Word-of-mouth has time and again been shown in research to be the top influencer of consumer’s purchase decisions. Now, a new study from Engagement Labs quantifies the extent to which word-of-mouth drives sales, finding that an estimated 19% of consumers sales are the result of online and offline conversations.
The study analyzed correlations between consumer conversations and purchases for 170 brands, using a combination of data scraped from social media, survey research and weekly brand sales figures.
The 19% of consumer sales driven by word-of-mouth broke out to 10% from offline and conversations and 9% for social media. It’s worth repeating that finding: conversations on social media drive an estimated 9% of consumer sales.
Survey data supports social media’s role: earlier this year, a survey from Deloitte found youth (14-33) more likely to say that recommendations from people in their social media circles highly influenced their purchase decisions than to say the same about TV ads.
W-O-M Has An Above-Average Impact on Tech Purchases
Compared to its 19% overall impact on consumer purchases, word-of-mouth seems particularly influential in the technology industry.
In fact, the Engagement Labs study estimates that fully 29% of consumers’ technology spending is driven by word-of-mouth, split evenly between offline (15%) and online (14%) conversations.
The Beverages sector is also highly driven by word-of-mouth, to the tune of 22% of consumer sales. This particular category is spurred more by offline (13%) than online (9%) word-of-mouth.
By comparison, social conversations online and offline play a lesser role in fueling consumer spending for pain relievers (14%) and beauty (also 14%).
Of the 5 categories tracked, online was the predominant driver of conversation-backed sales in one: groceries and food. Social media conversations in this category were responsible for an estimated 9% of consumer sales, compared to 6% share for offline conversations.
Meanwhile, although consumers ascribe more influence to word-of-mouth than advertising when making purchase decisions, Engagement Labs’ study indicates that advertising contributes to word-of-mouth success. In fact, about one-quarter of paid media’s contribution to sales was indirectly attributed to social influence.
On a related note, recent research from YouGov reveals:
- The top 10 US brands for customer advocacy; and
- The top 10 US brands for word-of-mouth among Millennials.
About the Data: Engagement Labs describes its methodology as follows:
“The study looked at 170 consumer brands in the United States, linking weekly social media and offline word of mouth data with weekly brand sales data. The study then isolated a subset of 21 brands across multiple industry verticals, including Toshiba, Budweiser, Tylenol, and Neutrogena, and procured sales and media data which were incorporated into comprehensive marketing mix models that are predictive of sales. The social media was scraped from Twitter, blogs and forums using industry-standard key word searches and natural language processing. The offline conversation data came from an ongoing survey of representative consumers aged 13 to 69, surveyed online, who provided detailed information about their brand conversations on the day prior to the survey.”