NetPromoter® Economics: Exploring the Economic Impact of Word of Mouth
Presented by: Dr. Vince Nowinski
Director of Methodology at Satmetrix
October 29, 2008
Word of mouth—the naturally occurring tendency to share exceptionally positive (or negative) brand experiences with others—is a powerful force in the marketplace. Customers consider it the most trustworthy source of information about unfamiliar brands and products, and weigh it accordingly in making evaluation and purchase decisions. With the eroding influence of traditional marketing and advertising, and the emergence of broad social networking technologies, the influence of word of mouth is rapidly expanding. Companies are beginning to recognize the opportunity that facilitating and amplifying these customer communications represent for driving profitable growth.
To date, however, few studies have been conducted, and few models built which quantify the economic impact of word of mouth—a key consideration for building business cases around investing in word of mouth initiatives. Dr. Vince Nowinski, Director of Methodology at Satmetrix, will discuss independent research recently conducted at Satmetrix linking customer loyalty, customer spend, and word of mouth. Based on data from both B-to-C and B-to-B marketplaces, Dr. Nowinski will present an economic framework for capturing the financial impact associated with both positive and negative word of mouth, and discuss its implications for corporate growth.