The Empirical Study on Influence Factors of Word-of-mouth Value of Customer
Equity
Lin Sun1, Ai-wu Cheng2, Huang-juan Wang2
Department of Management, Xi’an Polytechnic University, Xi’an, China
Department of Management, Xi’an Polytechnic University, Xi’an, China
(348428012@qq.com,cheng1955@126.com)
1
2
Abstract - The research of the measure of customer
equity has been given more emphasis by domestic and
foreign scholars, but the study of word-of-mouth value
which is regarded as one of the important composition of
customer equity is scarce. On the basis of theoretical analysis
of word-of-mouth value by domestic and foreign scholars,
this paper establishes a concept model of influence factors of
word-of-mouth value of customer equity, and verifies the
concept model by structural equation model. The results
improve that many factors of word-of-mouth infector and
receiver have great impact on the value of word-of-mouth.
Keywords - Customer equity, influence
structural equation model, word-of-mouth value
factors,
Ⅰ. FOREWORD
Nowadays the spread of word-of-mouth is considered
as the cheapest and high reliability tool of dissemination
of information for its characteristics as fast speed, low
price and be accepted easily. The spread of word-ofmouth of customer plays an important role in increasing
the value of customer equity by cutting down customer
cost and improving competitive ability of enterprises.
Therefore, it is one of the important composition of
customer equity. To make the best use of the value of
customer word-of-mouth, the research of the factors of the
value of word-of-mouth in customer life cycle is essential.
These factors can help enterprises identify the valuable
customer and take effective measures to consolidate,
maintain and increase customer equity. However, recent
research, especially the empirical research of influence
factors of customer word-of-mouth is scarce. Based on
this background, this paper establishes a concept model of
influence factors of customer word-of-mouth value under
traditional spread of word-of-mouth model from word-ofmouth infector and word-of-mouth receiver, and verifies
the concept model by structural equation model. Finally,
the key influence factors of the value of customer wordof-mouth and their connection are obtained. The results of
this paper might have stimulative effect on perfecting and
deepening the research of customer equity, and provide
some reference for establishing measure model of the
value of customer word-of-mouth.
_____________________
National Natural Science Foundation of China (70672116)
Ⅱ. LITERATURE REVIEW
Since the conception of customer equity was
proposed by Robert Blattberg and John Deighton in 1996,
the relevant research has achieved a series of fruition and
the area and composition of the research has been
improved step by step. In 2000, Rust et al observed that
customer equity was made up of equity value, brand
equity and maintain equity[1]. After that, Heinz. k. Stahl
(2003)[2]and other scholars suggest that customer lifetime
value consists of basis potential, growth potential,
network potential and learning potential, of which
network potential means the cash flow brought by the new
customers who are affected with spread of customer
word-of-mouth. At this point, the value of word-of-mouth
is viewed as an important composition of the value of
customer equity. Julian Villanueva and other researchers
(2006)[3] further describe the long-lasting effects from
word-of-mouth recommendation to the value of enterprise
and customer equity by empirical study using VAR
model. Domestic scholars also analyze the value of wordof-mouth of customer equity, such as Tao Wang believes
customer lifetime value is the sum of customer purchase
value, customer word-of-mouth value, customer
information value, customer knowledge value and
customer dealing value[4]. Jun-tao Zhang and other
scholars (2006) [5] discuss the issue from a different
perspective, they put forward that customer equity
consists of repurchase value, increase purchase value,
premium purchase value, cross purchase value, word-ofmouth value and information value.
Under these analyses, we conclude that the relation of
customer word-of-mouth value and customer equity is
generally accepted, but only a few scholars make a
theoretical analysis of the influence factors of customer
equity word-of-mouth value, there is still lack of further
empirical research. In this situation, a model of the
influence factors of customer equity word-of-mouth value
is presented in this article, and it is also analyzed and
verified.
Ⅲ. MODEL AND HYPOTHESIS
The process of spread of word-of-mouth includes two
subjects, the infector and the receiver, and an object, the
information. The three factors are indispensable to spread
of word-of-mouth. Any of them affects efficiency. For
enterprises, customer word-of-mouth value is the most
direct embodiment of the effect of spread of word-ofmouth.
Arndt (1967) defines spread of word-of-mouth as
“face to face verbal communication between the infector
and the receiver” [6]. Anderson considers that the value
created by customers in the process of promoting the
brand which increase sales volume and proceeds forms
customer word-of-mouth value, and the value is relevant
to the strength and the scale of influence of the customers
themselves [7]. Chuan Huang and Ai-wu Cheng (2008) [8]
suggest that customer word-of-mouth value embodies the
direct proceeds brought by the influenced people,
therefore, the purchase value of influenced people has
positive correlation with customer word-of-mouth value.
In the research of the influence factors of customer
word-of-mouth value, Gilly et al[9] (1998) observes that
there are mainly three influence factors of purchase
decision of the receiver: characteristic of sources of
information, homogeneity of infector and receiver and
characteristic of receiver. Bansal and Voyer (2000) [10]
further demonstrate Gilly’s viewpoint, they divide the
influence factors of purchase decision of the receiver into
interpersonal factors and inhuman interpersonal factors.
Jian-xin Liu and Xue-yang Chen (2007) [11] conclude that
the influence factors of the infector are spread desire,
spread ability and spread opportunity; the influence
factors of the receiver are characters of the receiver,
receive desire, receive ability and so on. Zi-lin Zhang
(2009)[12] indicates that the influence factors of the
infector include spread motive, spread ability and spread
opportunity; the influence factors of the receiver are
involved degree and expert knowledge. At the same time,
she considers relation strength of infector and receiver,
comparability of population statistics and comparability
of cognition as important influence factors. Chuan Huang
[13]
believes that the main influence factors of word-ofmouth value of customer equity include potential
customer purchase capacity, potential customer purchase
probability and potential customer purchase value, and
establishes a measure model of word-of-mouth value of
customer equity.
Based on the works previously, we don’t discuss the
information of word-of-mouth in order to simplify the
research in this paper. We sum up the influence factors of
the infector in spread desire, spread ability and spread
opportunity, the influence factors of the receiver are
summed up in receive desire, receive ability, relation
strength of infector and receiver and homogeneity. And
we consider these seven factors as independent variable.
As for the composition of word-of-mouth value of
customer equity, we use the measure model of word-ofmouth value established by Chuan Huang for reference,
and consider purchase probability and purchase value as
dependent variable. Finally, we establish a concept model
of influence factors of word-of-mouth value of customer
equity. As shown in Figure 1.
Word-of-mouth infector
Spread desire
Spread ability
Spread opportunity
Purchase
probability
Customer
equity
value
Word-of-mouth receiver
Receive desire
Receive ability
Relation strength
Homogeneity
Purchase
value
Fig. 1. A concept model of influence factors of word-of-mouth value of
customer equity.
In accordance with the factors above, we put forward
the following assumptions considering the research
object.
1) As the subject of the information spread, the wordof-mouth infector’s many factors may have a direct
impact on word-of-mouth value. The influence factors of
the infector are spread desire、spread ability and spread
opportunity. We can propose the following hypotheses
according to the analyses.
H1a: the spread desire of the infector has positive
correlation with purchase probability.
H1b: the spread desire of the infector has positive
correlation with purchase value.
H2a: the spread ability of the infector has positive
correlation with purchase probability.
H2b: the spread ability of the infector has positive
correlation with purchase value.
H3a:the spread opportunity of the infector has
positive correlation with purchase probability.
H3b: the spread opportunity of the infector has
positive correlation with purchase value.
2) The receiver is a direct embodiment of the results
of spread of word-of-mouth. Consumers will keep what
they need and screen out what they don’t want after they
received a great deal of information. In this process,
receive desire 、 receive ability 、 relation strength of
infector and receiver and homogeneity of the receiver will
have impact on purchase decision. We can propose the
following hypotheses according to the analyses.
H4a: the receive desire of the receiver has positive
correlation with purchase probability.
H4b: the receive desire of the receiver has positive
correlation with purchase value.
H5a: the receive ability of the receiver has positive
correlation with purchase probability.
H5b: the receive ability of the receiver has positive
correlation with purchase value.
H6a: the relation strength of infector and receiver has
positive correlation with purchase probability.
H6b: the relation strength of infector and receiver has
positive correlation with purchase value.
H7a: the homogeneity of infector and receiver has
positive correlation with purchase probability.
H7b: the homogeneity of infector and receiver has
positive correlation with purchase value.
e1
e2
e3
e4
X1
.69
.82
X2
.75
X3 .58
.62
X4
.5
spread desire
1
.46
Ⅳ. RESEARCH METHOD
A. Questionnaire Design and Data Analysis
The scale of this paper is presented by using mature
scale from home and abroad and considering the
characteristics of word-of-mouth spread. The research
objects are people who use computer frequently, mainly
including the social relations of the author and college
students. This survey uses the method of random
sampling, which is mainly in the form of paper
questionnaire and e-questionnaire. We send out altogether
300 questionnaires and got back 251. The valid
questionnaires are 221 and the ratio of callback of valid
questionnaire is 73.67%, which comply to the
requirements of statistical analysis.
This paper analyses reliability and validity of the data
using SPSS16.0 [14]. The reliability of the data is tested by
inner consistency, coefficient α of individual element in
this table is more than 0.7, the outcome shows this table
has good credibility.
The validity of measuring variable includes content
validity and construct validity. Content validity is a
subjective evaluation indexes. The measurement of each
variable is formed from mature research by domestic and
foreign scholars, so content validity is good. Construct
validity is an ability of measurement through scale, which
measures a series of assumptions of variables’ relation
caused by theory. The paper verifies validity of the scale
by the principal component analysis. First, we do
Bartlett's Test of Sphericity, the value of KMO is more
than 0.6, then pick up a component only after varimax
rotation, accounting for more than 55% of the variance,
the probability of significance is 0. 000. This shows that
the data of the samples are suited to factor analysis and
the design of the whole scale has a good construct
validity.
B. Verification of the Concept Model
The article tests variables’ relation which is under the
assumption of the theory model by structural equation
model, and analyses the results of the path coefficients of
the model using software Amos7.0. When firstly fit the
model, according to the standard of CR>1.96 in structural
parameters and their statistical coefficients, the results of
statistical indicators of the goodness of fit from the
structural model show that the data fit well. The road map
of structural equation of the influence factors of word-ofmouth value of customer equity is shown in Figure 2.
e5
X5
e6
X6
e7
X7
e8
e9
.4
5
.17
purchase
probability
.82
.
.74
.76
.78
X8
X9
e10 X10
e33
X1
9
X2
.7 0
8.8 X2
1 1
X22
e1
9
e2
0
e2
1
e2
2
.20
Y1
.6
1 .12
.6
receive 9.6
desire 6
.0
7
spread ability
X2
receive .9
ability 3 .8 3
.07
1.6 X2
4
.25
5
.17
X25
e2
3
e2
4
e25
.10
.5
1
purchase
value
.59
.72
.64 spread
opportunity
.73
e11 X11
.2
5
.45
.18
.87
Y2
.7
relation 7.8
strength 5
X2
6
X2
.7 7
X28
4
e2
6
e2
7
e28
.3
8
.72 X29 e29
.84
X30 e30
.72
X31 e31
e3
4
homogen
eity
Fig. 2. Road map of structural equation of the influence factors of wordof-mouth value of customer equity.
The results of analysis of path coefficients are as
follows:
(1)
“spread
desire
→purchase
value”(C.R.=1.275, P=.033), C.R. is less than critical
C.R.=1.96, it doesn’t pass significance testing, namely the
structural parameter is 0 in the statistical sense. This
indicates that spread desire has nothing to do with
purchase value; (2) The values of C.R. of other structural
parameters are more than 1.96, they all pass significance
testing, and the values are all positive. Therefore, there is
a positive relationship between the variables. The path
coefficients of structural equation model and results of
hypothesis testing are given in Table 1.
TABLEⅠ
PATH COEFFICIENTS OF STRUCTURAL
EQUATION MODEL AND RESULTS OF
HYPOTHESIS TESTING
Hypothesis
H1a
H1b
H2a
H2b
H3a
H3b
H4a
H4b
H5a
H5b
H6a
H6b
H7a
H7b
Standard
coefficient
0.499
0.548
0.415
0.487
0.498
0.574
0.161
0.057
0.195
0.092
0.237
0.077
0.223
0.150
C.R.
6.762
8.702
6.212
7.942
7.030
8.974
2.673
1.275
3.348
2.132
3.531
1.988
3.271
2.954
P
***
***
***
***
***
***
***
0.033
0.008
0.002
***
0.018
0.001
0.003
Conclusion
Support
Support
Support
Support
Support
Support
Support
Support
Support
Support
Support
Support
Support
Support
Ps: *** means there is significance under the level of 0.001
Ⅴ. CONCLUSION AND INSPIRE
According to the analyses above, we can summarize
as follows:
1) The word-of-mouth value of customer equity is
measured in purchase probability and purchase value, and
it is affected by seven factors, such as spread desire,
spread ability and spread opportunity of the infector,
receive desire, receive ability, relation strength of infector
and receiver and homogeneity of the receiver.
2) Among the purchase probability path coefficients,
the influence factors are in the following descending
order: spread desire、spread opportunity、spread ability
、 relation strength 、 homogeneity、 receive ability and
receive desire; among the purchase value path
coefficients, the influence factors are in the following
descending order: spread opportunity 、 spread desire 、
spread ability、homogeneity、receive ability and receive
desire.
In conclusion, to make the best use of customer
equity, the effective utilization of customer word-ofmouth spread is essential. Companies have to take
advantaged measures, increase the spread desire and
opportunity of the loyal customers, which can bring more
customers, increase the amount of customer purchase and
make more profits for enterprises.
Acknowledgment
This research was supported by the National Natural
Science Foundation of China under Grant 70672116. Aiwu Cheng is a corresponding author, and her email is
cheng1955@126.com.
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