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ROI Toolkit

Value of Word of Mouth

Investing in service sustains quality, preserving word-of-mouth reputation and driving continued revenue growth.

The Principle

Invest Ā£X in Service ā†’ Improve Key Service Drivers ā†’ Sustain Positive Word-of-Mouth ā†’ Increase Revenue (Ā£Y from referrals and loyalty) ā†’ Deliver ROI (Ā£Z)

The methodology

The following outlines the recommended steps to implement this methodology:

  • Focus on isolating word-of-mouth measures ā€“ Recognise that word of mouth (WOM) is a key driver of growth and must be measured and attributed directly to service performance.
  • Establish WOM baselines ā€“ Track referral rates, Net Promoter Score (NPS), and organic acquisition numbers to understand current WOM impact.
  • Identify service elements that influence WOM ā€“ Analyse which areas of customer service most affect referral behaviour, such as response speed, resolution quality, and personalised engagement.
  • Quantify WOM impact ā€“ Estimate revenue generated through referrals and organic growth attributed to WOM. This includes identifying uplift in customer acquisition without marketing spend.
  • Determine investment to amplify WOM ā€“ Calculate costs required to enhance service areas that drive referrals, such as staff training, process optimisation, loyalty programs, or proactive outreach.
  • Monitor and track WOM metrics ā€“ After implementation, continuously monitor changes in referral rates and organic growth, adjusting investments and strategies as needed.
  • Evaluate overall ROI ā€“ Compare incremental revenue from WOM growth and loyalty improvements against the cost of service investment.

An example of how an organisation might use the Value of Word of Mouth metric

A financial services company identified that rapid query resolution and personalised client updates were key to referral growth. They invested Ā£60,000 in training and new client communication processes. Over the next year, referral-based new business generated Ā£180,000 in additional revenue, with churn reduction adding Ā£40,000 in retained revenue. Applying the formula: ROI = ((Ā£180,000 + Ā£40,000 ā€“ Ā£60,000) / Ā£60,000) * 100 = 266%. This demonstrated that focusing on specific service drivers directly influencing word of mouth delivered substantial ROI.

Things to consider

Use NPS, referral volumes, and organic acquisition data to measure WOM accurately.

Distinguish between WOM-driven growth and, for example, paid marketing channels.

WOM impact builds gradually; continuous measurement is crucial.

WOM can drive exponential growth and brand trust beyond immediate revenue gains.

Key research/insight from us

Research from post card

Productivity UK

Productivity UK

Productivity UK

With almost 80% of UK GDP generated by the service sector, there is an urgent need to define, develop and measure productivity in a service context.

This Breakthrough Research examines the perspectives of senior managers, employees and customers on productivity in a service context.

The research looks at how organisations have sought to improve both their productivity and customer satisfaction, and recommends a framework to enable organisations to improve and measure their performance.

View full research
Building the Service Nation

Building the Service Nation

Building the Service Nation

The research is based on interviews with senior executives (including Chief Executive Officers, Chief Operating Officers and Customer Service or Customer Experience Directors) and online surveys with 751 employees in a variety of roles, across organisations and sectors, 929 consumers and 500 young people aged between 16 and 21. The research was conducted between December 2022 and February 2023.

Around 67% of UK employees spanning a wide range of roles, departments or functions, spend significant amounts of time in their job dealing with customers. Therefore, for many organisations, the profession of customer service is about embedding a service culture to deliver the organisationā€™s commercial and customer experience objectives, as well as developing appropriate skills in specific roles.Ā  The research identifies that there is a growing requirement for broader and more advanced skills and lays out in detail what these skills and capabilities will be.

Customer service provides a challenging and rewarding career with genuine pathways to develop skills and experience but potential employees are not always aware of the breadth of career opportunities and many are more likely to see customer service as a foundation for other careers than a respected profession offering good career opportunities.Ā  The research presents 5 main pathways for careers in customer service.

To conclude, our research highlights 9 areas to improve the perception and recognition of roles and careers in customer service as well as practical recommendations to aid organisations in addressing them.

View full research
A connected world?

A connected world?

A connected world?

Key themes of the research include:

  • Which technologies and applications will be most important for customer experience
  • What is required to implement technologies successfully and achieve business performance and customer service objectives?
  • How best to achieve optimum blend of human and technology-based experiences?
  • What should organisations do to reduce the risk of digital exclusion ?
  • From an AI, data or personalisation perspective are there technologies that are ā€œoff limitsā€?
View full research

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