In December 2003, Harvard Business Review published a critically important article by Fred Reichheld: "The One Number You Need to Grow."
He suggested that a customer's propensity to recommend or tell others about a product or service is the most important measurement in business today. Referral value, he argued, has a much higher correlation to company performance and results than traditionally defined "customer satisfaction."
Reichheld's article triggered an important marketing debate. But it failed to answer the most critical question: If a consumer's propensity to tell others is indeed the "one number you need to grow," what techniques and methodologies can help measure referral value?
Put another way, is it possible to "quantify" word of mouth beyond standard solicited "survey" questions?
Thanks to the archived nature of the Internet, the answer is clear. Indeed, what makes the Internet so unique and powerful is that it leaves a "digital trail" of word-of-mouth behavior, also called consumer-generated media, or CGM.
CGM is created primarily by consumers who have relevant product experience and who post, share and otherwise circulate their opinions in targeted and high-reach venues: millions of online discussion boards, forums, online communities, rating and reviews sites, direct company feedback and blogs. Their primary goal? Educate each other about products, brands, services, experiences, personalities and issues.
Why is CGM so important? First, it carries an extremely high trust factor. A May 2004 Forrester/Intelliseek study found that consumer–to-consumer recommendations—even online consumer postings to forums—carry a higher trust factor than virtually all other forms of advertising, including TV, radio and print.
Take the first step (it's free).
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