Despite the occasional bad experience, Dell has generally provided good service and products to their customers over the years. How do I know? Well, $58 Billion in annual revenues means they're probably doing a few things correctly.
But can you place a price on that positive word of mouth?
Yes, according to some recent research in the new book The Ultimate Question:
"In our (Bain & Co.) survey, 25 percent of new customers said the primary reason they chose Dell was referral. So 1 million of the 4 million new customers Dell acquired in 2003 came from positive word of mouth.
Since each new customer is worth an average of $210 each, those 1 million new customers were worth $210 million to the company.
If 40 million positive comments generated $210 million in value, each positive comment was worth $5.25.
Given that the average promoter reported making positive comments to about eight people a year, the promoter's positive word of mouth is worth $42 (8 x $5.25)."
What I like most about this method of placing a value on good WOM is that almost any business could apply it to their efforts as well. The formula is simple, elegant and allows you to really compare WOM to other types of measurable marketing.
(Many thanks to Sean Moffitt for pointing this out to me.)
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