KPIs for Marketing

KPIs for Marketing: word-of-mouth ROI

Discover the most effective KPIs for measuring the ROI of word-of-mouth marketing campaigns.

Word-of-mouth marketing is an incredibly powerful tool, and it's critical that businesses learn how to leverage it. Understanding the KPIs that are relevant to word-of-mouth marketing is one way to do that. In this article, we'll discuss the different types of word-of-mouth marketing, the value of social media in this area, and the key performance indicators (KPIs) that can help businesses measure their word-of-mouth ROI. We'll also explore strategies to improve that ROI by creating shareable content, encouraging customer reviews and testimonials, and leveraging influencer marketing.

Understanding Word-of-Mouth Marketing

Word-of-mouth marketing is any type of marketing where the message is transmitted from one person to another through interpersonal communication, rather than through traditional advertising. It can take many forms, and it's an incredibly powerful tool because people are more likely to trust recommendations from friends, family, or other trusted sources than they are to trust advertising or marketing messages from companies they don't know.

The Power of Word-of-Mouth

Word-of-mouth marketing can be incredibly powerful because it relies on trust and social proof. When someone hears a positive recommendation from a trusted source, they're more likely to take action than they would be if they simply saw an ad for the same product or service. This type of marketing can also be very cost-effective because it relies on existing relationships and networks, rather than requiring businesses to spend money on advertising.

One reason word-of-mouth marketing is so powerful is because it taps into the psychology of social proof. Social proof is the idea that people are more likely to take action if they see others doing the same thing. For example, if someone sees that their friends are all using a particular product or service, they're more likely to try it out themselves. This is why word-of-mouth marketing can be so effective - it creates a sense of social proof that can be very persuasive.

Types of Word-of-Mouth Marketing

There are several different types of word-of-mouth marketing to be aware of:

  • Organic word-of-mouth: This occurs naturally when someone recommends a product or service to someone else because they genuinely believe it's worth recommending. This can happen in person, over the phone, or through social media.
  • Viral marketing: This is when businesses intentionally create content that is shareable and encourages people to pass it on to others. This can include videos, memes, or other types of content that are designed to go viral.
  • Influencer marketing: This is when businesses partner with individuals who have a large following on social media or other platforms to promote their products or services. Influencers can be celebrities, bloggers, or other types of online personalities.

Each type of word-of-mouth marketing has its own strengths and weaknesses, and businesses may choose to use one or more of these strategies depending on their goals and target audience.

The Role of Social Media in Word-of-Mouth Marketing

Social media is a key tool for word-of-mouth marketing because it's a platform where people can easily share content and recommendations with their friends and family. Social media also allows businesses to target specific audiences and track the reach and impact of their marketing efforts.

One of the benefits of social media is that it allows businesses to engage with their customers and build relationships with them. By responding to comments and messages, businesses can show that they value their customers and are committed to providing great service. This can help to build trust and loyalty, which can in turn lead to more word-of-mouth referrals.

Another benefit of social media is that it allows businesses to create shareable content that can help to spread the word about their products or services. By creating content that is interesting, informative, or entertaining, businesses can encourage people to share it with their friends and family, which can help to increase brand awareness and generate new leads.

In conclusion, word-of-mouth marketing is a powerful tool for businesses of all sizes. By understanding the different types of word-of-mouth marketing and the role of social media in this process, businesses can create effective marketing strategies that rely on the power of trusted recommendations and social proof.

Key Performance Indicators (KPIs) for Marketing

KPIs are metrics that businesses can use to track their performance in a particular area. In the context of marketing, KPIs might include things like total website visits, conversion rates, and social media engagement.

However, simply tracking these basic metrics is not enough to fully understand the effectiveness of a marketing campaign. There are many other KPIs that can provide valuable insights into the success of a marketing strategy.

Importance of KPIs in Marketing

KPIs are important in marketing because they allow businesses to measure the impact and effectiveness of their efforts. By tracking metrics like website visits and conversion rates, businesses can identify areas where they need to improve and make data-driven decisions about how to allocate their marketing resources.

For example, a business may notice that their website traffic is high, but their conversion rates are low. This could indicate that their website needs to be optimized for conversions, or that their targeting needs to be adjusted to attract more qualified leads.

Common Marketing KPIs

Some common KPIs that businesses might track in their marketing efforts include:

  • Website traffic
  • Conversion rates
  • Cost per lead or acquisition
  • Customer acquisition cost
  • Click-through rates
  • Social media engagement
  • Return on Investment (ROI)
  • Email open rates
  • Customer lifetime value

Each of these KPIs provides valuable insights into different aspects of a marketing campaign. For example, tracking ROI can help businesses determine which channels are providing the highest return on investment, while tracking customer lifetime value can help businesses understand the long-term value of their customers.

Customizing KPIs for Your Business

It's important for businesses to track KPIs that are relevant to their specific goals and objectives. For example, if a business is primarily focused on increasing brand awareness, they might track metrics like social media reach and website traffic. If they're more focused on increasing sales, they may track conversion rates and cost per acquisition. Customizing KPIs allows businesses to track the metrics that matter most to them and make data-driven decisions about their marketing efforts.

In addition to tracking KPIs, businesses should also regularly analyze and interpret the data to identify trends and patterns. This can help businesses make informed decisions about how to optimize their marketing campaigns and improve their overall performance.

By tracking and analyzing KPIs, businesses can gain valuable insights into the effectiveness of their marketing efforts and make data-driven decisions to improve their performance and achieve their goals.

Measuring Word-of-Mouth ROI

Word-of-mouth marketing is a powerful tool for businesses to reach new customers and build brand awareness. However, measuring the return on investment (ROI) of these efforts can be challenging. It's important for businesses to understand the impact of their word-of-mouth marketing so they can optimize their strategies and allocate resources effectively.

Identifying Word-of-Mouth Marketing Channels

The first step in measuring word-of-mouth ROI is to identify the channels through which it's happening. This might include social media platforms like Facebook, Twitter, and Instagram, where people share information about products and services with their friends and followers. It could also include customer reviews on sites like Yelp and Google, where people can leave feedback about their experiences with a business.

Identifying these channels is important because it allows businesses to focus their efforts on the platforms where their customers are most active. For example, if a business finds that most of their word-of-mouth referrals are happening on Instagram, they may want to invest more resources into building their presence on that platform.

Tracking Word-of-Mouth Metrics

Once businesses have identified their word-of-mouth marketing channels, they need to track relevant metrics to measure the impact of their efforts. This might include things like referral traffic to their website, social media engagement (likes, shares, comments), and customer reviews.

Tracking these metrics allows businesses to see how their word-of-mouth marketing is driving traffic and engagement, and to identify areas where they can improve. For example, if a business sees that they're getting a lot of social media engagement but not many referrals to their website, they may want to focus on optimizing their website for conversions.

Calculating Word-of-Mouth ROI

Calculating the ROI of word-of-mouth marketing can be challenging because it often involves multiple touchpoints and channels. However, there are a few approaches businesses can take to get a better understanding of the impact of their efforts.

One approach is to use tools like Google Analytics to track website traffic and conversions that originate from word-of-mouth referrals. Businesses can set up custom tracking codes to identify when someone visits their website from a referral source (like a social media post or customer review) and then makes a purchase or takes another desired action.

Another approach is to track social media engagement and use surveys to collect feedback from customers about how they learned about the business. This can help businesses identify which channels are most effective for generating word-of-mouth referrals and allocate resources accordingly.

In conclusion, measuring the ROI of word-of-mouth marketing is important for businesses to understand the impact of their efforts and optimize their strategies. By identifying marketing channels, tracking metrics, and calculating ROI, businesses can make informed decisions about where to focus their resources and how to improve their word-of-mouth marketing efforts.

Strategies to Improve Word-of-Mouth ROI

Creating Shareable Content

Creating content that people want to share is one of the most effective ways to improve word-of-mouth ROI. This might include things like blog posts, videos, or infographics that are informative, entertaining, or emotionally engaging. Businesses should focus on creating content that aligns with their brand and messaging and that resonates with their target audience.

Encouraging Customer Reviews and Testimonials

Positive reviews and testimonials can be incredibly powerful in driving word-of-mouth referrals. Businesses can encourage customers to leave reviews by sending follow-up emails after a purchase or offering incentives like discounts or freebies. It's also important to respond to both positive and negative feedback to show customers that their opinions are valued.

Leveraging Influencer Marketing

Partnering with influencers who have large, engaged audiences can be an effective way to amplify word-of-mouth marketing efforts. Businesses should identify influencers who align with their brand and messaging and who have a strong following in their target audience. It's important to establish clear goals and expectations and to measure the impact of these efforts to ensure a positive ROI.


In conclusion, understanding the key performance indicators (KPIs) for word-of-mouth marketing is critical for businesses that want to maximize their ROI in this area. By tracking metrics like website traffic, social media engagement, and referral traffic, businesses can make data-driven decisions about their marketing efforts. Strategies like creating shareable content, encouraging customer reviews, and leveraging influencer marketing can also be effective in driving word-of-mouth referrals and improving ROI.