The Power of Word of Mouth and Being in the Arena

The Power of Word of Mouth and Being in the Arena

Introduction:
In today's digital age, advertising dominance is largely held by Facebook, Google, and Amazon, with these platforms accounting for 40% of all venture capital and 70% of a company's digital ad budget. However, recent developments, such as Apple killing user advertising IDs and Google decreasing the prominence of organic search results, have forced businesses to explore alternative methods to reach their target audience. One such method is harnessing the power of word of mouth, which has traditionally been difficult to measure due to its offline nature. This article delves into the importance of word of mouth, explores different measurement techniques, and provides actionable advice for businesses to leverage this powerful tool.

Understanding Word of Mouth Measurement:
Word of mouth is often measured through various methods such as Net Promoter Score (NPS), attribution surveys, and social listening tools. While NPS helps gauge the word-of-mouthiness of existing users, it falls short in quantifying actual growth impact. Attribution surveys, on the other hand, rely on asking new users how they heard about the product, but they may not accurately capture the full picture. Lastly, social listening tools crawl social platforms and the web to track mentions and engagement, providing valuable insights into the online conversations surrounding a brand. However, these methods have limitations and fail to provide a comprehensive understanding of word of mouth.

Introducing the Word of Mouth Coefficient:
To address the challenges of measuring word of mouth, a metric called NOPDAU or "New Organics Per Daily Active User" was created. This metric takes into account the premise that engaged users are more likely to generate word of mouth. By focusing on product retention, businesses can drive the growth of new organic users. The Word of Mouth Coefficient, calculated by dividing new organic users by active users, provides a quantifiable measure of the impact of word of mouth. For example, if the coefficient is 0.1 and the denominator is weekly active users, it means that every weekly active user generates 0.1 new users per week through word of mouth.

The Power of Retention and Engaged Users:
One key insight derived from the Word of Mouth Coefficient is that increasing retention can boost word of mouth. The longer users engage with a product, the more likely they are to talk about it and refer it to others. This finding highlights the importance of building strategies around engaged users rather than solely focusing on new user acquisition. Each "new organic" user has the potential to bring in multiple future daily active users as the word of mouth loop continues.

Actionable Advice for Harnessing Word of Mouth:

1. Prioritize retention: Invest in strategies and features that enhance user engagement and encourage prolonged product usage. By keeping users active, you increase their likelihood of generating word of mouth.

2. Optimize in-product viral flows: For industries like edtech, where offline sharing is prevalent, it can be challenging to leverage word of mouth. However, by optimizing in-product viral flows and making it easy for users to share within the product, businesses can overcome this hurdle and tap into the power of word of mouth.

3. Embrace stability and volume: While seasonality may affect the Word of Mouth Coefficient, overall stability can be achieved with increased volume. As the user base grows, the month-to-month volatility decreases, allowing for more reliable word of mouth predictions.

Conclusion:
The dominance of Facebook, Google, and Amazon in the advertising world has pushed businesses to explore alternative methods to reach their audience. Word of mouth, although difficult to measure, offers a powerful opportunity for growth. By understanding and leveraging the Word of Mouth Coefficient, businesses can harness the potential of engaged users and retention to drive organic growth. Prioritizing retention, optimizing in-product viral flows, and embracing stability and volume are actionable steps that can pave the way for successful word of mouth strategies. So, step into the arena, embrace the potential of word of mouth, and dare greatly in your pursuit of high achievement.