Word of Mouth and Active Members
The relationship between advertising and membership is linear. However, there is a reinforcing relationship among the level of Active Members, Referrals, and New Members from Word of Mouth. That means word-of-mouth creates the potential for exponential growth in membership.
In this lesson, we’ll do the following:
- Add the Referrals, Referral Rate, and Persuasion Fraction variables to the model.
- Define the formula for calculating New Members from Word of Mouth.
- Trace the reinforcing feedback loop among Active Members, Referrals, New Members from Word of Mouth, Joining, and back to Active Members.
- What factors impact the rate and persuasiveness of referrals by members to prospective members?
- As a community host, how might you influence the Referral Rate and Persuasion Fraction?
- How might advertising and word-of-mouth influence each other?
- How might the degree to which your members and prospective members are connected socially in meaningful ways help or hinder word-of-mouth?