A good word-of-mouth marketing strategy results in new customers at very little cost to your business.

It’s a type of marketing that any company will benefit from, and the tactics are relatively easy to implement. In this article, we’ll explore everything you need to know about the topic.

What is word-of-mouth-marketing?

Word-of-mouth-marketing (WOM or WOMM) is when customers tell people they know about a product or service. It’s essentially free advertising spurred on by great experiences. Traditionally it would take place in person, but now many recommendations happen online.

Here’s an example:

Remember that time you loved a restaurant experience and couldn’t wait to tell all your friends about it?

That’s word-of-mouth marketing at its finest. A business produced a winning experience that the customer felt compelled to share with others.

But it can go far beyond this. The best word-of-mouth marketers are experts at creating buzz around their product.

A campaign may include:

  • Being active on social media.
  • Building community relationships.
  • Incentivising referrals.

Organic word-of-mouth vs. amplified word-of-mouth

Customers love to share powerful experiences. If your business provides them, you’ll get referrals without having to do a thing.

But, there are strategies you can use to increase the chances of people sharing your business.

We call this amplified word-of-mouth, and it can take on many forms. For example:

  • Creating products with shareability in mind.
  • Nurturing relationships with industry influencers that use your product.
  • Incentivising referrals through bonuses, discounts, or freebies.

If you choose to amplify your word of mouth marketing, remember that the customer experience should always come first.

You may receive word-of-mouth recommendations with a great experience and no amplified strategy. But you won’t receive them if you have an amplified strategy and a poor experience.

Why is word-of-mouth-marketing important?

Word-of-mouth-marketing is important because it is a powerful way to get new customers without a high cost.

It can also have a great influence on purchasing decisions. Studies have found that customers trust recommendations from people they know far more than other forms of advertising.

Here are some word-of-mouth marketing statistics that show this:

  • Nielsen found consumers say word-of-mouth advertising is the most credible form of recommendation.
  • TouchBistro found 91% of restaurant-goers would visit a new venue based entirely on a positive recommendation from a friend.

The power of your word-of-mouth-marketing campaigns will vary depending on your business. Companies with low marketing budgets will find it useful as it is a low-cost way to attract new buyers.

It’s also prevalent in some industries more than others. The Harvard Business Review reported that word-of-mouth was the top source of clients for 75% of all solopreneurs. This figure increased to 84% when considering only solopreneurs making over $100,000 annually.

WOMM is also a good way to increase the effectiveness of existing campaigns.

Imagine you currently spend $10 on PPC ads to convert a single customer. Encouraging these people to refer others will bring your customer attraction costs down.

Finally, word-of-mouth recommendations are a sign that your business is doing a good job. If people are talking about your product, you can be confident you are providing an experience people love.

How to create an effective word-of-mouth-marketing strategy

Here are six tips you can use to create an effective word of mouth strategy.

1.    Create a Great Product or Experience

We can’t stress enough how important it is to provide a great customer experience. To get recommendations, your product needs to be worth talking about.

All the other points on this list rely on your business, providing something that people love. If you are in any way worried about your offering, sort this out before moving onto the other steps.

Factors you should consider include:

  • The quality of your product: People won’t recommend products or services that are below par.
  • The buying experience: Think about your website UX, the quality of your sales team, or the interior of your physical location.
  • Post-sales experience: Make sure you support people after they have purchased your product. Happy customers are more likely to recommend your business.
  • Pricing: Your product doesn’t need to be cheap, and in many cases, it shouldn’t be. Nonetheless, people should feel like it offers value.

This article has a ton of information about how to create a customer experience people love.

2.    Encourage Customers to Share on Social Media

Many word-of-mouth recommendations take place on Social media. Businesses can encourage this by incentivising people to post or tweet about their products.

On the most basic level, this encouragement could be offering a discount or freebie to people who talk about your business.

However, customers will often see through these types of word-of-mouth marketing campaigns.

A better option is being active on social networks. Consider:

  • Creating a unique hashtag relevant to your business.
  • Sharing customer posts or stories to your profile.
  • Interacting with people when they mention your brand or business in a positive light.

For more information, here is everything you need to know about social media marketing.

3.    Be Involved in the Community

Building community relationships is a good way to encourage recommendations.

Find Facebook groups, subreddits, LinkedIn groups, or Twitter communities that discuss topics related to your product and get involved.

The key is not to spam the community. Instead, take an active role in discussions. If you are unsure where the line is, consider looking at others in your industry and seeing how they interact on your chosen platform.

Try to help out, answer questions, and recommend other services. By doing this, people may recommend your business in return.

Word-of-mouth marketing can extend into your content marketing strategy. Look for people who mention your product in blogs or articles. Reach out to them and ask if there is any way you can help with further content.

The tips in this section will not only improve WOMM but will increase your business’s visibility within the community you plan to serve.

4.    Create Brand Ambassadors

Turning your most loyal customers into brand ambassadors will boost word-of-mouth referrals.

To do this, you’ll need to create a brand ambassador program. The program will be a two-way relationship where you help ambassadors reach their goals, and they in turn, end up promoting your product.

Lululemon has one of the most successful ambassador programs around. The fitness wear company provides local leaders with tools they can use to grow their communities.

5.    Attract Customer Reviews

Customer reviews can be a powerful form of word-of-mouth marketing.

This Trip Advisor survey about the power of reviews in the restaurant industry found that 92% of people in the U.S. use online reviews to influence decisions.

Consider encouraging people to drop reviews on popular sites like Facebook, Google, and Yelp. Just a handful of positive posts make a big difference when someone is searching for your business.

You can also use these reviews at strategic locations on your website. Consider putting positive recommendations on your homepage or sales pages.

6.    Run Referral Programs

Referral marketing is when businesses ask customers to recommend their products to people they know.

The business will typically offer some form of incentive to the customer for the referral. Often the person receiving the recommendation will also receive a discount.

It’s an effective form of marketing for online businesses like SaaS and eCommerce companies. Physical businesses could still benefit from this type of program.

Referral marketing is an excellent way to encourage word of mouth recommendations. Although, there is some debate about whether it is a type of word-of-mouth strategy or not. We explore these arguments in the next section.

What is certain is that a well-run referral program with attractive incentives for referrers and signups can result in a ton of new customers.

How is WOM different from referral marketing?

WOM marketing and referral marketing have many similarities:

  • They both use your existing customer base to attract new buyers.
  • They both rely on a relationship between the referrer and lead.
  • They are both cheap ways to attract new customers.
  • They both benefit businesses in various industries.
  • They both effectively increase brand awareness.

However, there are differences, and many people consider referral marketing to be a distinct type of marketing.

This is because the referral is often heavily incentivised and thus not a true word-of-mouth recommendation.

Nonetheless, there are many benefits to referral marketing. It is far more repeatable than word-of-mouth, meaning it can help quickly scale your company. Offering a benefit to the referrer is a powerful motivator when done right.

A Good Word-of-Mouth Marketing Campaign is a Powerful Tool

The low cost of implementing a word-of-mouth marketing campaign makes it an attractive marketing method.

Improving your WOM marketing efforts can be as simple as getting involved in the community, building relationships with customers, or even asking for referrals.

For more information about creating an effective customer acquisition strategy, check out our article on the topic here.