Sales Happen Offline, as Does WOM

Monday, 20 December 2010 / Published in Blog, Insights, Shopping & Retail, Social Media

One of the more provocative Keller Fay statistics on word of mouth reveals less than 10% of conversations Americans have about products, services, and brands occur online (email, social media).  Which means, over 90% of marketing-related word of mouth conversations happen offline (person-to-person, voice-to-voice).

For many social media marketers this 90/10 split is hard to believe given the increasing time people are spending online.  Ed Keller, CEO of Keller Fay, explains the seemingly implausible disparity this way, “At Keller Fay we are measuring word of mouth conversation, not readership of consumer-generated content.  Lots of people might read information on social networking sites, but contribute infrequently.  Especially when it comes to brands.”

Let’s put this 90/10 split in a different context by asking and answering a question:  What percentage of retail sales in America occur online?

(The answer will surprise most of us.)

According to Forrester Research, only 7% of US retail sales occur online in the digital space.  Which means, of course, 93% of retail sales in America occur offline in the physical world.

This is fascinating.  A dramatic parallel exists between where we spend our money and where we participate in brand-related word of mouth conversations.

Let’s apply some numbers to bring more context to this spending/conversation parallel.

Forrester Research estimates online US retail sales in 2010 will account for $172.9 billion dollars.  That’s a HUGE number.  However, according to Forrester, that’s only 7% of total US retail sales.  The other 93% of retail sales occurs in offline places and accounts  for a staggering $2.3 trillion dollars.

Keller Fay estimates 1.1 trillion brand-related word of mouth impressions take place offline and online every year in America.  Applying the 90/10 split shows 985.5 billion word of mouth impressions happen offline versus 109.5 billion occurring online.

The discrepancy between offline and online word of mouth impressions is tremendous but, interestingly, it parallels the wide discrepancy between offline and online sales.

The point of this comparison is not to discredit or deemphasize the importance of online sales and online word of mouth.  Both are vital to the health of the US economy and to the wealth of the marketing opportunities we have to better connect with customers.

Instead, the point is for marketers to not lose sight of the bigger picture when it comes to creating and implementing sales-driving marketing programs.

Social media and digital online marketing activities dominate the discussions marketers are having about designing and delivering sales-driving programs.  However, the vast majority of opportunities marketers have to connect with customers to increase awareness, appreciation, and conversation about brands resulting in driving sales doesn’t occur in the digital online world but rather, the physical world of traditional marketing.

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