What’s big, gray, and responsible for 20-50% of purchasing decisions? It’s the elephant in the room known as Word Of Mouth.

There’s something truly ironic about digital media making Word of Mouth more available than ever before, while simultaneously leading marketers down the “data-driven” path that totally ignores Word of Mouth in favor of too-good-to-be-true pixel-perfect ad conversions. WoM is still the elephant in the room, and no matter how much you try to keep your head down on closed-loop attribution, that elephant is still going to have a ton of influence. If you’re not observing that influence, your whole marketing mix will be off-balance and you’ll have no true sense of your brand’s virality.

The big stumbling block, of course, is that WoM is believed to be an impossible source to measure. And why work to optimize something you can’t measure? Here’s the thing though: as a DTC brand, you can measure it, optimize it, and use it to fuel your broader market strategy. In fact, we won’t even make you read the whole article to learn the big secret -- here it is: talk to your customers. That’s the DFC side of DTC, after all.

Since you’re here, we might as well tackle the basics to help you make the most out of Word of Mouth attribution: What is WoM, really? How does it impact your business? How can you measure it successfully?

Okay, let’s dive in -- we’ll have you riding that elephant around the office in no time.

1. What is Word of Mouth, really?

Word of Mouth doesn’t like being boxed in by definitions (which is why it helps to know how to ask the question), and if your paid media is strong, WoM can often bleed into those realms as consumers pass along celebrity testimonials and advertising messages as their own. That said, there are a few ways to identify Word of Mouth:

Audience: 1:1 & 1:Many

A friend or family member’s personal recommendation is pure gold for brands, with a Nielsen study finding that 92% of consumers trust it more than any other influential input, and are 4x more likely to buy when referred by a friend. You see a box of Magic Spoon cereal at your buddy’s house, you ask how they like it, and they proceed to rattle off all the selling points, catered specifically to you as an audience of one (interestingly, while brands often assume that emotional messaging will resonate through Word of Mouth, McKinsey found that consumers will more often share messages about use cases and product features).

That’s a 1:1 example, and we all know it well. 1:Many is much more nuanced these days; it could be that a stranger on the train is wearing Allbirds, and it just clicks for you that these shoes are a great look. Or, perhaps you’re unsure of buying a new shoe brand online, and search Reddit for reviews to find that somebody has penned a brief novel detailing their experience with Allbirds’ impressive quality over time. Or, perhaps your favorite movie star is on a podcast and happens to make an unpaid endorsement of Allbirds.

This is all WoM as earned media, and in fact, you can see how the natural occurrence of 1:Many WoM actually paved the way for advertising: if seeing the shoes on someone makes an impression, why not take out a billboard? If a celebrity’s endorsement is so influential, why not pay them to make one?

Message: Experiential & Consequential

The most frequent -- and wildest -- Word of Mouth is experiential: messages expressed by customers whose brand experience was unexpectedly good or bad (it’s rare that someone takes the time to talk about an experience that merely met their expectations).

You expect a Dr. Squatch soap to smell good. You don’t expect the magnificent customer service or funny messages in the packaging, and as a result, you feel compelled to let other people in on this great brand you found.

Consequential WoM, on the other hand, is what we mentioned previously about consumers echoing or enhancing your marketing messages. Quip’s print ad says it helps you brush longer, which leads to healthier teeth. Ok... sounds biased, but duly noted. Then one day, your friend says, “I bought a Quip toothbrush, and I honestly can’t believe how much more I’m brushing. I feel way more healthy these days.” That’s a sale right there.

Whenever some timely combination of all these audiences and messages comes together, you get Word of Mouth influence: the essence of brand virality.

2. How does Word of Mouth impact your business?

We obviously don’t have to explain the importance of virality to any of you, but it’s worth considering how the two-way street of Word of Mouth equity impacts business decisions more broadly.

As we’ve discussed on our Question Authority podcast, the customer-centric collaboration between product, marketing, and CX teams is fast-becoming a potential market advantage for nimble DTC brands. Word of Mouth is perhaps the most obvious effect of this alignment, as listening for customer feedback yields a continuous optimization loop of stronger messaging and better product/shopping experience, which in turn yields better customer feedback.

What’s more, understanding the audiences and messages that flow through WoM makes those opportunities easier to predict and scale. Quip is again a good example here, as a toothbrush naturally lives in a 1:1 audience for WoM. Unless the customer starts creating experiential TikToks or Reddit posts, the majority of their brand advocacy will come when someone walks into their bathroom. So, what can the product team do to tap into the 1:Many WoM audience? If they do some customer research through the marketing team or listen to feedback heard by the CX team, they might find an overlapping interest in extended oral care or a positive correlation between “health” and “freshness”. So, with a few Pez dispenser-derived sketches later, they create… Quip gum.

Now the brand is out of the bathroom and into the 1:Many audience realm, with a product designed to be shared and a spokesperson doling out free trials. It’s actually the best of both audience worlds. Obvious? In hindsight, perhaps. But still genius.

That said: if every piece of Quip gum is a single serving of WoM, it’d be great to measure that… right? How the heck can you do it?

3. How can you measure Word of Mouth successfully?

Again, to save you time we could just go ahead and say, talk to your customers. But if you want to know why so many marketers struggle to measure Word of Mouth, we can help you avoid those pitfalls.

The de facto WoM attribution strategy is referral codes. Even the core startup metric of Viral Coefficient -- its K-Factor -- is typically calculated by creating referral codes and following their performance through the attribution funnel.

WoM referrals are perhaps most widely relied upon in the services sector, and in products that are wait-listed or invite-only. But inherently, the method has a few significant shortcomings:

1. Referrals require effort and formal communication. WoM, at its core, is neither of those things -- if someone has to step out of character to instruct a friend on a specific buying process, you’re really ramping up a cringeworthy MLM-grade sales team rather than a viral coefficient. As a result, lots of customers will be huge advocates of your brand, yet never touch the referral process. One study illustrates this limitation, where 81% of a brand’s consumers said they’d refer the company, but only 30% actually used the referral program (and just 12% of that group actually produced customers through the trackable referral code). Whether that 30% are tribe members or coupon clippers is up for debate. And what the other 51% did is a total mystery, if you have no other means of attribution.
2. For product-based brands, referrals are often tied to incentives like discounts or points in order to drive observable attribution; not only does this muddy the line between virality and paid media from a CAC perspective, it also has the obvious and negative effect of increasing your CAC and because you’re paying to confirm an event that was likely to happen anyway. This has always been one of the biggest drains on CAC for traditional retail brands -- they consistently sacrifice margin on future sales just to track Word of Mouth reliably through incentives.

These WoM measurement limitations may sound familiar, because they’re the same problems you find with offline media campaigns (and again, the urge to scale WoM spawned much of the offline advertising industry, so the similarities aren’t a coincidence). It’s also in line with the struggles social media managers experience in justifying their community-building ROI. They can create tracking links all they want, but users always find a way to break things… especially when it’s not natural to their WoM style.

Point being, a lot of your marketing is in the same boat as WoM -- and you already know that, since a huge chunk of your traffic is “direct” or “unknown”. So arguably, measuring WoM may be the best metric to represent everything else your company does that isn’t your predictable-yet-dubious Facebook spend.

We’ll let one of our agency partners, Krystina Rubino of Right Side Up, tell it:

TLDR: referral codes and tracked links are certainly useful, but you have to supplement them with the safety net of post-purchase attribution surveys. Fairing's response rates average 50%+, which means many of our clients get a net attribution boost of 20% or more across their entire marketing mix. A big chunk of that number is the lost treasure that is Word of Mouth and the hard-to-measure media it complements, so getting those responses is crucial for operationalizing a lower, more predictable CAC.

To wrap up, we’ll say this: asking the question matters, but how you ask is just as important. We’ll break down the how in our next post, so you can use Word of Mouth feedback to surgically inform marketing messaging, diversify media, and more.

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