Are we measuring the wrong one number?

For a lot of people, an article called "The One Number You Need To Grow" (sadly, you have to pay for the article) by Frederick Reichheld in a 2005 edition of the Harvard Business Review has been their way in to the subject of word of mouth. There's a Parl Marsden of the LSE.

I have 2 problems with these pieces of research in this context:

Firstly, while they claim to be showing that advocacy leads to growth, both articles as far as I can tell actually relate current advocacy to past growth. There seems to be a real danger that they've got their causes and their effects the wrong way around. I'd even argue that brands that have a lot of recently acquired customers (i.e. they have grown recently) should have a lot of advocacte - people who are either reinforcing their own brand choice, or who are simply in a position of knowledge having recently evaluated the brands available.

More significantly, I'm just not sure that the kind of advocacy they suggest we measure necessarily leads to constructive, innovative, and interesting attempts to engage with consumers: creating brands and marketing that respond to their needs and capture their imagination. Customer satisfaction researchers have been arguing for years that likelihood to recommendation or buy again are better measures of customer commitment than satisfaction, so I might even present this as another example of WoM hype.

Essentially, my issue with Reichheld and Marsden et al is that they seem to argue that advocacy is an end in itself. To my mind, person-to-person recommendations are a beneficial side-effect of a positive relationship between a brand and its consumers. It's fantastic when people spontaneously endorse brands they love, but most of the time, we should be focussing on long-term brand building that fosters real engagement (mutual value), and see the advocacy as a secondary benefit.

Having read a bit more of Marsden's stuff, I think it's just not the most compelling argument for why word of mouth is important.

Here endeth the opinion for today.