Mumbai: As word-of-mouth, or WoM, marketing becomes increasingly important, brands are looking at measuring the efficacy of this communication and advertising medium. Walter J. Carl, co-chairman of Chicago-based Research and Metrics Council, and founder and chief research officer of ChatThreads Corp., an independent WoM measurement and analytics company, has helped clients such as Johnson and Johnson, Kellogg’s Co., Microsoft Corp., Nike Inc. and Unilever NV as well as advertising and media agencies such as Arnold, BzzAgent and Matchstick quantify the impact of consumer conversations and advocacy. Carl talks about WoM marketing and measurement metrics and how this segment is likely to develop in India. Edited excerpts:
On how companies are learning and listening from conversations about their brands:
Fresh insight: Walter J. Carl says that companies differ in how far they want to actively involve their consumers.
Consumer voices are now much more amplified due to various communication technologies such as blogs, discussion forums, social networking sites, RSS, among others. Some companies are embracing this fact more than others and are taking steps to listen and learn from the conversations by monitoring conversations online or through research panels, like a lot of Fortune 500 companies do now, such as Toyota Motor Corp. Or they are participating in the conversations that are going on about their brands—for example, by becoming members of certain communities. Fiskars is a great example of a brand that participates in discussions by people in the scrapbooking community.
Other companies host their own communities so they can interact with consumers using tools provided by companies such as Communispace Corp. and Passenger. Others, such as, General Motors Corp., start their own blogs or facilitate the discussions by creating platforms where consumers can support each other—Intuit Inc. and Dell Inc. are great examples. Or they try to stimulate additional conversations by seeking to involve influencers or people who are passionate about their brands—the Firefox community is a great example.
Some companies have explored the idea of co-creation, where they involve passionate consumers in the creation of their product and/or marketing messages. Lego Groupis an excellent example of what they did with their Lego Ambassador programme. Companies differ in how far they want to actively involve their consumers.
On metrics measuring return on investment (RoI) on WoM spending:
Key metrics include volume, or amount, of WoM (in the online world this is often measured in terms of the number of posts, comments or discussion threads); sentiment or whether the WoM is positive, negative, neutral or mixed; dispersion—into how many different communities or social networks messages spread; conversational reach or the number of unique people involved in conversations about a brand; influence (how influential certain consumers are relative to others in their social network); net promoter score—based on how likely consumers are to recommend a brand, and calculated by subtracting the percentage of people who are very unlikely to recommend from the percentage of people who are very likely to recommend. Consumers’ purchase intent or how likely they are to purchase, sales (by units sold and/or revenue generated) and cost of conversion are also used to help compare across media channels.
Pre-post and test control research designs are common tools to establish RoI: Surveying people before their involvement in a marketing initiative and then again afterwards and setting aside certain markets where a company runs an initiative and others where they do not, and then assessing differences between the markets.
At ChatThreads we use what we call Conversation Value, which measures the bottom line impact of consumer conversations about a brand. It combines a customer’s purchases over a certain period of time (their lifetime value) along with the number of people with whom they talk about the brand and those people’s purchases (their referral value).
In the end, you end up with a dollar value (or whatever currency) such as $1.20 (Rs55.08), which means that each time a consumer talks about Brand X that can be attributed to a particular marketing initiative, the brand made $1.20. If the conversation value is negative then that means the marketing programme failed to generate a positive return on investment.
On companies likely to enter India with their WoM metrics:
Brand monitoring firms (such as what Nielsen Online, Cymfony, Umbria, Radian6, among others are for North America) have emerged in a number of other countries outside the US, so I would expect to see these firms in India and Asia as well. The BzzAgent style model has been replicated by other companies in a number of countries, so I would see that happening as well. I know BzzAgent is in the US, Canada and the UK now, but a lot of other countries have their own “home-grown” versions, such as Trnd (Germany), Buzzador (Sweden), Coleo Marketing Group (South Korea), among others. ChatThreads currently operates in the US, Canada and UK, but has had a lot of enquiries from countries in Europe and Asia.