Quick Answer (TL;DR)
Word of Mouth Coefficient measures percentage of new users acquired through WOM. The formula is WOM-attributed signups / Total signups x 100. Industry benchmarks: 20-40% for PLG companies. Track this metric when measuring organic growth channels.
What Is Word of Mouth Coefficient?
Percentage of new users acquired through WOM. This is one of the core metrics in the referral metrics category and is essential for any product team serious about data-driven decision making.
Word of Mouth Coefficient measures the organic growth potential of your product. Referral and word-of-mouth metrics are powerful because they represent growth that does not require proportional increases in marketing spend.
Understanding word of mouth coefficient in context --- alongside related metrics --- gives you a more complete picture than tracking it in isolation. Use it as part of a balanced metrics dashboard.
The Formula
WOM-attributed signups / Total signups x 100
How to Calculate It
Suppose you measure wom-attributed signups at 500 and total signups at 2,000 in a given period:
Word of Mouth Coefficient = 500 / 2,000 x 100 = 25%
This tells you that one quarter of the base is converting or meeting the criteria.
Benchmarks
20-40% for PLG companies
Benchmarks vary significantly by industry, company stage, business model, and customer segment. Use these ranges as starting points and calibrate to your own historical data over 2-3 quarters. Your trend matters more than any absolute number --- consistent improvement is the goal.
When to Track Word of Mouth Coefficient
When measuring organic growth channels. Specifically, prioritize this metric when:
You are building or reviewing your metrics dashboard and need referral indicators
Leadership or investors ask about referral performance
You suspect a change in product, pricing, or go-to-market strategy has affected this area
You are running experiments that could impact word of mouth coefficient
You need a quantitative baseline before making a strategic decision
How to Improve
Optimize the numerator. Increase the number of users or events in wom-attributed signups through better UX, clearer CTAs, and reduced friction in the conversion path.
Qualify the denominator. Ensure total signups represents the right audience. Better targeting means a higher conversion rate.
Make sharing frictionless. Reduce the steps required to refer someone. Pre-written messages, one-click sharing, and in-product referral prompts dramatically increase participation rates.
Incentivize both sides. The most effective referral programs reward both the referrer and the referred user. Two-sided incentives increase conversion 2-3x compared to one-sided rewards.
Time referral asks strategically. Ask for referrals immediately after a user experiences a moment of delight --- completing a milestone, receiving positive results, or upgrading their plan.
Common Pitfalls
Ignoring sample size. Small sample sizes produce volatile rates that do not reflect true performance. Ensure you have statistically significant data before drawing conclusions or making changes.
Measuring program activity instead of outcomes. Referral invites sent is a vanity metric. Track actual conversions and the downstream revenue generated by referred customers.
Measuring without acting. Tracking this metric is only valuable if you have a process for reviewing it regularly and a playbook for responding when it moves outside acceptable ranges.
Related Metrics
Social Shares --- number of times your product/content is shared
Referral Revenue --- revenue generated from referred customers
Review Rating --- average rating on third-party review sites
Time to First Referral --- average time before a user makes their first referral
Product Metrics Cheat Sheet --- complete reference of 100+ metrics