Olivier Blanchard: How to Measure Word of Mouth — live from Word of Mouth Supergenius

11:53 — Kurt Vanderah mentions charity: water http://gaspedal.com/water

11: 54 — Kurt introduces BrandBuilder‘s Olivier Blanchard.

11:54 — Olivier: ROI — the most boring topic, but it’s why you all are here. I help companies integrate social media and WOM into what they do. I’m a brand management guy. In the process of working with companies, I have to learn what motivates executives to release budgets.

11:56 — Olivier: Vertical engagement = Brand + customer. When looking at corporate communication in the social space, there are two distinct directions. Vertical used to mean the company talks to the customer. Then Web 2.0 came along, and it became 2 directional. The problem is, with 500 million Facebook people and 100 million Twitterers, the dialog doesn’t scale well if the dialog is only vertical. WOM scales for lateral engagement. That is how it really scales — through recommendations, sharing etc.

11:58 — Olivier: (He invokes the Old Spice guy.) People talk to each other all day long, and have multiple conversations. In-person conversations are limited. WOM via networks is huge.

11:58 — Olivier: 42% of people on Twitter use it to look for products and services. Vertical engagement is the catalyst. Lateral engagement is the reaction. Talk doesn’t pay the bills. Talk needs to impact purchasing behavior. Nothing a company does is free.

11:59 — Olivier: We don’t necessarily deal with the back end. Just because being in social media is free doesn’t mean it won’t cost the company something. Programs and communications take manpower. They also need technology. And most importantly, they take time.

12:01 — Olivier: Those things are limited resources. There are buckets — marketing, advertising, headcount — these take 100% of your budget, but they also generate 100% of your business. So you have to figure out which bucket do we have to empty to fill the new one? This is an opportunity cost.

12:02 — Olivier: Which one will yield best results for me? Which one will get me the bonus (if you’re dealing with upper management)? They need to be successful and they need to look good. You need to convince them.

12:03 — If your boss asks: “Why should I assign money/resources to this project?”

12:03 — Olivier: Start with a question: What are you trying to accomplish? Define objective first, THEN come up with tactics.

12:04 — Olivier: Tactics don’t dictate the objectives. Objectives dictate tactics. I need X — how does WOM fit? Will it save me money? Will it generate more revenue? Will it save money or generate more money?

12:05 — Olivier: Frequency, reach , and yield — frequency: increase how often customers buy from us monthly, reach: increase the net number of transacting customers, or yield: increase average spend per transaction.

You have to get past the sales people or get them onboard with ideas. This is what they came up with.

12:07 — Olivier: If you’re McDonalds and some folks only buy on Mondays — you want to get people in other days (frequency).

Old Spice — you can’t increase buy rate — people only buy it every so often — you have to increase net number of customers (reach).

Then, get people to supersize or increase spend per transaction (yield).

You shouldn’t just sell WOM or Social Media; sell what makes/saves money.

ROI — return on investment — put some money in, get more money out. Gain from investment — the cost of investment divided by the cost of investment. It is a business metric that doesn’t change.

12:10 — Olivier: Only measuring digital or social won’t get you anywhere. The problem is WOM gurus or social media experts don’t really help you get money unless tied to results.

12:11 — Olivier: WOM vs. ROI folks — there are 4 roles in WOM world: strategy and development folks, operational folks, management folks (community managers, the “people people”), and the measurement folks. Everyone has different perspectives.

12:12 — Olivier: Investment > action > reaction > non-financial impact > $$Financial impact

12:14 — Too many agencies only focus on the non-financial impact (website visits, discussion about brand) instead of the change in behavior. The difference is that the financial impact is what it takes to affect the company.

1. Establish baseline before WOM campaign.

2. Create activity timeline.

3. Monitor impact on conversations.

4. Measure transactional precursors — visits, click-throughs, comments, etc. Look at retail traffic before and after. Also look at the number of transactions. Measure net new customers —  that’s effective reach, not just media reach.

5. Look at financial data.

6. Overlay data on a timeline. It sounds simple but it’s not.

7. Look at trends.

8. Analyze and prove or disprove relationships based on how you touched/impacted scales. http://smroi.net

Q&A

Q: Jeremy from Situation Interactive: When you measure before and after, how do you account for economy and other external factors?

A: There’s no easy way to do this — there is more correlation than causality. Look at trends, competition, and other indicators and see what things you can find to help create the standard path. You do have to adjust for this.

Q: You’ve been doing a lot of measurement and analysis. What are characteristics of campaigns that have positive ROI?

A: Example of spend justification — A retailer suspected his print advertising wasn’t helping. 90% of spend was on print, 10% was on email, blog, and in-store. We embedded unique promo codes in each channel. We did sales as tests. We didn’t need to measure all the time, just slivers of time. Of all promo codes, 4% of sales came from print, 69% came from email, 17% came from Facebook, and 10% came from web and blog.

The retailer realized he had negative ROI on print and abandoned it. He used money to upgrade CRM and started targeting customers more effectively

Q: David, Columbia Business — I liked the FRY model on cost savings. Do you have a similar cost savings tool?

A: There’s one that’s a little different in one particular area — customer service or support. You have fixed costs and you know who you’re talking with. For example, Comcast knows how much they spent on Twitter/online vs. how much they spent while on the phone with customers. They can compare and see how they can more effectively handle problems.

Love this live coverage? It’s all thanks to the hard work of the very talented Howard Greenstein.

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  1. Live coverage recap from yesterday's Word of Mouth Supergenius - July 21, 2010

    […] How to Measure Word of Mouth — with BrandBuilder’s Olivier Blanchard […]

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