Landmark Study Reveals how Word-of-Mouth Correlates with Rise in Sales

November 18, 2014

In a landmark study conducted by Analytic Partners, word-of-mouth marketing drove 13% of consumer sales


Wayne Friedman, MediaDailyNews - One in eight word-of-mouth interactions results in consumer sales -- some $6 trillion in annual consumer spending, according to a new study.


The research from the Word of Mouth Marketing Association (WOMMA) -- paid for by agency and brand sponsors, including AT&T, Discovery Communications, Intuit, PepsiCo and Weight Watchers -- says the study was based on “sophisticated econometric modeling of sales and marketing data provided by participating brands on a confidential basis.”


The study came from “consumer word of mouth” in six categories -- telecommunications, food, beverage, software, personal services and television -- through online and offline consumer conversations and recommendations.


Word of mouth resulted in 13% of consumer sales -- and in higher price-point sales, word of mouth resulted up to 20% of sales, the study revealed.


“This is the first public demonstration of the measurement of word-of-mouth sales effectiveness,” stated Alice Sylvester of Sequent Partners, consultants for the project.


Overall, one-third of the “sales impact” is attributable to word of mouth -- as an “amplifier” to paid media, such as television. Paid media delivers 69% of sales impact. The study says most of the impact of word of mouth works independently of advertising.


The research also showed that an offline word-of-mouth impression drives at least five times more sales than a paid advertising impression. Word of mouth’s impact happens closer to the time of purchase than traditional media — often within two weeks.


When “offline” was compared to “online” word-of-mouth marketing, “offline” had two-thirds the impact of word-of-mouth on business sales, with one-third the impact for “online.”


Analysis was conducted by Analytic Partners, an independent analytics consultancy. Nancy Smith, president of Analytic Partners, said: “Word of mouth is an area that begs for more deliberate decisioning and planning from marketers, as it works hand-in-glove with paid media.”