Measuring word of mouth marketing.

"The future belongs to marketers who establish a foundation and process where interested people can market to each other." So says Seth Godin in his book, Unleashing the Ideavirus. Word of Mouth (WOM) marketing strategies are being engaged daily across North America as a means to positively impact customers' decision processes. But how can one measure what neighbors say to neighbors regarding a specific product?

Measuring return on investment (ROI) on WOM is an important endeavor to making WOM a core part of the mainstream marketing mix," says Andy Sernovitz, CEO of Word of Mouth Marketing Association. "WOM marketing has a direct impact on all other marketing initiatives." Industry experts say that both results and ROI are to be considered as they influence immediate market share gain, as well as, the impact those efforts have over time.

"The value WOM marketing brings companies is in both immediate gain and the continuing, resonating results that occur--including the benefits of increased sales, improved retention, higher satisfaction and greater loyalty," said Arron Madson, director of sales and marketing for AgCall, the Calgary, Alberta-based company providing a range of specialized services for agricultural clients.

"The measurable success of any WOM strategy represents the minimum return on investment," says Stephanie Liska, president of Wayne, Neb.-based Beck Ag Com. "It's critical to understand the ripple created by customers talking positively. Ripple drives the product message and results in additional product adoption far beyond those engaged in the personal peer-to-peer experience. That's additional leverage which goes well beyond measurable ROI."

THE PROOF IN ROI

AgCall and Beck Ag Com employ a variety of customized solutions to deal with the unique marketing challenges agrimarketers face to effectively reach customers. Madson says AgCall's FarmCall[R] approach, "Utilizes the concept of advocates talking with their peers, producers are able to share everyday experiences--their success and challenges--with fellow producers."

Madson explains the value of a program conducted for Pfizer Animal Health. "Our challenge was to build a ground swell of sales and grow Dectomax[R] market share for Pfizer when their key competitor owned significant share of the parasiticide market," he said.

"We recruited producers, then conducted product and sales training with them. Those producers went to the field and talked with other targeted producers," Madson said. "Armed with the experience of having used the product in their own operations, the advocate producers effectively neutralize any negatives and build an understanding of product use and benefits. Through that experience sharing, producers were turned into retention customers and even growth customers for the product."

Dave Ireland, director of sales for Pfizer Animal Health, Pfizer Canada Inc., used AgCall's WOM solutions in Canada over the course of three years. "Based on the success, ROI and ripple effect that we saw in Canada, I had no concerns recommending this approach to my counterparts in the U.S.," Ireland said.

Clients investing in WOM strategies with Beck Ag Com have seen similar results regarding return on incremental sales dollars invested in WOM marketing solutions. Based on independent research conducted by Purdue University, a Beck Ag AgTelecom program produced significant ROI over the three-year study period for a corn insecticide product in the U.S.

Ultimately, Madson says, there's more to gain from investing in WOM strategies. "There's continuing momentum on the value of investment with WOM," he said. "Beyond the metrics, it's critical to realize the long-term impact and ripple effect that WOM solutions have on the company, the brand growth and their bottom line."

Kathleen Erickson is president of Erickson Communications and Consulting, Clarks Hill, Ind.

Additional Sales Generated from a WOM Strategy

Client Investment in Beck Ag Com                    Approx. $100,000
Incremental Sales Generated: Year One                       $756,960
Incremental Sales Generated: Year Two                       $856,560
Incremental Sales Generated: Year Three                   $1,055,760
Total Increased Sales Generated over three-year study
period:                                                  $26.70 to 1