Business Referrals Encouraging Word of Mouth

Get More Business Referrals by Encouraging Word of Mouth

Word of mouth marketing is the most powerful advertising tool in a small business owner’s toolkit. A happy customer sharing your story with a friend, colleague, or family member is far more effective and much cheaper than any billboard, blog, or Twitter feed.

Conversely, an unhappy buyer telling friends how bad their experience was can cut deeper into revenue than nearly anything else. Done right, word of mouth marketing can grow your business, build your brand, and secure your revenue stream.

Researchers have been examining word of mouth marketing for at least 60 years to figure out what it is, why it works, and how to do it well. Here’s what we know:

What Is Word of Mouth Marketing?

Word of mouth marketing differs from unorganized expression in that it’s influenced and directed by the organization. In providing that influence and direction, a business can follow one or more of three basic word of mouth marketing models:

1. Seeding. In this model, companies suggest to customers what they can say and how they can deliver the message to show their satisfaction. Typically, companies also offer rewards to customers who participate.

2. The Engineered Approach. Like seeding, the engineered approach builds a network of satisfied customers who express similar ideas on the same channels, but it’s more hands on than seeding. The engineered approach can include targeted messaging or talking points that flow from the company to the influencer.

3. The Direct Approach. Here, businesses take more control of the influencer, message, and approach. They may pay someone to promote their service or product on YouTube, Instagram, or Twitter, for example.

Word-of-mouth marketing can create both buzz (discussion about the brand or product) and direct, person-to-person sales.

Does Word of Mouth Marketing Work?

Most marketers believe word of mouth marketing is the single most valuable and most effective form of marketing there is. Consumers have 82% more trust in word of mouth from their peers in the form of reviews than in brand claims.

Businesses have always relied on people to spread the word about their products or services, so perhaps word of mouth is the oldest marketing strategy in history. In today’s hyper-connected world, however, word of mouth marketing isn’t just talking. It’s also getting reviews on sites such as Yelp! and Google, having customers share your blog or Facebook posts, or employing a social media influencer to talk about your product on their site.

The value of social media marketing lies in its continuity. It’s not a once-and-done strategy. When one person shares a piece of content with a friend, that friend can pass it on to another friend and so on. As trust in paid advertising continues to decline among the North American public, people are increasingly turning to friends and other people they know to provide trustworthy product reviews.

Word of Mouth Marketing

Why Is Word of Mouth Marketing Considered So Powerful?

Word of Mouth Marketing Statistics

  • 92% of consumers believe suggestions from family and friends more than they believe advertising. (Nielsen)
  • 90% of people trust suggestions from family and friends. [HubSpot]
  • 91% of B2B buyers are influenced by word of mouth when making their buying decisions. [USM]
  • Word of mouth can improve marketing effectiveness by as much as 54%. [MarketShare]
  • 43% of social media users report buying a product after sharing or favoriting it on Twitter, Facebook, or Pinterest. [VisionCritical]
  • Millennials ranked word of mouth as their top influencer when deciding to purchase clothes, financial products, packaged goods, or big-ticket items. Baby Boomers ranked word of mouth their greatest influence when buying big-ticket items and financial products. [Radius Global]
  • The average value of a Facebook fan in certain consumer categories is $174. [Nielsen]
  • Word of mouth results in five times more sales than paid media. [Invespcro]
  • Word of Mouth Marketing Case Studies

  • State Farm. In 2019, the insurance giant released a series of commercials for television and YouTube, including one about a woman named Cheryl who had a burning she shed. Within just months, Cheryl and her she shed had racked up more than 1 million views on YouTube and had seen 33,000 runs on TV. Online fans were creating theories about the she shed on Reddit, and some people were even asking for a whole sitcom starring Cheryl. “Who burned Cheryl’s she shed?” became a familiar internet meme, carrying State Farm’s brand everywhere it traveled online. Why? State Farm created fun and shareable content with memorable actors, and then enchanted viewers did their part by leaving likes, shares, and comments.
  • Netflix. Built on word of mouth advertising, Netflix may be the best in the business. The streaming company frequently shares viewers’ excitement about upcoming shows online since it knows people trust their peers more than the company that makes the product. Netflix also released all ten episodes of Making a Murderer at one time, making it easy to binge watch (and therefore to talk about at the water cooler the next day).
  • Slack. Slack’s freemium model lends itself well to word of mouth marketing. People are always keen to tell their friends about a cool new product that’s free. Slack also emphasizes keeping its customers happy over direct sales. Reportedly, the company maintains a customer service team that’s four times larger than its sales department. The idea? Keep the customers happy and they’ll sell for you.
  • Zappos. The online clothing and shoe retailer has never had a big advertising budget, preferring to rely on word of mouth marketing to build its business. CEO Tony Hsieh said, Our philosophy is to take most of the money we would have otherwise spent on paid advertising or paid marketing and invest it into customer service and the customer experience instead, and let our customers do the marketing for us through word of mouth. Hsieh’s idea must be working since his company reportedly earns $2 billion in annual revenue.
  • Quaker. Oatmeal may not seem exciting, but Quaker is getting its customers buzzing about the hot breakfast cereal anyway. In 2017, the long-lived food production company beat out Kellogg for the number one spot in social media and word of mouth conversations according to Engagement Labs, a Canada-based social media tracking and analysis firm. One reason? The company paid 13 influencers to target the 55+ market.
  • Word of Mouth Marketing Ideas

  • Create Shareable Content.Anyone can create content. The key is to create shareable content. What makes content shareable? Ask yourself: Is it entertaining? Visually appealing? Interesting? Practical? Affirming? Consider the content you enjoy and share from other companies when you create your own.
  • Share Customer Testimonials. Adding customer testimonials immediately enhances your viability and creates trust among your audience. Try putting customer testimonials on the website, in your emails, and on your social media posts. You could even get real-life customers to make videos and compile them into a montage for YouTube. Or ask satisfied customers to share photos of your product in their home and then promote those images on Instagram.
  • Connect with Thought Leaders and Industry Influencers. While some of the buzz around influencer marketing may be hyped, finding the right influencer with the right audience can be advertising gold. A well-developed campaign message coupled with an influencer who personally believes in your product or service can return a high value for your investment.
  • Build a Social Community. Your social media platforms need to do more than convey information. Ask questions for your followers to answer in the comments. Share some of their content every now and then. And be sure to engage with people’s emotions as well as their statements of fact. Social media is, after all, social first.
  • Reward Loyalty. Keeping a loyal customer is far cheaper than securing a new one. Returning customers tend to spend more money per purchase, and they are the ones who will give you recommendations, share your articles and posts, and talk you up to their friends. So make sure your most loyal customers are getting a little love for their efforts.
  • Word of Mouth Marketing

    How to Start Word of Mouth Marketing

    Before you launch any word of mouth marketing strategy, know your brand well. Make sure you’ve thought through the language, colors, and feelings that you want your messaging to convey. If something you create does go viral, you expect it to tell the truth about your company.

    Second, be authentic. The more vulnerable you appear, the more people will sense that you are honest, credible, and easy to do business with. Owning a mistake online and publicly making it right will do more to advance your word of mouth campaign than try to appear perfect.

    Finally, have a message of hope. The internet — and the world — are already crammed with heartbreak, anger, and suffering. Don’t add to that. Instead, speak to people’s aspirations and joys. Tickle their funny bones. Give them a reason to believe in something bigger and better than themselves.

    In other words, create content that is true, sincere, and hopeful. Then put it where people can share it.

    How to Drive Word of Mouth Marketing

    Two groups of people drive your word of mouth content into the world. One is influencers. The other is your everyday customers.

    To get great influencers, identify the people of influence in your target communities. Maybe they are online influencers. Maybe they’re local officials. Or well-known writers and speakers. Consider how you can build relationships with those people (Hint: invite them to be a guest on your podcast).

    Take your time establishing a genuine connection. Help them achieve their own ambitions first. Then ask them for help to advance your own narrative. Slowly, methodically cultivate your influencers. They’ll pay off in huge dividends over the years.

    For everyday customers, make it easy to leave reviews and share your content. A customer may like your product and their experience with you, but they don’t want to have to enter their blood type to crack open the safe that contains your complex review process. Just a one-click option can help you collect those coveted four and five star reviews from a lot of people and thus establish credibility on the internet.

    How to Improve Your Word of Mouth Marketing

  • Identify your top customers. Nurture them. Reward them. Honor them. Go above and beyond their expectations every time. Then ask them to leave a review or share your content.
  • Make yourself interesting and valuable. People won’t share your content if they don’t like it. If your brand were a person, would your customers want to have a drink with that person? Or would they find that person boring and selfish? Answer that question honestly, and you’ll be able to improve your word of mouth marketing (and your overall business and brand) by a factor of 10.
  • Get on the right channels. People can’t share your content if they can’t find it. Nearly every brand should be on Facebook because it’s still the biggest and most-used social media platform. YouTube is extremely popular as well, and you should probably be there, too. If you sell primarily to women, Instagram and Pinterest are your friends. If you’re in a B2B company, why aren’t you on LinkedIn? Teens and tweens your buyers? You need to be on TikTok.
  • Maximize the power of hashtags. #Hashtags increase your followers and improve your online engagement. You can also use hashtags to connect with thought leaders and influencers. It’s easy to get lost in the main feed’s generalities, but hashtags will direct you to a collection of focused posts on a specific topic.
  • Measure Word of Mouth

    How to Measure Word of Mouth Marketing

    Word of mouth marketing is notoriously difficult to measure. Recently, however, McKinsey developed a strategy to measure it. This strategy uses the equation: Volume x Impact = Word of Mouth Equity. Here’s how it works:

    Volume = The number of messages. “What is said,” the researchers at McKinsey noted, “is the primary driver of word-of-mouth impact.” Surprisingly, the researchers found that functional messages got more customer buzz than emotional ones did.

    Impact = Network + Content + Sender + Source. Who’s talking? Where are they talking? What are they saying? What is their trigger? Competent, trustworthy people who pass messages in tight networks get the best results.

    Volume times impact, according to McKinsey, will tell you “word of mouth’s relative impact on brand and product performance.”

    Word of mouth is powerful, effective, and low cost. It’s also very hard to do. But patience, customer empathy, and a rock-solid plan can help you develop an effective word of mouth marketing system that generates amazing results.

    Check out all of the articles in the ‘Marketing Strategies Every Business Should Be Using‘ series:


    Stephanie is the Marketing Director at Talkroute and has been featured in Forbes, Inc, and Entrepreneur as a leading authority on business and telecommunications.

    Stephanie is also the chief editor and contributing author for the Talkroute blog helping more than 100k entrepreneurs to start, run, and grow their businesses.

    StephanieGet More Business Referrals by Encouraging Word of Mouth