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Top 9 Word Of Mouth Rules For Building Successful Marketing Programs

Rob Fuggetta — Tue, 08 Dec 2009 20:08:57 +0000

Here is a list of best practices about word of mouth marketing that we have developed and that are the base behind the successes we’ve been able to achieve for our customers. These rules are at the core of what we believe is the power of the advocate.

WOM Rule #1: Build advocacy, not buzz.

Creating and leveraging a thriving group of Advocates should be the #1 mission for your company. Advocacy is the key to business success. Companies with higher advocacy levels and positive WOM grow revenues two times faster than companies with low advocacy levels and negative WOM, studies by the London School of Economics and others have found.

WOM Rule #2: Advocates are different from fans

A fan is a consumer who likes your brand or product. Fans may be willing to join a group on Facebook. They may post something positive online about you on their blog or Tweet out news about your latest promotion or sale.

WOM Rule #3: Advocates are different than loyal customers.

Loyal customers are frequent buyers, but they are not necessarily Advocates. In fact, your loyal customers may be your harshest critics.

WOM Rule #4: You have more many Advocates than you think.

Many companies assume that only a small slice of their customers — typically less than 10% — are Advocates. This is a myth.

WOM Rule #5: Advocates Have Massive Reach

WOM Rule #6: Brand Advocates are 5X More Influential than Paid Media

Why are Brand Advocates so influential? It boils down to two words: trust and reach. According to Forrester Research, 94% of consumers trust Word of Mouth recommendations. Only 14% trust online ads.

WOM Rule #7: Advocates are Your Best Salespeople

Fire your salespeople. Energize your Advocates. That sounds extreme. But consider these three points.

WOM Rule #8: Advocates are your Most Valuable Customers

Advocates are 2X to 3X more valuable than average customers, according to studies by Yahoo!, Comscore, Zuberance than others. Why?

WOM Rule #9: Know the value of every single advocate

In “The Ultimate Answer,” author Richard Owens, the CEO of customer satisfaction company Satmetrix, says a single Advocate of an enterprise software company is worth $565,000, based primarily on the Advocate’s lifetime referral value.

Word of Mouth Rule #9: How much is a Single Advocate Worth?

Rob Fuggetta — Mon, 07 Dec 2009 12:50:25 +0000

So how much are your Advocates worth?

Here’s an easy way to calculate this. Many companies track the Average Customer Lifetime Value or CLV. To simplify this, this is often calculated as follows:

There is now a growing body of evidence (Yahoo!, Comscore, others) that Advocates are a minimum two to three times more valuable than average customers based on referral value. We believe these estimates do not reflect the true value of Advocates because many of these studies were conducted before the rise of social media (Facebook, Twitter, etc.) and therefore don’t reflect the ability of Advocates to reach and influence thousands or even millions of prospects.

So a simple way to calculate Advocate Lifetime Value is by multiplying CLV by 3X. Via Zuberance’s real-time analytics, you can get more precise measurements of Advocate Lifetime Value.

Word of Mouth Rule #8: Advocates are your Most Valuable Customers

Rob Fuggetta — Mon, 30 Nov 2009 19:45:55 +0000

Advocates are 2X to 3X more valuable than average customers, according to studies by Yahoo!, Comscore, Zuberance than others.

Why?

• Advocates drive sales. Advocates not only are about twice as likely to recommend their purchases to friends than non-Advocates, but their friends also buy the recommended products two to three times more often. (see chart below from Yahoo! and Comscore)
• Advocates are lead gen engines. In many companies, Advocates generate 80 to 90 percent of the referral leads (source: loyalty guru Fred Reichheld.) Ask your salespeople where their best leads come from. No doubt, the best leads come from existing customers.
• Advocates are Word of Mouth machines.

Word of Mouth Rule #7: Advocates are Your Best Salespeople

Rob Fuggetta — Mon, 23 Nov 2009 22:51:35 +0000

Fire your salespeople. Energize your Advocates.

That sounds extreme. But consider these three points.

Prospects trust your Advocates more than your salespeople. 53% of business executives say colleagues’/friends’ Word of Mouth is the #1 influencer of their purchase decisions compared to 39% of sales representatives, according to a study for events management firm Jack Morton by Keller Fay, a leading Word of Mouth research firm.
Advocates actually get their friends and colleagues to buy. According to Comscore and Yahoo!, Advocates actually convert prospects two to three times more often than non-Advocates.
Unlike paid salespeople, Advocates evangelize you for free. They go out of their way to recommend you because they’ve had a great experience with your product or service and want to tell others.

Word of Mouth Rule #6: Brand Advocates are 5X More Influential than Paid Media

charlesjorlando — Mon, 16 Nov 2009 15:06:05 +0000

Why are Brand Advocates so influential? It boils down to two words: trust and reach. According to Forrester Research, 94% of consumers trust Word of Mouth recommendations. Only 14% trust online ads. (See below.)

Empowered by social technologies, Brand Advocates have massive reach. As we pointed out in WOM Rule #5, on average each Brand Advocate reaches a minimum of 150 people. A company with 100,000 Advocates can thus reach 15 million prospects with highly relevant, trusted messages.

WOM Rule #5: Advocates Have Massive Reach

Rob Fuggetta — Mon, 09 Nov 2009 23:51:15 +0000

Each Advocate reaches approximately 150 people in his or her social and/or business network. We reached that conclusion by analyzing publicly-available data from social networking sites like Facebook, Twitter, LinkedIn, plus email marketing trade associations, and other sources. First, we added the total number average number of contacts that people have. We then discounted by 60% to account for duplication. Depending on your point of view, you may consider our estimate low, high, or about right. A quick poll of our employees showed that the average number of contacts each person has on Linked In alone is 167. (We’re reproducing the chart here since we have been asked often about this data.)

One other point here: Advocates actually reach many more than 150 people because their friends and colleagues often forward Advocates’ recommendation others. The ability for recipients to re-Tweet content makes this easy.

WOM Rule #4: You have more many Advocates than you think.

charlesjorlando — Mon, 12 Oct 2009 15:17:04 +0000

Many companies assume that only a small slice of their customers — typically less than 10% — are Advocates.

This is a myth.

At Zuberance, we’ve conducted over 100,000 interviews with consumers and business decision makers across multiple industries, market segments, product/service categories, and geographies. Our studies have shown that, on average, about 40% of customers are Advocates – they are highly likely to recommend the companies they do business with and the products and services they’ve purchased.

Of course, the percentage of customers who are your Advocates will vary depending on industry and market segment; the category and quality of your product or service; and other factors. In our studies, the percentages of Advocates we’ve seen ranges from 25% to 76%.

To learn more, download our whitepaper: An Army of Advocates

WOM Rule #3: Advocates are different than loyal customers.

charlesjorlando — Mon, 05 Oct 2009 15:15:44 +0000

Loyal customers are frequent buyers, but they are not necessarily Advocates. In fact, your loyal customers may be your harshest critics.

The classic example is the airline industry. Many members of frequent flyer programs go out of their way to blast the airlines they fly. Yet they continue to fly the same airline because they want to pile up points or because corporate travel policies require them to do so.

In one study by Zuberance, we found that 20% of a company’s loyalty program members were Detractors – they were highly unlikely to recommend the company to friends and colleagues.

Don’t assume that your loyal customers are Advocates. Identify your true Advocates now.

WOM Rule #2: Advocates are different from fans

charlesjorlando — Mon, 28 Sep 2009 21:15:31 +0000

Advocates, on the other hand, go out of their way to evangelize you. They champion you to their colleagues. They bring you new customers and prospects. (In many companies, Advocates generate 80 to 90 percent of qualified leads.) They eagerly answer prospects’ questions, defend you from critics, and give you profitable ideas that grow your business. And, unlike fans, Advocates evangelize you without asking for payment or perks.

Smart marketers are identifying and energizing their Advocates now.

WOM Rule #1: Build advocacy, not buzz.

charlesjorlando — Tue, 22 Sep 2009 23:55:55 +0000

Creating and leveraging a thriving group of Advocates should be the #1 mission for your company.

Advocacy is the key to business success. Companies with higher advocacy levels and positive WOM grow revenues two times faster than companies with low advocacy levels and negative WOM, studies by the London School of Economics and others have found.

Example: Apple’s Advocates are the lifeblood of its success. Since the company’s founding, Apple’s Advocates have served as a Virtual Salesforce, spreading positive WOM, helping boost sales, and even defending the company from critics. And the same consumers who were advocating Apple long before Steve Wozniak was dancing with the stars are still evangelizing Apple today.

Buzz, on the other hand, is tactical and short-lived. Buzz may result in a short-term spike in awareness and sales. But getting people to talk about your brand is not nearly as valuable or sustainable as getting them to advocate you.