I spoke at the Direct Marketing Association conference today on how to set a word of mouth marketing budget. Fascinating stuff..honestly!
As I was pulling together the presentation it dawned on me that it was actually pretty important. One of the biggest barriers to brands investing in WOM campaigns is a lack of historical benchmarks. If you haven’t done it before how do you know how much to spend?
One of the solutions I offered today was a measure that calculated the average value of a recommendation. Effectively, it discounts conversations between existing customers and provides a single number that you can mutiply by the reach of various mechanics to give you a maximum budget. I must confess it wasn’t my solution, but one given to me by my friend Paul Marsden.
If budgets do begin to shrink in the coming months there will be a real temptation amongst Marketing Directors to start backing safe options such as TV advertising (where they hold historic data) rather than the right options (taking into account the rapid change in the way customers now consumer information). This temptation really needs to be fought as we move into 2009 planning. A few simple formulas give a pretty good start.
Hello,
What formulas do you recommend for building a WOM budget?
-Christa
Hi Chista,
Two are worth looking at. Share of influence and calculating the value of a recommendation. Search out the Harvard Business Review 07 – How valuable is word of mouth.
Richard
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