I have been living and breathing word of mouth marketing theory for the past few days in Las Vegas, where I was attending the WOMMA Research Symposium and Marketing Summit. I would like to use this space to share some of the key learnings I took away from the conference, which was rich with WOMM examples and best practices.
First, the Conversation Value (TM) Model developed by the research firm ChatThreads and colleagues brought quite a bit of substance to the discussion around the incremental value WOM brings to campaigns. The firm, leveraging the work of Dr. Walter Carl from Northeastern University (and ChatThreads' Chief Research Officer) and Prof. Barak Libai who is currently teaching at MIT University, has built an agent based model. The model takes elements such as the following into consideration:
- profitability per unit
- purchases per customer
- retention rate
- discount rate
- time periods people continue to make recommendations
- generational relay
- generational purchase rates
- number of program participants
- program, coupon, sample costs
ChatThreads uses survey data and statistical modeling to calculate the value of a conversation. It is like, if you are skipping a stone over water, you can estimate the number of times it is going to bounce and the distance it will travel based on the strength of your arm, the weight of the stone and what happens when that stone hits the water.
The model helps marketers go beyond metrics such as impressions, hits and clicks; which tell only part of the story. It puts a dollar value on an esoteric concept such as word of mouth. When I asked Dr. Carl whether the model was best suited to estimate the value of conversation around tangible products, he explained that it could actually have a variety of applications, including scenario planing.
So, imagine knowing how far the word will go when faced with a crisis or when writing the key messages for a campaign. Pretty powerful stuff.