A group call Satmetrix just released a study on the Economic Impact of word of mouth marketing.

As WOM becomes accepted and embraced as part of the marketing mix, the demands for ROI and other measurements intensify.

According to Satmetrix's model, which focused on the computer hardware industry, each Promoter was worth approximately $2,634. Promoters spend $203 more than the industry average of $1,615 and account for roughly one-half of a new customer acquired through positive word-of-mouth. In comparison, each Detractor can cost a business 0.84 percent of a new customer through negative word-of-mouth. by only $158.

Keep an eye out for more word of mouth marketing measurement.  We've got a new model we're formalizing as well.  It's a sign the industry is growing up.

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This weekend I had the pleasure of dining with close friends at a new Washington D.C. steakhouse. Our meal was later followed by one of us experiencing extreme food poisoning into the morning hours. The current suspect: An alleged order of Tuna Tartar.

 

The next morning, my friend - we'll call her Kate - called the restaurant to speak with a manager. After a brief conversation, she was told that the General Manager and Executive Chef would call her right back. After several hours, and trips to the bathroom, no call had been returned. Kate's immediate reaction: "I'M TAKING THIS TO THE BLOGOSPHERE!"

 

An influencer in her own right, Kate began to post reviews on multiple restaurant sites, like the Washington Post's restaurant guide (http://www.washingtonpost.com/wp-srv/cityguide/dc-restaurant-guide.html). She then posted numerous comments on local food blogs, like D.C. Foodies (http://www.dcfoodies.com/). And, she even ended the popular phrase, "Kate is..." with "... puking her guts out thanks to..." on her Facebook page. No doubt her husband - deputy chief of staff for a well-connected congresswoman - will repeat this story several times Monday while working on Capitol Hill. And, while he's in session, Kate will voice her grievances during "mommy groups" and non-profit board meetings that fill her weekly schedule.  

 

There are three reasons why this story should scare the tenderloin out of the D.C. steakhouse in question, and other brands open to popular opinion:

1. According to a recent study by Roper Report, influential people are considered the best source for restaurants and which brands are best, 83% and 60% respectively
2. The speed with which this word of mouth happens - thanks to technology - means consumers are sharing their opinions faster than ever
3. Without having a good idea of who your brand's most influential consumers are, this conversation will be difficult to manage, much less monitor

 

The real tragedy here - there is no proof that food poisoning was the cause of Kate's illness. This entire word of mouth effort could have been about how well the restaurant managed her complaint. However, that didn't stop Kate from exercising her freedom of speech in our nation's capital. Power to the people my friend.

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