In December 2003, Harvard Business Review published an article by Fred F. Reichheld regarding customers as promoters. Mr. Reichheld's findings, based on two years of research, argued for a stronger correlation between growth by word of mouth over brand loyalty. Reichheld, F. (2003). “The one number you need to grow”, Harvard Business Review, 81 (Nov.-Dec.): 1-11
While some continue to argue the absolute quantitative methodology of measuring brand advocacy (net-promoter figure), word-of-mouth marketing continues to grow at a healthy double-digit rate.
"Word-of-Mouth (WoM) Marketing is the fastest-growing segment of the $254 billion marketing services sector of the media industry, which includes among others, branded entertainment, direct marketing and public relations. WoM marketing grew almost five times faster than the overall marketing services sector in 2006 and more than six times faster than the overall media industry and nominal GDP.
PQ Media defines Word-of-Mouth (WoM) marketing as an alternative marketing strategy supported by research and technology that encourages consumers to dialogue about products and services. And for the first time in the long history of WoM marketing, an industry has arisen by integrating strategy, technology and measurement from its earliest stages of development. Brand marketers are responding, and have begun to increase their WoM media budgets, moving from test phase to implementations that support their integrated marketing campaigns." More >
The fundamental challenge traditional media channels and advertisers continue to face is the loss of trust between brand creator and consumer. Moreover, the Internet provides consumers a more transparent, trusted, and efficient marketplace for exchange of information between consumers about the merits of the product or service.
Whether you're a b2c or b2b organization, you should leverage social media technologies into your marketing activities and innovation process.
Click on image for full size.