Archive for November, 2010

Word-of-Mouth Campaign Effectiveness is Impossible to Measure by Conventional Means

November 24, 2010 |  by  |  Secrets of WOMM  |  No Comments

The Silverman Uncertainty Principle:

You can’t measure your word-of-mouth campaign with a conventional control group design, because the purpose of word of mouth is to set off a chain reaction of second-order word of mouth that reaches everyone quickly. In experimental design, it is called “contaminating the control group.”  You can’t use a pre/post design because you can’t control for the other variables without a control group, which you can’t use. Also, the second order effects are much more powerful than the initial exposures. Your boss is going to hit the roof over this.

The Problem with Word-of-mouth Measurement

Word of mouth is the only marketing method that can’t be measured accurately. Even more disturbing is that the more effective the program, the more likely any attempted measurement is going to be invalid. That’s a serious problem, because most companies now require that you show a substantial return on investment (ROI) for any marketing method you use.

Don’t get me wrong. You can plot the number of mentions of your product on the social media when compared to your competition, but that’s not the same as measuring the bottom-line effectiveness of a particular word-of-mouth campaign. That campaign isn’t the only thing that’s happening in the world. You can’t use a control-group design, for instance, to measure the purchases of people who attended your Webinar. The major effects may be on friends of friends. In most cases, that can’t be tracked back to its source.

This  lack of measurability goes contrary to common sense. Everything else is measurable, so it seems obvious that word of mouth must be measurable.

More to come on this, but I welcome your comments.

The GM Decline Predicted in 1990

November 8, 2010 |  by  |  Focus Groups  |  No Comments

I just came across this from an article titled “Strategic Listening” that I wrote in 1990. I thought it was interesting in the aftermath of the bankruptcy of GM, its bailout, and its immanent IPO.

General Motors

I once wrote to General Motors in the early 70’s, when they were totally dominating the market, and suggested a dealer telephone focus group program. They sent me a legalistic letter explaining that they get ideas from all over, and that they could not accept unsolicited “proposals” because doing so would raise questions and lawsuits about who originated the ideas. In effect, they were declaring that they were closed to new ideas “Not Invented Here.” Lee Iococca is another example. He declared that he didn’t believe in marketing research. Neither Chrysler nor General Motors has been doing too well lately. Ford, on the other hand, is doing very well. They learned from the failure of the Edsel, and many other hard knocks, as well as the success of the Taurus. They seem to be listening to everyone. In fact, the way they built the Taurus, which is well documented in the business literature, is an extraordinary lesson in external and internal listening. Ford is becoming identified with quality (Quality is Job 1), and delivering quality. It is also winning. Bravo!

Moral: If a good idea falls in the forest, make sure you are set up to hear it.