitoring online social media (72 percent), and using sharing buttons (68 percent). Forty-two percent measure offline WOM;
  • The tactics best poised to see more usage are enlisting advocates (40 percent are considering it), and setting WOM as an advertising objective (35 percent).

 

Discussion Questions:

Why do you think finding a measurement tool for ROI on word of mouth marketing has proven so elusive? Does online WOM promise to offer much better ROI than offline WOM? Should online WOM be given a much higher priority at this point than offline?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Should offline or online WOM be receiving a larger share of the marketing budget?

Comments:

Sitting in 5th Avenue traffic in NYC yesterday, we were pondering how measurable taxi advertising really is. By its nature, WOM - on or offline sits in the same boat. It will always be open to believing whatever the numbers are and who interprets them.

Online and mobile seemingly are more measurable, but what exactly is effective marketing? Sharing? A purchase? Possibly the most measurable "WOM" tactic is affiliate links. Someone reads about a product on a blog or elsewhere and clicks through what is (unlikely known to them) an affiliate link and makes a purchase. It can be construed that the blog spread the word so enticingly that a potential buyer was motivated to purchase. Then again, the blog may have been the last stop on a research tour and merely racked up the credit for an already inevitable purchase. Thus is the conundrum of measuring something relatively intangible....

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Ken Lonyai, Digital Innovation Strategist, co-founder, ScreenPlay InterActive

This is the big difference between large chains and independents. The owner is closest generally to their own sales floor. So they hear that someone saw a product post on Facebook. An employee can get excited speaking about a Pinterest board a customer started with their items.

The larger chains don't have sufficient ways to actually hear those casual conversations. And employees are further away from those who actually create the content. And passing those casual word of mouth moments would seem pointless once repeated.

Word of mouth has always been a bonus, not something you could actually measure. I would suggest that measuring it will always be elusive the larger the organization.

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Bob Phibbs, President/CEO, The Retail Doctor

WOM may not always have direct correlation to purchase in a short period of time from the exposure but, done well, will provide a level of emotional (subliminal) connection to the brand. It may be hard to quantify but is extremely relevant in making an impact on the desire to purchase. Once the relevant emotion is seeded, other stimuli seen or heard at a different time can trigger the purchase by re-awaking the memory of the experience.

Having studied and read about 20+ books in the past few years on the principles of human behavior and influence, I have no doubt about the correlation from relevant WOM experiences to purchase behavior. But as I've said before, it's difficult to measure because the "emotional center" of the human brain has no way to "voice" what is impacting it.

Example: when you hear the jingle "the best part of waking up is Folger's in your cup," it typically will trigger the positive emotion you may have felt when the college boy shows up unexpectedly on Christmas morning and has coffee with his mom. Long story short — that radio spot heard on the way to the supermarket might trigger a Folger's purchase but the shopper simply is unable to tell you that because she has no way to connect the subliminal dots in a survey or even a human intercept study.

The measurement tools have to be sensory in nature, and that's hard to do and even harder to correlate to "norms" when experiences are varied and hardly ever standardized like "watching a TV spot in a controlled environment."

I look forward to the WOMMA research study in November. This nut will be cracked, but it will take time and it won't be about "case lift" in a two week window.

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Anne Howe, Senior Vice President, Shopper Solutions, part of Acosta Mosaic Group

The elusive ROI is always a challenge for retail marketers, but particularly in the area of social media it should not stop them from implementing strategies. Social clearly influences shopper behavior in increasingly significant ways. WOM marketing should be included as part of a complete marketing strategy - not necessarily a greater or lesser priority than other tactics.

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Debbie Hauss, Editor-in-Chief, Retail TouchPoints

Offline Word of Mouth (WoM) has always been an extremely powerful marketing agent - ask any shopper who has been "surprised and delighted" with an amazing find! When charcoal goes on sale at Lowe's or Home Depot, my brothers in-law and I have a standing agreement. When one of us discovers the sale, a call is made and at least 100 pounds of charcoal are sold! This is virtually impossible to measure, but it happens and it is a powerful tool.

Creating an offline WoM campaign that goes "viral" is a mechanism that should be leveraged. The best way to measure its efficacy is in units sold. With everyone holding a mobile device, an offline WoM that goes "viral" would actually force folks to use their device as a phone along with e-mail and text notifications.

Since an online WoM campaign is easier to measure, the ROI is therefore easier to calculate. Given the access and power of communication in the form of a mobile device held by almost every shopper, an offline WoM campaign that goes viral can be the most powerful tool. The challenge is finding the right product/service, the campaign, and its ignition point.

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Adrian Weidmann, Principal, StoreStream Metrics, LLC

Remember the olden days when marketers paid for a TV spot, radio spot, newspaper ad or billboard? Companies selling the space could show marketers how many people their ads would reach and how frequently. Marketers determined base reach and frequency levels to break through the clutter and make an impression on consumers. WOM cannot be measured the same way. And frequently, consumer WOM can be negative, rather than positive.

Marketers need to make their brands available to dialogue with consumers and need to vigorously listen to what consumers have to say and quickly respond. Brands need to handle consumer complaints quickly and ask if they have successfully solved the problem. Dialogues and customer service will produce happier consumers, which will generate far more meaningfully positive WOM than enlisting advocates.

Social marketing and WOM are not traditional media. Brands need to treat them differently, even if it's hard to get an accurate ROI.

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Max Goldberg, President, Max Goldberg & Associates

It's a bit like herding cats. Where do you begin? When we refer to "word of mouth marketing" it connotes that it begins with the marketer. And if that were the case, it would be easier to track from the beginning to the end point. However, WOM and other forms of social media are often consumer initiated at the beginning, in the middle and at the end. How do we cast a net that wide? And in what direction?

The way to begin finding the path to documenting is to start at the end, with the transaction and tracing the influences to that path to purchase going backwards, at least for a sample of shoppers. That's one way to build hypotheses and then test them out.

But what I don't feel I truly understand is how marketers define the word of mouth they want to measure, or the social media they feel is most relevant to their sales.

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Joan Treistman, President, The Treistman Group LLC

Marketing to consumers on social networks is largely a "top of the funnel" activity, and by definition, top of the funnel marketing activities are harder to attribute to conversion events and therefore harder to quantify. Digital WOMA is still imminently more measurable than other top of funnel activities like print or broadcast.

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Jason Goldberg, VP Commerce Strategy, Razorfish

The best way to find out why people are shopping at your store is to ask them. Of course this is easier for smaller shops. However, more and more stores are equipping their staff with portable digital devices with which they can complete transactions. Is it possible to develop a simple app for such devices to allow sales people to input what led a customer to the store that day? It's not that difficult to politely ask someone what brought her into the store or why he's interested in a particular item - that should already be part of typical encounter. Human interaction may be one of the only ways to track WOM. There just needs to be a simple means to record it.

Sometimes, when I slide my credit card, the display is used to ask questions about whether or not I would like to donate to a charity. Perhaps it could have a multiple choice question about why I chose to shop there.

There may not be a means to track ROI for all WOM transactions, but it seems that with a little innovation, retailers could become better equipped to track more. Then again, there is also the cumulative affect of multi-channel marketing or an "all of the above."

'RetailRetell'

I don't think we will unravel the WOM ROI puzzle until we stop thinking of social media as channels into which we push our messages. There is nothing linear about the path to purchase, as far as I can tell, and causality always appears closer in the rear-view mirror.

The sheer volume of interpersonal messaging created by social media participants dwarfs anything we can hope to create as brand stewards. Our first priority must be to learn how to selectively extract some meaning and insights from the torrential flow. We had best be prepared to discover that our brands are not as important to our target consumers as they are to us.

With that sober analysis in mind, there is certainly opportunity to influence consumers along their multiple meanders toward the purchase decision. Marketing works for many good reasons, and measures of brand reputation from social media may be one good way to frame an ROI metric (and I do not mean counting "likes").

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James Tenser, Principal, VSN Strategies

Actually, ROI tools are indeed available today. Social media analytics is a huge priority investment for many retail and CPG brands. Both online and offline WOM are proving to be effective strategies for marketing. Social media analytics is a powerful tool for discovering customer sentiment from millions of online sources. Businesses are using the power of social media to gain a better understanding of their markets. However, they need deep analytics expertise to transform this "Big Data" into actionable insight.

From identifying new patterns and trends for your CPG product development team, to protecting your retail or CPG brand image and micro-segmenting consumers to refine marketing campaigns, or targeting prospective new hires for HR, and to improving the overall customer experience, social media analytics can drive true ROI via offline or online WOM marketing.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

In my many years of sales learning and practice there are several standout characteristics found in everyone without exception. Two characteristics that come to mind as a result of reviewing this discussion are that people see what they want to see and hear what they want to hear. Everything we say and do is understood uniquely by any and all observers. This continues to evolve as the actions and words are passed on by "word of mouth" from first hand to second hand and so on and so forth observations. So I have always been of the opinion that the more complicated the communication the less effective it is on it's own. In fact, a complex communication stands a good chance of being detrimental to any and all sales efforts for a long time.

Simple three word, one syllable, seemingly aloof action messages leave little to the imagination and stimulate a curiosity and willingness to explore. This can cause a sale and a second hand continuance of the message commonly called positive word of mouth referrals.

'gjarnoldjr'

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