Tom 0:08
Hello, welcome to another edition of the data for bluffers podcast. This week, we wanted to dive into some data behind word of mouth. I think anecdotally we all know that word of mouth is powerful. But how powerful and why is often less well understood. So with that in mind, we wanted to pick out a few numbers from a report that the Word of Mouth Marketing Association did, and a) just share them, but also b) talk to the science behind them, the behavioural science behind them, with the aim to understand them, because, you know, I think if you can understand what’s driving these numbers, you can better harness them. So as usual, I’m joined by Ed. Ed, how are we doing?
Tom 0:47
Hi Tom, I’m good thanks.
Tom 0:49
Good, good, good. So let’s jump straight in. And I think before we start looking at any numbers, can you just tell us what is word of mouth?
Tom 0:57
So for the purposes of the study that we’re talking about today, word of mouth was defined quite strictly as consumer brand conversation or mention, online or off. So taking that definition apart, what does that mean? It’s when two consumers or potential consumers discuss a brand, or just kind of mention it to each other, either online – So there we could, we could be talking about reviews, for example, but also, more casual online conversations – also, as we’ll see, is very importantly, offline. So conversations that people have between each other, you know, over dinner or in the pub. So all of those conversations, all of that time that a brand is being mentioned in conversations between pairs of people and groups of people as well.
Tom 1:46
So with that in mind, then we’ve got a definition behind word of mouth. What four stats are we going to talk to today, I think the best way to do this is let’s just quickly review what they are. Let’s give the headline numbers. And then we’ll walk through each one one by one. And as I kind of said, let’s pull them apart, understand a bit more about them, and maybe how they’re made up to so we can actually use these in our in our marketing day to day. So what are the four we’re going to discuss today?
Tom 2:15
The big one up front is that word of mouth drives up to 27% of sales. Associated to that is offline word of mouth. So those conversations in the pub, they’re up to 200 times as likely to drive a sale than a traditional impression from a digital ad or a TV ad, for example. So big number associated to that offline word of mouth as well. So two thirds of word of mouth is taking place offline, which means you can’t really see it. It’s not on the internet. It’s not reviews. This is, you know, conversations people are having with their friends, their colleagues in their communities.
Tom 2:52
When we dive into that I’m interested to talk about social media listening in that context, as well. So okay, cool. Two thirds of word of mouth is offline.
Tom 3:00
Yep. Finally, we’re going to talk about how word of mouth interacts with other channels. And we’ll see that the increase word of mouth can increase the effect of paid media by up to 15%. And that’s without changing that media at all.
Tom 3:16
Okay, powerful. Okay, great. So they’re the four stats, I think the first first stat you said was up to 27% of sales are driven by word of mouth? What more can we get from the report about that?
Tom 3:30
The first thing to really ask is, what does it mean that word of mouth drives up to 27% of sales? And the way the study was done in the report, as I’m sure any marketer knows, attribution is hard.
Tom 3:43
Let’s not pick that fight today.
Tom 3:44
No, no, we’re gonna go with what was done with the report. So all sales in the report were kind of attributed across channels. And what that means, a good way of thinking about that 27% number is really, that sales could be 27% lower, if word of mouth wasn’t happening at all. So it’s not that, you know, 27% of sales were directly because of word of mouth. And all the others were to do with digital ads, or TV advertising, or organic, really, what we’re saying is that across all sales, the effect of word of mouth is about 27% of total sales.
Tom 4:26
Think I get that, if the people they’d, you know, got that data from hadn’t heard word of mouth the sale wouldn’t have happened. They’re looking at it that way, as opposed to direct sale.
Tom 4:35
Yes, yes. So all the interactions that people have with a brand add up and 27% of that effect, or up to 27% of that effect comes from the word of mouth.
Tom 4:46
When we talk about this up to 27%. Is there a range in there? Like does it work better for some types versus other types of brand product service, you know, whatever the criteria might be?
Tom 4:57
Yeah, exactly. You’ve really picked on an important part of this statistic. So the 27% figure is for the highest price and highest consideration products that were included in the study products, which aren’t bought very often, and are relatively expensive with respect to those covered in the study, which included cable TV, telecom services, personal care software, and also FMCG. So, at the higher end of the scale, we can talk about the software that was included in the study, that’s where we have this high price, high consideration, lots of effective word of mouth, at the far end of the scale, in fast moving consumer goods, the effect is much smaller, it’s down to as low as about 3%. For some goods, and there you can think of like, well, one of the brands involved in the study was Pepsi. So you can think about, okay, how much does word of mouth have an effect for for Pepsi? Now, it’s still 3% of Pepsi sales. And you know, Pepsi is a large company, that’s not to be sniffed at.
Tom 6:04
I think that makes sense. I think what was interesting there is, you know, whenever you hear high price, high consideration, you know, high is quite subjective, you know, that might be, it might be pictures of yachts going through people’s heads, but actually, in the companies you’ve mentioned there, and I think the software company where they weren’t a particularly high price point software company, you know, they weren’t millions of pounds. So, it shows that even you know, the study here uses a mix of b2b and b2c customers, but you know, high pricing consideration is kind of relative to a can of Pepsi type area, not necessarily kind of cars and yachts.
Tom 6:47
Yeah, exactly. Like, I think from a behavioural point of view, people really understand this, that, you know, you’re more likely to ask advice and and listen to people who have experience with higher priced products, you know, before you go and spend 1000 pounds on something, you’re gonna want to know that you’re getting value for that. However, what this study shows is that in the highest price and consideration category, we’re actually talking about when people are spending maybe, you know, 50 to 100 pounds or something.
Tom 7:17
Okay? There’s a lot there, especially as people start to think about where they are on that sliding scale and potentially what could be on the table or left on the table? If they’re not, they’re not considering word of mouth. Okay, good. So stat number two was about offline word of mouth impressions, driving up to 200 times sale up to 30 times the sales than of a traditional impression. So I guess we’re going to talk about a range in there, because the 200 sounds really impressive. But yeah, like what more is there in the report that we can actually pull out to make that stat useful for people?
Tom 7:53
So again, we see this big range between high consideration categories and low consideration categories. So the 200 times figure that’s for the highest consideration categories. And for the lowest consideration categories, we’re still talking five times. But obviously, that’s a lot smaller than the 200. We see it in the highest consideration.
Tom 8:17
Well, why is that important? Like it’s a nice step, how can we start to bring this to life for people?
Tom 8:22
So I think what people could be hearing there or should really should be hearing there is that if you can motivate an offline word of mouth impression, the value of that is five times a paid media impression. So what that says is you should be willing as a marketeer, if you’re happy with how your paid media impressions are doing to pay five times as much for it. Now, if you think of that, in terms of how much where you’re allocating your budget, you can generate a lot more impact. And you should be willing really to move a lot more of your budget towards offline word of mouth.
Tom 8:57
Yeah, okay. And we’ll talk more about that a bit later, as well at how you can do that, because I appreciate that’s probably a question hanging over people’s heads as they’re listening. So step number four, this one I find really interesting. Two thirds of word of mouth is offline, because, you know, I think for a number of years now, there’s been a lot of investment that’s gone into social media listening. And, you know, I’ve always kind of talked about, if you just look at even the social platforms themselves, you know, the vast majority of us are passive users, you know, the numbers change, but, you know, when Twitter put out their user stats, it’s a very small percentage of people that are actually producing content and commenting. I think a lot of people are scrolling and absorb information, you know, so, from a social media listening point of view, I guess, counsel that you’re getting a small slice of that online conversation. So I was really interested to see from here that you’re getting a small slice of that online conversation, which is only a third of the actual conversation. But is there any kind of more? Does it a) bring more in the report? But also, what is offline? How are we defining that in this context?
Tom 10:24
So offline? We mean, both conversations happening truly offline. So between people in person, but also conversations, which may be mediated over the internet, or a phone line, but aren’t public. Things like that? So yeah, so WhatsApp, you know, Facebook Messenger. And what we see here is that not only is there more offline conversation, but also it’s more impactful. So two thirds of the impact of total word of mouth is coming from this offline activity, that you can’t measure or monitor, using, you know, web scraping, those sort of tracking metrics that you might try know.
Tom 11:12
Okay. There’s two immediate things that jumped out to me, and I know, we sort of covered it a little bit in, in our bias one, a few episodes back, top tip for anyone wants to go listen to that they can now go and listen about bias, you know, measuring this stuff can be hard, and a lot of people’s measurements truly rely on online data, which isn’t necessarily bad. But I think it’s important that at people measuring recognise that, you know, if they’re, if they’re taking their data from an online source, that they don’t treat that as that represents 100% of the conversation. But also, if you’re in a, maybe a strategic role, you know, CMO or you run an agency relationship, that when you’re being given data, that you ask those questions, you know, is 99% of time it’s going to be online data. But again, so you’re aware that if someone’s reporting to you have, this is what this is, What Our Customers Are Saying, to drill into, where that’s come from. And you know, if it is all online data, that you keep that you keep that in the top of your head, and therefore you don’t bias everything that you do towards a relatively small subset of the population. Does that fair? Ed?
Tom 12:23
Yeah, I think I think it’s really important to talk about the fact that it’s not the case that online word of mouth is, is a online reflection of what’s happening offline. The people that we talk to offline, and the types of conversations that we have are very different, in general, than the conversations we have online. You know, they’re with people we trust more. They’re with, you know, friends, family, they’re more casual as well, if we go back to our definition of word of mouth, using the study, so this is where all the mentions are happening. You know, the idea of brands being mentioned casually between people, rather than people seeking out reviews, specifically of a product. And what this, what this statistic really shows us is that those, what we might think of like softer, less impactful things are actually in total having more impact than, you know, all of the people who are seeking out reviews for your product.
Tom 13:20
And as you were talking, it got me thinking. I remember reading a book by Chris Voss, he’s a, an FBI hostage trader, he talks about negotiation. And he really stresses the importance of,
you know, face to face comms. were built because any seven, I think it’s 7% of communication happens through words, right. So if the, if it’s all happening online through words, a lot of the message that you take from people happens through tone and body language. Now, that’s not always the case in offline, because we’ve got things like WhatsApp, but I guess there’s more impact being created, if you’re hearing stuff from people, you know, and trust in the pub in the gym, just because of fundamentally how humans communicate. So that’s the three we’ve got one more, and that was about the amplification effect, I think it was word of mouth can increase the effects of paid media by 50%. Free money almost.
Tom 14:21
Yeah. And that’s actually a very important point to make about the statistic as it was in the study. So in the study, none of the media campaigns that were run, were designed to interact with word of mouth. So this is word of mouth, amplifying the effect of paid media that is just being done anyway. So without any creative or any, you know, any attempt directly to stimulate word of mouth with that campaign, and that’s important because it kind of shows it’s probably only the, you know, the tip of the iceberg of what’s possible. Yeah. If you actually try and stimulate word of mouth with your campaign, but basically yeah, what has been found is that, you know, a paid media campaign that manages to tap in to word of mouth is about 15% more effective than a paid media campaign that doesn’t Wow. Okay. Which is about, you know, basically, yeah, as you say, free money or free success, really, on the extent of your pay media campaign, you know, if you can
Tom 15:27
put, if you can put a campaign in front of two audiences, one where there’s some word of mouth about your brand, or one that’s not, you know, the one that’s in front of their word of mouth group 50%, uplift for without doing anything, apart from Apart from finding them.
Tom 15:43
Exactly. And that’s, and that is also worth thinking that’s because of the way the study was conducted, that’s only really tapping into the very short term effects of that paid media campaign. So that’s the, you know, the impact on paid on the paid media campaign that can be directly then attributed back to the paid media campaign. So you could also you could also think that, you know, stimulating word of mouth also generates, like brand awareness and things like that, which, which hang around in the community for much longer.
Tom 16:13
I was gonna say, I think we’re probably doing a separate podcast on this, because when we could probably talk a long time on but, you know, we certainly talk to customers about it, but it is that memory of word of mouth, you know, group groups of people, you know, yeah, groups of people just remember things longer. So it’s a great way for to stay top of mind, you know, for for those sorts of purchases. Okay. That’s pretty good. So I think you said there about, I think was a nice segue, you kind of talked about how they, how they collected the data. I think that’s that’s kind of really interesting here, because I think there’s some super powerful stats here. But as with ever with data, it’s always interesting to know, well, how do they get it? How do they go about conducting this? Yeah, and is there anything you know, people can do to, to kind of get more insight in their own brands around around this stuff?
Tom 17:06
It’s worth it’s worth setting out. So this report was conducted back in 2014. Yeah, right. Okay. There’s a very good reason why I started, the study is not being repeated. And that is that it was a very large study, it used three years worth of data, that data was came from, you know, basically five large sponsoring brands that included, as we’ve said, Pepsi, at&t discovery, so really big players, putting their data resources into this. That included an extensive survey of over 10,000 people’s conversations and analysis of hundreds of millions of online posts. And that was all combined with, you know, full panel data across all of their campaigns for the relevant products as well. So they had full access to their, you know, all of the campaigns, they were running over three years, not an insignificant amount of work for three years, is actually so very much not not as you know, not a small undertaking. And that explains why it’s not being repeated. And also explains why unfortunately, to get it’s not a you know, cut and paste, that you can take yourself for your own brand, to find out what your effective word of mouth is. Or you can, you know, copy to try and then, you know, start experimenting with and say, Okay, well, if I do this to my, my marketing strategy, how can I maximise whether
Tom 18:35
it makes sense? That makes sense? And this was, this was done in the US? Was that right?
Tom 18:41
Yes, yeah. So this is these were these were US companies day, all of the data was collected, collected inside the US.
Tom 18:48
I think the other point to note that everything we’re talking about here, has a grounding in behavioural science, you know, that there’s, and we talked about this in lots of other episodes. But fundamentally, there’s a lot of behavioural science, which is why we prefer to be influenced by people that we, that we know we trust, which is why, why it works. So even though the data is a few years old, actually, how our brains evolved over the last, you know, couple of million years, that time period is relatively small, you know, a, we’re herd animals still, right, that that’s, that’s the kind of, that’s the fundamental piece here. So and I guess, you know, I think I’ll ask you to give a bit more detail. But and it’s something we don’t do a lot on the pod, but this is really where I think we’ve come in, you know, you left us there and saying, you know, fundamentally, to do this for yourself, you’re gonna have to do some, you know, massive study over a long period, you know, give access to lots of data. So for the vast majority of companies, it’s, you know, it’s prohibitive. You’ve just can’t do that. And this is where, while the stats are great, what you really want to be able to do is is activate them, but I think I kind of see two core things you know, when We, we see this up to 200 times for sales, through word of mouth, you know, you want to be seeding and driving more areas with word of mouth. And then when we see this 15%, uplift in areas that already have word of mouth, you want to be targeting your ads at groups of word of mouth. So there’s two, two really big outcomes and uplifts available, but you know, the elephant the room is how do you find find that and we kind of arrived arrived at that conclusion that there’s valuable value in this stuff, you know, understand where people are talking about it. And we took a data analytics approach to it. And really, what we’ve done is allow people to take their first party sales data, you know, so again, we’re trying to head off the issues people are gonna have with, you know, third party cookie data, but really just predict and detect where you’ve got these offline conversations. So the stats we’ve, we’ve kind of talked about can be activated. I guess, another level below that aired, you know, again, not not a your brain level, because you’re, you’d be, you know, be far too detailed. But like, how the report used surveys, we’re using data. And we could do that for any brand, like, just can you give a high level of how we how we go about doing that?
Tom 21:20
Yeah, so as you’ve highlighted, we’ve, you know, we kind of just told people that they can’t do this for this brand, for their brands, and that we’re saying that we can, right, and I guess, what we’re really saying is, we can do a similar thing. And specifically, we identify audiences, that where this word of mouth is going on, yeah. Now, not to the quantitative complexity that was managed in this study, but to a good enough level, to allow people to interact with those communities and change the way they’ve marketing interacts with those communities to drive more sales. And the way we do that, as you said is, is we effectively detect the almost footprints to use an analogy that that word of mouth activity has in sales data, so has in the first party data
Tom 22:17
make sense? I guess the the other benefit, it does give I know, this, this was very, the study data was very much gathered around surveys. So you know, when you’ve had, sorry, measuring service, we’re measuring conversations, but it doesn’t take into account subconscious influence. Now, it’s, you know, I kind of group that into word of mouth. But, you know, if someone walks into the pub, wearing a heel t shirt, and then you’re at the gym, and you see someone drinking kill, and then you see an ad for heal, you know, no one’s actually mentioned the word heal to you there. But by the fact that one of your makes us want to heal t shirt and one of your workout buddies is want to heal t shirt. When you see it, he’ll add it all the you know, all of the behavioural psychology behavioural science pieces have kicked in. And this is why we see that uplift. So guess the good thing about look, detecting those footprints, as you say, in the sales data is we can capture both the where the conversations are likely happening, but also where that subconscious influences happening as well. Right?
Tom 23:21
Exactly. So word of mouth, kind of working in a group, word of mouth, really sort of drives almost like a buzz is a good way of thinking of it for a brand. So what we can do is we can find where that buzz is happening and in the audience’s in which that buzz is happening.
Tom 23:37
And just before we I guess, start to wrap, the kind of last question I had on my list really was around influencer marketing. I think it was less of a thing. directly quote me on that, but I don’t remember it being as big at least, when the report was out. Like where does the influence of Mark marketing fit into what we’re talking about here in the report? Or I guess very, does it fit? It’s probably a better question.
Tom 24:04
It’s a very important question, not least because of the way that word of mouth has, I think, evolved since this report came out and in particular, the word of mouth Association themselves have leaned very heavily. It seems towards influencer marketing as a version of word of mouth. Now, I would say if we think about all of the types of conversations we’ve spoken about, influencer marketing doesn’t really fit into them. In many ways, it’s a newer way of getting an impression right. And influencers impression is a kind of form of paid media. And actually, it fits better into that category than anything else. However, a lot of the theory and lots of study around influences is that they are is a channel which is very good at generating word of mouth. Yeah, I
Tom 24:58
like that definition.
Tom 24:59
So When we talk about 15%, uplift on paid media without word of mouth, I would imagine that for influencer marketing you probably get, we don’t have the figures, no one’s done the study or I haven’t seen the study if, if any of our listeners have please send it in influences, probably a lot greater effect of their marketing is through word of mouth. Yeah, it’s you know, is people saying, Did you see so and so talking about this the other day, or they see the they see another ad, and they interact with it by going, oh, this person I follow Instagram was talking about that.
Tom 25:33
So they could potentially be good cedars have word of mouth, you know, if if word of mouth is starting somewhere, but it’s in its early days, they could be a good channel to, to get that ball rolling, get get more impact out of it.
Tom 25:49
Yeah, definitely. So both cedars and also enhances to, you know, keep the conversation going, for example, because people talk about influencers, and therefore they talk about what influencers have been doing.
Tom 26:00
Great. So I think that’s, that’s probably a good place to start to bring things together. I think, what’s really interesting for me as a story, as you’ve started to explain some of these. And I think, if I probably focus on on three of them, is that most of the most of the most kind of word of mouth happens offline. Now we see a lot of people talking about it online. And when we had Phil on the podcast, you know, he joked that a lot of people talk about social proof is just, you know, reviews, and, you know, logos on a website. But actually, most of this stuff does happen in the offline world. And, you know, if you can, if you can stimulate word of mouth, you can get up to 200 times as many sales. And if you can aim your marketing, in areas where there’s there’s also word of mouth, you can get a kind of a much higher impact from that paid media. So it really feels like there’s a really nice story that pulls together. But you know, fundamentally, you’ve got to understand where where that stuff’s kind of going on, at any any final words from you, any wisdom bombs you want to drop?
Tom 27:13
I mean, I hope that this has helped people kind of understand a bit more about word of mouth, like the word of mouth Association, where they set out to do this report, it was in the face of the fact that they were finding that people didn’t really have an understanding of, you know, how effective word of mouth was, and how, how it could be utilised, partly because a study like this didn’t exist, right. So now we’ve kind of brought this study to people, I hope people are, you know, interested in it and want to dive more into word of mouth and, and how effective it can be for stuff.
Tom 27:48
Well, thank you. And, you know, as usual, thank you for joining us. And thank you for listening. And we’ll be back again in two weeks, as usual weather with another edition. As usual. Today, we have talked for a long time about word of mouth and how powerful it is. So it would be it’d be silly of me not to remind you now to tell all your friends and colleagues and anyone you think would find this useful about this. You know, that drives up to 200 more podcast subscriptions and us doing a paid ad. Have we listened to the stats we played with today? Yeah, and that’s all Let’s say goodbye and see you next time. Say goodbye. Goodbye.
