How Important Is Word of Mouth? Development, Validation, and Application of a Scale

Companies spend large amounts of money to induce word of mouth (WOM) and spread it among consumers. This research introduces the concept of "WOM relevance," which measures the importance of WOM for consumers' purchase-decision process in a specific category. It uses three studies to develop and validate a parsimonious scale to measure WOM relevance at the consumer level across various product categories and different types of WOM, and applies the scale in an additional set of five studies. Specifically, this research disentangles the consumer-level and category components of WOM relevance; shows that the consumer-level variation is (much) larger than the category-level variation; and provides insights into differences in WOM relevance across categories, consumers, and WOM types. It also empirically shows that electronic WOM relevance relates to consumers' search behavior and consideration-set formation in an online-shopping environment. Furthermore, it demonstrates that the proposed scale predicts choices as well as a more sophisticated choice model does. Finally, this research shows that WOM relevance influences not only consumers' own purchase-decision process but also their intentions to retransmit others' WOM messages.