November 2014

The UK’s big 4 supermarket brands are struggling.  Sales are down as consumers switch to discounters Aldi and Lidl, while at the top end of the market Waitrose continues to benefit from its premium positioning (but also a willingness to trim margins perhaps – profitability for Waitrose has slipped).

Research indicates that word of mouth has a clear impact on sales, and in supermarkets the evidence is compelling.  In a category where there are big differences in the quality of WOM, there is a strong correlation between WOM sentiment and sales performance:

Aldi, with consistently positive WOM, has enjoyed spectacular growth, whereas Tesco’s troubles are widely publicised.

There are two outliers.  Waitrose has WOM sentiment similar to Lidl, but its sales are growing much slower.  In part this will be because some simply can’t or won’t pay Waitrose prices, however loudly their friends might praise them.  But we also feel that Waitrose somewhat underperforms in terms WOM volume.  TalkShare for the brand is only moderate given the number of Waitrose stores (whereas Aldi and Lidl overperform), and Waitrose perhaps needs to activate latent brand advocacy more fully.

At the other end of the scale, The Co-operative’s modest sales decline is less than expected given the very poor sentiment it has ‘enjoyed’.  We know, of course, that the Co-op’s organisational and financial woes have been a big talking point over the past year, but conversations in the core grocery categories were somewhat less negative (though still below average).  Plus the Co-op has been hit less by the drift away from larger superstores.

Keller Fay is undoubtedly best known for the “90% of brand WOM is offline” stat, which continues to be the case.  The growth and reach of online social media is impressive, but other channels remain dominant for conversations about products and services: most Tweeters and Tumblrs still spend a great amount of their time interacting with other people in person.

Specifically, those active in online social media – especially those who embrace a number of different platforms – have brand-related discussions through all channels, very much living up to our other favourite mantra: “all media are social”.  The net result is that users of online social media have more offline conversations:

It is also apparent that different platforms have very different profiles in terms of offline conversation activity, with Tumblr, Instagram and Google+ users having the highest number of conversations on average (they also rank highest for online conversation).  In contrast, those who only use Facebook have below-average WOM levels.

In part this is down to demographics: Instagram and Tumblr especially have younger user profiles, and younger people have more brand/product conversations.  But middle-aged users of these platforms also outrank their peers for WOM volume – sociability is a trait which cuts across age and lifestage.

Another way in which digital and analogue worlds overlap is in the sharing of content.  Conversations may be face-to-face, but digital content travels far and wide offline.  Among social media users, fully a quarter of their offline brand conversations include references to digital content/media:

A clear implication is that any evaluation of the impact and ROI of digital media activity should take into account offline WOM.

But as ever, let’s not overlook the impact of other media on the digitally-active.  Among users across these social media platforms, the single biggest paid media source mentioned in brand conversation is….the TV commercial