Lithium: Word-of-Mouth Campaigns on Customer Networks Double Marketing Results
Wireless News
October 31, 2009
(c) 2009. Close-Up Media, Inc. All rights reserved.

Lithium Technologies, a provider of Social CRM solutions to power the customer network, announced initial findings from its collaborative research on the impact of customer networks on word-of-mouth marketing campaigns.

The report marks the first joint research produced by Lithium's chief scientist, Michael Wu, and leading researchers studying marketing and social media, including Barak Libai, of MIT Sloan School and the Leon Recanati Graduate School of Business in Tel Aviv; Eitan Muller, of New York University Stern School of Business and the Recanati School; and Renana Peres, of The Wharton School, University of Pennsylvania and Hebrew University of Jerusalem.

The goal of this research is to quantify the impact of customer networks - a set of interconnected online relationships among members of a company's customer and prospect base - on word-of-mouth marketing campaigns. Findings indicate that word-of-mouth campaigns executed across customer networks can increase product adoption by as much as 107 percent.

Lithium noted the following highlights from the report:

- Influencers matter: Influential customers within branded customer communities can increase the effectiveness of word-of-mouth marketing programs by as much as 50 percent.

- Influencers accelerate sales: Influencers within branded customer communities can help accelerate new product adoption. In competitive markets, almost all of the value of word of mouth programs originates from accelerated product adoption.

- Influencers produce high ROI: Companies can achieve more than 80 percent of the potential value of the word-of-mouth campaign by targeting fewer than 5 percent of the potential audience.

"Identifying your most ardent customers creates tremendous opportunity for companies," said Lyle Fong, CEO Lithium Technologies. "We are seeing that the ability to identify, engage, and create lasting relationships with passionate, influential customers is a core competitive advantage for companies."

Choosing to build a branded customer community and engaging with users willing to share their product experiences with others not only enhances customer support, but also has been found to amplify word-of-mouth marketing programs and accelerate sales cycles.

This new research builds on Lithium's report about community health, where the company identified and provided open standard metrics that help understand the efficacy of customer communities. And, the new white paper explains the role that these health factors play in propagation of word-of-mouth messaging and offers practical suggestions for marketers on how to ensure that brand communities maximize opportunities for success.

The researchers studied the interactions within communities of top brands focused on consumer products ranging from high-tech to finance, and with revenues ranging from $15M to more than $70B.

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