We’ve all been in that situation before, where we want to go out, either alone, with our partner, or with a group, but you don’t know how to choose a restaurant. You could use a review website, but you’re not really going to know what it’s like until you taste the food yourself. Plus, no review will give you an exact picture of what your experience will be like, especially since you don’t know the person who wrote the review. One person’s “intimate atmosphere” is another person’s “bumping elbows with the table next to them.”
There’s an easy way, of course—ask a friend. Even if you don’t know each other that well, you’ll have enough context to avoid the analysis paralysis and just jump in. Decisions will be made, and you even feel better about the decision, because you feel you got primary advice.
This “dord of mouth” is every marketer’s dream. You want a product and experience that is so good that people can’t help but recommend it to their friends and acquantancies. It’s hard to brute force though, as pushing it can come off too salesy. But you have to do something, so it’s a delicate balance.
And this is where our guest comes into play—Yousuf Bhaijee. Yousuf drove word of mouth growth at Eaze, ClassDojo, Disney, and Zynga. Nowadays you can find him as a contributing writer at Reforge where he publishes “word-of-mouth acquisition” research, which he began seven years ago. His plethora of knowledge is something you’ll want to stick around to hear about. And maybe after you’re finished, you’ll pass it along yourself with your own word-of-mouth marketing.
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Here we summarize the main takeaways for you to implement or hand off to your team for implementation.
What is word-of-mouth marketing?
Word-of-mouth marketing (WOM marketing) is the process of consumers organically sharing their experience and satisfaction with a brand, with their friends and family. And contrary to popular belief WOM marketing can be measured and influenced.
Why is it important?
WOM marketing is important because it leads to conversions, as it’s a key influencer for their buying decisions. A Nielsen report shows that 92% of people trust recommendations from friends and family over anything else. Additionally, WOM marketing is free, and more importantly, it helps you build a trusted brand and gain loyal customers that will continue spreading the word.
Evaluate and determine whether your product or service is a good fit for a WOM marketing strategy. Today, having a WOM marketing strategy is more important than ever. Whereas before it used to be limited to the location and people you physically interacted with, today, thanks to the internet and social media, you can reach millions in just seconds. Every share, repost, or retweet, is helping to potentially put you on the path to some serious growth.
But the real beauty of WOM marketing is the trust that is built into every recommendation. No other marketing strategy has that. And building a trusted brand is key for long-term success.
Yousuf knows WOM marketing, and furthermore, he knows how to measure it. Below are what Yousuf calls, “the ingredients,” to help you determine if your product or service is a good fit for WOM marketing and a few steps to help you get started.
There are two questions you need to ask before taking any further steps:
What is the current NPS of the product?
If you have a poor NPS, you need to find out why your core experience is lacking, and fix it. Don’t work on growth, work on improving the core experience.
Is there already a community around it?
Having a community already in place for a product or service, helps facilitate WOM marketing. If you don’t have one, work on building one.
Start with a good NPS product for the customer that you're targeting.
Make sure tracking is set up—anything you use to track new users, e.g., paid ads, product flow, etc. This will help you measure WOM (explained below).
Analyze your timeline based on typical usage of your product (will vary by product) to see where blips occurred, and what happened before that, in order to build a hypothesis of what drove that word of mouth.
Put together a framework to release the features/experiences that you conclude are going to drive word of mouth.
What to do within the next year:
If you haven’t already, read The Word of Mouth Coefficient, so you can accurately measure your WOM marketing with the WOM Coefficient. As with all strategies, measuring the output is crucial to ensure you’re on the upward path of growth, and WOM is no exception. And though WOM can be hard to measure, the WOM coefficient helps facilitate the process, so you can ensure your WOM efforts are accurately placed.
The WOM Coefficient tracks the rate that active users generate new users via word of mouth, similar to how average revenue per daily active user (ARPDAU) tracks the rate that active users generate revenue.
It has two components:
New Organic Users: First time product users that we consider to be driven by word of mouth (i.e., they can't be traced to any trackable source such as a paid digital ad). This is the numerator and what we are trying to predict.
Active Users: The denominator of the ratio is everyone else: Returning Users + Non-Organic New Users. The time period depends on your retention metric. For most products it’s typically daily, weekly, or monthly active user.
Next week, Rallypoint's CEO, David Gowel, talks culture, business, the conflict between money and purpose, and so much more.
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By Patrick Campbell
Founder & CEO of ProfitWell, the software for helping subscription companies with their monetization and retention strategies, as well as providing free turnkey subscription financial metrics for over 20,000 companies. Prior to ProfitWell Patrick led Strategic Initiatives for Boston-based Gemvara and was an Economist at Google and the US Intelligence community.