The Power of "Word of Mouth"

August 10, 2018 / James Hughes

Every company dreams of the day that their product becomes the talk of the town (and hopefully for the right reasons!) But does the conversational buzz around a new product actually increase sales? Can customers and their conversations actually be the boom to your company that so many marketing wizards say that it can be? A recent research study suggests that YES, word-of-mouth on social media does actually increase sales performance.

Liu & Lopez (2016) studied the impact of WOM on the performance of soda sales, looking specifically at market leaders Coca-Cola and PepsiCo. They found that social media conversations about specific brands raised awareness, which in turn improved how customers viewed those brands, and ultimately lead to increased sales. They also found that what was important was the volume of social media conversations, rather than how positive the conversations were, giving some weight to the idea of “all press is good press”.


Implications for Managers:


Liu & Lopez strongly suggested that managers created marketing campaigns that increased conversations around their products. They pointed at the “Share a Coke” campaign as an example, with the social media conversations around the campaign leading to 7% increase in sales.

They also noted that by monitoring social media conversations, you can glean consumers’ preferences for product characteristics, giving guidance for future product changes that can also help increase sales.


Thanks for reading,

James Hughes


Reference:

Liu, Y., & Lopez, R. (2016). The impact of social media conversations on consumer brand choices. Marketing Letters, 27(1), 1-13. doi:10.1007/s11002-014-9321-2

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