wom report 10-26-07 final

measuring the role of word-

of-mouth marketing

October 2007

In a recent national online study among 600 adult men and women, novaQuant explored the relative influ-

ence of word of mouth on decision making across a wide variety of consumer products and services, rang-

ing from computers to cars, from dentists to mobile phone providers, from movies to soft drinks. The goal

was to quantify, on a relative basis, which categories are most likely to benefit from marketing efforts to gen-

erate word of mouth.

Report on Word-of-Mouth Marketing October 2007 Page 1 Copyright © novaQuant Inc.

180

171

162

162

157

155

149

142

133

133

131

131

120

106

103

97

93

86

80

79

73

73

71

67

54

51

49

46

41

3723

Computer

Movie

Digital camera

Sit-down restaurant

Dentist

Mobile phone service

Real estate agent

TV

Car or truck

Plumber

Auto insurance

Printer

Internet service

Hotel

Take-out food

Bank account

Book

Cold remedy

Clothing store

Airline flight

Denim jeans

Car rental

Athletic shoes

Online shopping

Coffee

Shampoo

Ice cream

Toothpaste

Grocery store

Website for news

Soft drink

The word-of-mouth index by category

Word-of-Mouth Influence Index

At first glance, the results showing which product or service decisions are most impacted by word of mouth

seem intuitive. Namely, claimed word-of-mouth influence indexes high for:

• High-tech and/or expensive products, such as computers, digital cameras, cars

• Local services which involve a personal relationship, such as dentists and real estate agents

• Decisions that are related to a new experience such as choosing a sit-down restaurant or seeing a

movie

Conversely, more everyday products and services, such as soft drinks and grocery stores, tend to be less

impacted by word of mouth on a day to day basis.

Note: Percent at least somewhat influenced by

other people’s opinions (top 3 box on 5-point scale)

divided by the average for all 31 items

Above average

Below average


74%

67%

65%

67%

63%

62%

55%

55%

53%

55%

46%

45%

40%

29%

25%

56%

51%

49%

47%

42%

41%

38%

33%

31%

27%

25%

23%

15%

12%

7%

Computer

Digital camera


Real estate agent

Car or truck

Printer

Internet service

Hotel

Bank account

Cold remedy

Clothing store

Denim jeans

Ice cream

Website for news

Soft drink

First time

Most recent time

The products and services where word-of-mouth impact is low for the most recent brand purchase usually

registered significantly higher word-of-mouth impact the first time that same brand was chosen.

For example, only 7% claim that their most recent purchase of a soft drink was influenced by word of mouth.

However, there are still 25% of respondents who claim word of mouth had an impact the first time they

bought that particular brand of soft drink. So given that the first time a brand is purchased has an impact on

all future purchases for that same brand, the absolute effect of word of mouth on small everyday purchases

can still be substantial.

Cold remedies are another interesting example. Twenty-seven percent claim some word-of-mouth impact

on the brand they chose for their most recent purchase, but more than half (55%) say that word of mouth

had an influence the first time they purchased that brand.

need for word of mouth is linked to experience with

a brand/product category

Word-of-Mouth Influence for

First versus Most Recent Purchase

Note: Top 3 box on 5-point scale; asked

about 15 of the original 31 items; those

whose most recent decision was the first

time that decision was made are included

in both subgroups above.


friends and families are most

common source of information People are more likely to be influenced by

product or service opinions from friends, family

and other people they know than from people that

they don’t know (such as experts, customers

online, etc.) The digital camera is the only

product where the influence of word of mouth

from people not known is actually higher. Brand

decisions regarding technology products tend to

be the most impacted by opinions from people

not previously known. Selecting a mobile phone

carrier seems to be somewhat of an anomaly –

which may have to do with local coverage/

performance issues and the growth of the friends

and family promotional packages being offered.

word of mouth can come from people you know

and people you don’t know

78%

77%

73%

71%

70%

70%

69%

68%

65%

63%

59%

58%

56%

53%

28%

34%

10%

14%

4%

25%

58%

53%

8%

26%

52%

35%

7%

62%

31%

56%

Real estate agent


Clothing store

Bank account

Ice cream

Internet service

Computer

Car or truck

Denim jeans

Cold remedy

Printer

Hotel

Soft drink

Digital camera

Website for news

People Know

People Don't Know

Word-of-Mouth Influence

but a clear need for expert and customer opinions for big deci-

sions still exists Even though people clearly place higher value on

the opinions of people they know and trust, the

impact of other people/sources is still often sub-

stantial across a wide range of categories. The

most notable exceptions are for personal-taste

items such as ice cream, soft drinks, and denim

jeans, where opinions from people not known are

clearly less influential.

The results also reinforce that people rely heavily

on friends and family for insights on local ser-

vices such as real estate agents and banks. Pre-

sumably the fact that these services are local and

may require a more personal touch suggests that

opinions from friends and family are highly rele-

vant.

Note: Among those who received opinions

about that decision; Asked of “short list” of

15 products/services only.


Despite the prevalence of e-mail and instant messaging usage, the vast majority of opinions are from

people personally known, such as family and friends, and are received verbally - in-person or over the

phone (98%). Opinions from people not known, on the other hand, are primarily received on the Internet

(78%), especially from online customer reviews and surfing the web.

traditional, personal forms of word of mouth are still

the most common forms

People They Know People They Don’t Know

In-Person/By Phone (net) 98% In-Person/By Phone (net) 28%

In-person 94% In-person 24%

By phone 51% By phone 8%

Net: Internet/Text 36% Internet/Text (net) 78%

E-mail 32% Customer reviews online 51%

Instant message 9% Surfing the web 42%

Text message 4% Expert websites 37%

Online publications 27%

E-mail 19%

Online discussion boards 16%

Blogs 7%

Instant message 1%

Text message 1%

Traditional Media (net) 45%

Newspapers or magazines 33%

TV or radio 29%

How Received Opinions


There are essentially two kinds of “unknown” people who influence product and service decisions: Pros

(experts and other professionals in relevant fields) and Joes (regular individuals such as those who write

customer reviews online). Pros have more influence on almost all products and services in the survey,

especially the higher ticket items (such as a vehicle or computer) or where health is concerned (such as a

cold remedy). Joes are more influential when it comes to hotels and clothing stores.

a key segment of experts: “The Pros”

50%

49%

47%

44%

22%

20%

29%

33%

22%

19%

6%

17%

13%

11%

16%

2%

19%

27%

11%

18%

20%

2%

3%

4%

24%

6%

3%

8%

5%

5%

Car or truck

Computer

Digital camera

Printer


Cold remedy

Website for news

Internet service

Real estate agent

Hotel

Bank account

Denim jeans

Clothing store

Ice cream

Soft drink

Pros

Joes

Word-of-Mouth Influence from People They Don’t Know:

Professionals (Pros) versus Individuals (Joes)

Note: Among those who received

opinions about that decision


Word-of-Mouth Influence by Age

While this study focuses on the relative importance of word of mouth across categories, the results also

highlight the key differences by age in terms of the influence of word of mouth.

Younger respondents (ages 18-34) are consistently more influenced by word of mouth than their older

counterparts (ages 35-64) – especially for cars/trucks and auto insurance. This could be due to the fact that

they have less experience with certain types of purchases given their life stage. Interestingly, they were

equally influenced for items like computers and printers.

a key demographic: consumers age 18-34

63%

61%

60%

59%

58%

56%

56%

54%

53%

52%

50%

47%

45%

44%

43%

41%

40%

40%

38%

35%

35%

34%

31%

28%

26%

26%

26%

24%

20%

17%

14%

32%

50%

33%

46%

56%

44%

48%

49%

46%

41%

40%

33%

27%

28%

25%

41%

21%

18%

25%

17%

16%

21%

20%

10%

6%

12%

19%

11%

12%

9%

4%

Car or truck

Movie

Auto insurance

Dentist

Computer

Real estate agent

Digital camera

Sit-down restaurant


TV

Plumber

Internet service

Take-out food

Hotel

Bank account

Printer

Cold remedy

Clothing store

Book

Denim jeans

Athletic shoes

Airline flight

Car rental

Shampoo

Grocery store

Coffee

Online shopping

Ice cream

Toothpaste

Website for news

Soft drink

18-34

35-64

Note: Top 3 box on 5-point scale


younger consumers take to technology for word-of-

mouth communication

98%

93%

58%

45%

36%

18%

9%

98%

94%

48%

31%

30%

4%

2%

Net: In-Person/By

Phone

In-person

By phone

Net: Internet/Text

E-mail

Instant message

Text message

18-34

35-64

82%

56%

50%

43%

33%

19%

27%

14%

1%

1%

37%

28%

24%

30%

27%

7%

77%

48%

39%

34%

24%

19%

11%

4%

1%

0%

48%

36%

31%

27%

22%

9%

Net: Internet/Text

Customer reviews online

Surfing the web

Expert websites

Online publications

E-mail

Online discussion boards

Blogs

Instant message

Text message

Net: Traditional Media

Newspapers or magazines

TV or radio

Net: In-Person/By Phone

In-person

By phone

18-34

35-64

How Received Word of Mouth from People Know – by Age

How Received Word of Mouth from People Don’t Know – by Age

Younger consumers (ages 18-34), who we assume to be generally more tech savvy than their older

counterparts, are more likely to use technology to solicit word-of-mouth recommendations. Instant

messaging with friends and family for word-of-mouth information is the most noteworthy gap.


highlights for marketers

personal, one-to-one methods still dominate the communication of

word of mouth Even amidst the exploding presence of social networking, blogs and user-generated content and even for

decisions where expert opinions are clearly needed, most word of mouth comes from friends and family or

other known people and most of it is done in-person. Giving consumers easy ways to spread the word to

their friends and family, both in-person and online, will be an increasingly important element of fueling word

of mouth.

categories where purchases are costly and infrequent should

command more word-of-mouth marketing efforts Brand decisions for high tech and/or big tickets products like cars, computers, digital cameras and printers

are among the most influenced by word of mouth, both the first and most recent time the brand is selected.

Since these types of products are continually being updated and purchases are not made that often,

consumers need education and will seek it out from many sources – both from people they know and don’t

know and from both professionals/experts and other consumers.

professional “experts” are especially sought for advice on high

ticket items This underscores the importance of having a good brand story to tell these potential influencers in certain

categories such as automotive or home technology.

local and/or personal services are highly influenced by friends and

family Choosing a mobile phone service provider, real estate agent or dentist are also decisions that are highly

influenced by word of mouth. However, in these cases, the word of mouth is much more likely to come

from friends and family. Perhaps both the personal and sometimes local nature of these services makes

the advice from people they know and trust far more relevant and valuable. It’s also possible that people

feel they will get a better deal or enhanced service if they “know” someone that is already connected to the

service provider.


highlights for marketers (continued)

decisions of personal style and taste are less influenced by the

opinions of others, except for the first time! When it comes to choosing a brand for items driven by personal taste or style, such as ice cream, a soft

drink, jeans or a clothing store, the impact of word of mouth is markedly lower than for other categories.

However, there is much more impact on these decisions for the first time the particular brand is selected (in

some cases, more than twice as much), suggesting that the “first time” word of mouth is critical for these

products. Understandably, when consumers do get word of mouth for these decisions, it is primarily

coming from people they know, likely those whose taste or style matches their own.

Word-of-mouth opinions are more highly sought by younger

consumers who are also active users of communication technology Younger consumers (18-34 years old) are typically more influenced by word of mouth than older

consumers (age 35-64) and are more likely to turn to online methods to get that information. Greater

interest in the opinions of others may be a general characteristic of the more youthful segment, many of

whom will have had less experience with some types of purchases. High interest in word of mouth among

younger consumers may also derive from more access to and greater comfort with a wider range of

sources such as the Internet, emailing, and text messaging.


Data in this summary are from an online survey

fielded by novaQuant Inc. Respondents age 18-

64 were asked to rate a random subset of 31

product or service decisions that they have made

in terms of how much other people’s opinions

influenced their most recent decision.

Respondents are considered to have been

influenced by word of mouth for a given product

or service if they report being at least “somewhat”

influenced by other people’s opinions for a given

decision (top 3 box on a 5-point scale).

Some key questions were limited to a total of 15

product or service decisions for a more detailed

exploration of the word-of-mouth experience.

Respondents were specifically instructed to

include both positive and negative opinions from

people such as friends and family, people online,

and experts (however they define them) – but to

NOT include opinions from sales people or the

company selling the product or service.

methodology and additional insights

about novaQuant novaQuant is a full service marketing

research consultancy. We provide the

innovative research expertise, the active

listening, and the thinking needed to deliver

marketing and business insights that

provide real solutions for our clients.

Please visit us at www.novaQuant.com.

wom report 10-26-07 final

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