consumer decision journey

An Attribution Model for Word of Mouth

Attribution models are used by search marketers to give equal credit to all ads the user clicks on in the purchase path, not just the final ad. Word of Mouth (WOM) also needs an attribution model.

The example below shows how WOM plays a highly influential role in a consumer’s restaurant dining choice: (Note that I’ve simplified the purchase decision process to illustrate the point about the value of WOM.)

  • Awareness: Customer learns about restaurant via WOM recommendation from friend.
  • Consideration: Customer reads positive reviews about restaurant on Yelp. Again, WOM plays a key role.
  • Purchase: Customer goes to OpenTable and makes restaurant reservation.
  • Advocacy: Customer recommends restaurant to his friends, which leads to additional purchases.

In the example above, OpenTable would get credit for the purchase because it was the final click in the purchase path. However, WOM deserves credit for heavily influencing the purchase decision. In fact, without the initial WOM recommendation and the positive reviews of the restaurant on Yelp, the consumer probably would never have chosen the restaurant. This means that WOM should actually get more credit than the click or last action immediately before the purchase.

Since WOM plays a highly influential role in the two steps leading up to the purchase, the restaurant should give credit to WOM for at least two-thirds of the value that it currently gives to OpenTable. If the restaurant is paying $2 to OpenTable for each reservation, WOM deserves $1.32 of the credit for this reservation. (OpenTable charges a pay-for-performance fee of $1 per seated diner booked on OpenTable.)

By the way, this doesn’t take into consideration the value of the fourth stage in the decision process - advocacy - where the customer recommends the restaurant to his or her friends.

To sum up, then, here’s a simple way to assign value to WOM:

  1. Model the customer decision process.
  2. Analyze what role WOM plays at each step in the customer’s purchase decision process.
  3. Assign value to the role of WOM based on what you currently pay for the last click or action before the purchase occurs.

This attribution model isn’t perfect (very few are.) But at least it can help you analyze the value of WOM in the purchase decision process.

-Rob Fuggetta, Founder/CEO, Zuberance

Marketers are Spending Money in All the Wrong Places

Have you seen the cover story of Harvard Business Review’s latest issue? It was all about…you guessed it…brand advocacy!

It's called, “Branding in the Digital Age: You’re Spending Your Money in All the Wrong Places” by David C. Edelman (Principal, McKinsey & Company.)

The article highlights the “consumer decision journey” (CDJ), developed by David Court (McKinsey & Company) from studying purchase decisions of about 20,000 consumers across five different industries and three continents.

Four Stages of the “consumer decision journey”:

  1. Consider- consumer considers products/brands attributed to various stimuli (exposure to ads or store displays, encounter at a friend’s house, etc)
  2. Evaluate- consumer seeks input from peers, review sites, retailers, and the brand/competitors to the brand
  3. Buy- consumers often put off a purchase decision until they’re actually in the store, making placement, packaging, pricing, etc very important
  4. Enjoy, advocate, bond- when pleased with the purchase, consumers will advocate the product/brand by recommending it to others. As the bond between the consumer and brand becomes stronger, consumers will enter an “enjoy-advocate-buy” loop that skips the consider and evaluate stage

David Edelman makes a critical point: The traditional sales funnel is outdated; it ignores the enjoy-advocate-bond stage and the shifting nature of consumer engagement in general. People like to talk about products and brands- they write reviews, create testimonials, recommend products to others, and more. In fact, the average American consumer discusses brands 56 times per week; 62% of these discussions are positive (Keller Fay, 2010.)

But check this out: 70%-90% of marketing budgets go to advertising and retail promotions that hit consumers at the consider and buy stages, yet consumers are often most influenced by the evaluate and enjoy-advocate-bond stages (McKinsey.)

Why aren’t marketers spending money on driving advocacy?