Tuesday, January 16, 2007

WOM Measurement – The Wild, Wild West

As one of the newest media (and one that is still very much evolving), there’s quite a bit of measurement snake-oil surrounding the links between word-of-mouth marketing and financial value creation.

I don’t think we’re far off from bringing respectability to it, because all the necessary tools are there. But we won’t progress unless marketers stop being satisfied with simple “stroke counting” measures — like message delivery and open and pass along rates — and start building a roadmap that more clearly links WOM to revenue and profit.

Here’s a 6-step prescription for WOM measurement progress:

1. Define Objectives. Clearly and succinctly state the intended outcome of the campaign expenditure in economic or behavioral terms.

2. Test the effectiveness of your message strategy to determine the recipients’ behavioral outcome.

3. Develop test-and-control constructs to determine the true predictive value of the awareness or attitude change, and its effect on behavior.

4. Conduct post-campaign interviews with current and new customers, and those who still resist your value proposition to find out what did or didn’t influence their decision to act or not act.

5. Review your proposed measurement methodology with key constituents of the outcome (i.e., the CFO and CEO) in advance to get their feedback and to tighten any loopholes and gaps.

6. Be clear on your expectations. State them in as tangible of financial terms as you can. Then ask yourself the tough questions: Did you succeed in achieving your goals and expectations? Continue to adjust as you move forward.

As word of mouth grows into a recognizable line item on the budget, the measurement practice must improve along with it. Otherwise, it’s the wild, wild west all over again.

If you want to see more on measuring word of mouth marketing, read:
Is There a Reliable Way to Measure Word of Mouth Marketing?

Tuesday, January 02, 2007

Prediction for 2007… Pain

With all the hype surrounding the resurgence of legendary on-screen boxer Rocky Balboa, I couldn’t help but borrow a line from the old Clubber Lang (Mr. T) in anticipation of what 2007 will bring for marketing measurement. He said, “My prediction… pain.”

In the case of marketers, that pain is likely to be felt most by some of the late adopters to measurement discipline. In fact, marketers who haven’t yet made a concerted effort to get a suitably comprehensive and properly stakeholdered measurement process in place are likely to feel the pain more than ever in 2007. Why?

First, CEOs and CFOs are hearing more and more about how measurable marketing is these days. They’re seeing it at conferences, reading about it in their trade journals and hearing it firsthand from their peers. These seeds, once planted, can’t help but grow up through the most hardened sidewalks of resistance. And when they crack through the foundation of credibility, the crumbling is impossible to stop.

Second, unless you’re lucky enough to be in a high-growth business spinning out exceptional shareholder returns, the die is likely already cast for another year of cuts to the marketing budget. The best you can hope for is that the slashes will be swift and sharp. But chances are, they will more likely resemble death by a thousand small incisions. And you can forget about defending your turf. If you had the insights the CEO needed to be more confident, you wouldn’t be the one who’s budget they look to begin with.

Third, if you’re entering the “opportunity zone” of your tenure with the company (somewhere between months 20 and 30), you may have but one more chance to put a sound foundation behind your next budget recommendation. But you’ll need to start now. It takes a minimum of nine months, and more often 18, before you can really get a good historical handle on marketing performance drivers and be able to correlate them to spending with any predictive validity.

The good news is that, if you start in January while the year is fresh and new, you’ll have a fair chance of making a big difference for 2008. You can build a foundation that will serve you immediately and for many years to come. But by April, your window will close. So the question for many marketers isn’t whether or not there will be pain in 2007, but whether it will be the pain of progress or the pain of avoidance. Either way, the choice is deliberate.

Wishing you the very best (and a full bottle of Advil or Tylenol) in 2007.