FreshNetworks Blog

Last week I wrote a post about the new white paper from Satmetrix which claims it can prove the econmic benefit of all of this word of mouth. They can put a price on the value of word of mouth – with those who are advocates spending about 25% more than detractors for the B2C computer hardware market they use as an example. However the true value of word of mouth is probably more complicated than this.

Last year, an article in the Harvard Business Review explored the value of word of mouth and concluded that the value of an individual advocate was not in the amount of money they themselves spent, but the amount spent by those to whom they recommend your brand. The Semantix report also discusses this aspect and attempts to put a figure on it.

Using the same B2C computer hardware example, Semantix calculate how many more customers positive word of mouth generates and how many existing customers negative word of mouth will cost you. The results support the much quoted theory that people discuss a bad experience more than a good one. An Advocate will generate 0.5 customers for your product, whereas each Detractor will cost you 0.84 customers.

The benefit of converting Detractors to Advocates is therefore huge. Not just the 25% extra revenue generated from the individual themselves but rather than costing you customers they also generate new ones – the net effect will be 1.34 new customers for your brand. Converting Detractors to Advocates is therefore critical for any brand.