If the queues in your local supermarket this Christmas were a little less frantic than in previous years, the reason is not hard to fathom.
A growing number of shoppers are now fully paid-up fans of buying groceries online. But which retailer to choose?
If word of mouth is anything to go by, Ocado appears the obvious choice.
Tales of the quality of its goods and services have spread from one satisfied customer to another. Hardly surprising, really, given that this formed an integral part of its strategy.
'Its whole ethos was quality over coverage,' says Giles Hedges, joint head of planning at Miles Calcraft Briginshaw Duffy. 'Quality of customer experience first, coverage second. It expanded from postcode to postcode, gaining consumers in smaller quantities than its rivals, but in concentrated areas.'
Clearly, putting word of mouth at the front of a strategy to communicate with customers can be a valuable exercise. Yet for marketers, building a word-of-mouth campaign is in many ways the easy part; measuring its effectiveness is a different matter entirely. There are similarities to the early days of sponsorship, when brand owners basked in the reflected glow from association with a winning team, but were often unable to isolate the effectiveness of their spend in this area compared with other elements of the marketing mix.
There are specialist research companies - as well as relevant software - to examine the most important metrics, such as spread, analyse the tone of resulting consumer conversations, identify the key connectors and work out how a campaign is affecting a company's image. There is even a Word of Mouth Marketing Association in the US that aims to create accountability in this area.
Yet still there are no internationally recognised standards.
However, there is now movement toward achieving this goal. London School of Economics' Dr Paul Marsden will reveal new evidence at the Market Research Society conference in March that shows how research outreach programmes can be used to harness word-of-mouth connections.
Power of opinion
Marsden, whose background is in pharmaceuticals marketing, points out that one of the first research studies on word of mouth took place in this sector. 'Doctors are overloaded with ads and information,' he says.
'They don't take notice of interactive marketing, so when you're launching a drug that cost a quarter of a billion dollars to develop it's vital that you get customer advocacy, because that drives sales.'
His attention was drawn to parallels between pharmaceuticals and FMCG marketing, in which information overload and fragmented channels result in consumers taking insufficient notice of advertising. When a study on the topic appeared last year in the Harvard Business Review, he decided to replicate it to see whether its findings were valid in the UK and whether a monetary value could be put on that word-of-mouth metric.
'We use a Net Promoter Score (NPS) system used by Bain Consulting among others,' he says. 'It is correlated to business growth. You ask one simple question - how likely is that you would recommend whatever to whomever - on a scale of 0 to 10. You take all the people who say nine and 10, subtract all those who answer 0 to six, and you get the net promoter score.
That score, based on that one question, is predictive of sales growth.' Customer satisfaction, he says, has no correlation to future sales and is, therefore, not particularly good as a key performance indicator, in contrast to word of mouth.
Industry discussion on the topic has to date been divided, as deciding on a consensus of how word of mouth works has proved difficult. This was acknowledged in a report on the topic by Mediaedge:cia's think-tank, MediaLab. Called 'Where's Debbie', its introduction explained that word of mouth 'remains an enigma for marketers because intuitively accessible theories on how it works do not connect with research methodologies that allow for accountable planning, implementation and evaluation of word-of-mouth strategies'.
This is echoed by Martin Oxley, managing director of interactive at TNS, who says that 'as a concept, it is very powerful, but as something measurable, word of mouth has always struggled. How do we get it on a measurable footing?'
It is a problem Oxley and his colleagues are determined to solve, particularly in light of the shift toward non-traditional advertising. 'We are finding that when launching products many companies are not necessarily advertising.
Heinz, for example, has more or less stopped it and said it will go below-the-line.
So we are trying to show that there is this other aspect companies need to measure: the extent to which the diffusion of innovation can be influenced by the types of people buying your product, the extent to which they will buy the ideas and their connectedness.'
It is small wonder that companies are shifting budget when studies such as one conducted last year by GfK NOP indicate that 92% of US consumers now view word of mouth as the best source of ideas and information about new products, compared with only 67% in 1977.
The difficulty lies in predicting precisely which consumer types are the ones to watch. There are a number of theories concerning the profile, distribution and value of influencers. Popular wisdom has it that one in 10 people are influencers and they tell the other nine what to do. The reality, as David Evans, research director at Continental Research, notes, is more complex. 'A number of studies that we have carried out have shown that certain people are more important than others with regards to word of mouth,' he says. 'This, however, varies depending on the product sector analysed. For example, someone who is happy to communicate the benefits of an iPod to others may be less likely to do the same regarding a Dyson product and vice versa. Segmentation, therefore, is vital to draw out the key segments within the sector which are most likely to pass on information.'
It can also prove a challenge for companies to make sense of the stream of information resulting from a word-of-mouth campaign. The sheer scale of such operations is evident at Procter & Gamble, whose Tremor division recruited 280,000 teen 'influencers' in the US who now spread the word for P&G and third-party clients on anything from shampoo to movies.
'The wealth of consumer-generated qualitative media that is often created means that quantification is necessary to enable accurate analysis and insightful interpretation,' says Amanda Scott, a research manager at FreshMinds.
'Word-of-mouth researchers should mix quantitative digital activity data and mining of digital archives with qualitative data from consumer surveys and testimonials to give a rounded picture of the impact of a word-of-mouth campaign.'
However, not all researchers are happy with an overwhelming focus on quantitative data in the discipline. 'If all you can produce is quantitative statistics about word of mouth, all you are doing is saying this is very important without being able to do anything about it,' says John Griffiths, who runs the Planning Above and Beyond website for account planners. 'The question should be: are some people better at word of mouth, and if so, why? Is it because their whole status and social position is predicated by how effective they are at always telling people things and knowing the right people?'
Clients will no doubt discover much from Marsden's session. After all, which marketer would not want to know about a technique that could predict sales growth? Yet there is a danger that such a focus ignores the real intricacies of human behaviour: the whys and wherefores. Surely no marketer could resist a technique that could identify what makes a word-of-mouth story more interesting, and the person who tells it more persuasive than the rest?
CASE STUDY - DISCOVERY CHANNEL
Discovery Channel commissioned a study into the influences on people's choice of holiday destination in three European markets. The aim was to help communicate to tourism authorities the benefits of using its channel to reach their target audiences.
A key aspect of the holiday decision-making process is word of mouth, yet conventional tracking often deems such recommendations a 'dead' figure, preferring more concrete sources of information.
Continental Research used a statistical technique, the Markov process, within a conventional segmentation study. This traced back influences on choice of destination to find the ultimate source of advice for each respondent. The Markov process worked out how people who passed on the information were influenced down the chain, using statistical assumption to provide a total impact for each medium, from brochures and weekend supplements to TV shows and personal recommendation.
Discovery demonstrated that its viewers were more likely to be influenced by programming and communication about holiday destinations. Forty per cent of viewers were influenced directly by programmes and 27% indirectly (such as when someone who has been influenced by a TV programme influenced someone else by word of mouth). They are also more likely to pass this information on to others than non-viewers.
The findings were presented at last November's World Travel Market, and helped to secure new advertising budgets.
Research: 2006 Word of mouth Date: Thursday 23 March Venue: Barbican, London Contact: www.mrs.org.uk
Details: Chaired by Mark Earls, planning director at Ogilvy, the session will be in three parts.
1Simon Chadwick, partner at Cambiar, and Ed Keller, co-author of The Influentials, will report on experimental research designed to investigate whether all individuals are equal in their peer influence.
2Dr Paul Marsden of London School of Economics will present new evidence from a major FMCG client that quantifies the effect of word of mouth on business performance.
3Graham Trayner, a director of Opinion Leader Research, will reveal how research can turn passive consumers into active purchasers.
This article was first published on Marketing