Word-Of-Mouth Interactions Correlate With Rise In Sales

One in eight word-of-mouth interactions results in consumer sales -- some $6 trillion in annual consumer spending, according to a new study.

The research from the Word of Mouth Marketing Association (WOMMA) -- paid for by agency and brand sponsors, including AT&T, Discovery Communications, Intuit, PepsiCo and Weight Watchers -- says the study was based on “sophisticated econometric modeling of sales and marketing data provided by participating brands on a confidential basis.”

The study came from “consumer word of mouth” in six categories -- telecommunications, food, beverage, software, personal services and television -- through online and offline consumer conversations and recommendations.

Word of mouth resulted in 13% of consumer sales -- and in higher price-point sales, word of mouth resulted up to 20% of sales, the study revealed.



“This is the first public demonstration of the measurement of word-of-mouth sales effectiveness,” stated Alice Sylvester of Sequent Partners, consultants for the project.

Overall, one-third of the “sales impact” is attributable to word of mouth -- as an “amplifier” to paid media, such as television. Paid media delivers 69% of sales impact. The study says most of the impact of word of mouth works independently of advertising.

The research also showed that an offline word-of-mouth impression drives at least five times more sales than a paid advertising impression. Word of mouth’s impact happens closer to the time of purchase than traditional media — often within two weeks.

When “offline” was compared to “online” word-of-mouth marketing, “offline” had two-thirds the impact of word-of-mouth on business sales, with one-third the impact for “online.”

Analysis was conducted by Analytic Partners, an independent analytics consultancy. Nancy Smith, president of Analytic Partners, said: “Word of mouth is an area that begs for more deliberate decisioning and planning from marketers, as it works hand-in-glove with paid media.”

3 comments about "Word-Of-Mouth Interactions Correlate With Rise In Sales".
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  1. Karen Ticktin from brandthis, November 18, 2014 at 12:44 p.m.

    whoo hoo. Finally!

  2. Ed Papazian from Media Dynamics Inc, November 19, 2014 at 10:27 a.m.

    It's good to see an attempt to measure the impact of word-of-mouth product endorsements/recommendations on product sales, though I'd like to more about the methodology. It has long been evident that WOM is a potent force, especially when combined with conventional advertising and promotional efforts, but the effects are rarely quantified.

  3. James Smith from J. R. Smith Group, November 19, 2014 at 12:23 p.m.

    Ed's got a point regarding the methodology and it seems a stretch to call this research the "first" public demonstration. The "lift" from WOM has been researched for years, even going back to those early opinion-leader and source credibility studies.

    But it's considerably more complex than evidenced in the article. What about the decay rate of positive WOM? Does a positive response hike "intent" to purchase or actual purchase (and at what rates)? What are the tipping points for consumers in various stages of the purchase process? How many positive WOMs does it take to cancel/neutralize negative WOMs? How about the correlations among information seeking, ad exposure, interpersonal (face-to-face) vs. Internet sources and so on? What about the price points of the purchase (a $30k car vs. a $3 packet of lunch meat)? No question, WOM works. Do agencies and corporate marketers have the savvy and patience to develop and execute WOM-related tactics?

    However it shakes, WOM is a nifty acronym and we should use it as often as possible.

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