Word-of-mouth marketing, also referred to as WOM marketing, is when consumers share information about a product or service with someone else. Traditional word-of-mouth marketing happens through verbal communication like an in-person conversation or phone call. Nowadays, though, it’s also common for word-of-mouth marketing to occur nonverbally through methods like social media messaging or online reviews.
We’ll cover what word-of-mouth marketing is, how to generate more of it, and why it’s important for your business.
Definition and Examples of Word-of-Mouth Marketing
Word-of-mouth marketing is when a customer provides information about an item or a business to somebody else. Often, the individual is recommending a product they like. When this happens, it can be one of the most effective ways to gain new customers.
Word-of-mouth marketing can take place via conversations in person or over the phone, or it can happen virtually when you do things like share a post with your social network or email someone the link to a product. As a business owner, there are things you can do to increase the chances of customers sharing their experience with others, such as providing a quality product and emphasizing its key features.
An example of word-of-mouth marketing is when a customer who had a great experience at a store tells a friend about it. The friend then remembers what was said about the store, and when they need a relevant product, they try out the business for themselves. The business has now gained a new customer by putting in very little effort other than providing a great product and experience. According to a 2018 report from consulting firm Convince & Convert, 71% of Americans say a “great experience” spurs word-of-mouth recommendations.
Occasionally, businesses hire actors to pretend to be customers for WOM marketing campaigns. Today, companies accused of this are reviewed by consumer protection agencies. Most states require a paid marketer to legally disclose their intent and employer relationship.
- Acronym: WOM marketing
How Word-of-Mouth Marketing Works
Having a great product or service and providing a strong customer experience are key aspects of word-of-mouth marketing. People want to recommend places or products to others when they have a good time or find something they like.
A business owner looking to take advantage of word-of-mouth marketing might do a promotional giveaway on Instagram, for example. They could offer entries to the giveaway in exchange for both liking a post and sharing it with a friend through a tag. The expectation for the giveaway is that the social media attention will attract new customers who are learning about the business from people they trust.
Types of Word-of-Mouth Marketing
Engaging in the conversation is key to successful WOM marketing. Here are some common types of WOM marketing that businesses can adopt.
A referral program focuses on incentivizing and encouraging customers to spread the word about the business. Often, businesses will offer discounts or perks to clients who share product information with others.
According to ReferralCandy, a company that helps make marketing programs for online stores, it’s important to set clear goals before creating a referral program. Consider asking yourself:
- What am I hoping to get out of the rewards program?
- Do I want more customers?
- Am I hoping for bigger purchases by existing customers?
- Am I trying to increase sales with a higher conversion rate?
Online Recommendation Programs
Businesses can encourage customers to write an online review of their experience, either on their own social media accounts or on review platforms like Yelp or Tripadvisor. In some cases, restaurants will give diners something in return, such as a free dessert or a cup of coffee when they post about their meal.
In a 2020 survey from BrightLocal, 87% of consumers said they read online reviews for local businesses in 2020 and it had an impact on their purchase.
Seeding programs are when businesses place products in the hands of some people in hopes that they can sway the purchasing decisions of others. Businesses may give someone a free product to review or share with their network in an effort to gain new customers.
This strategy is similar to traditional influencer marketing, but in this case, the company would gift the person or influencer with a product, rather than paying them for spreading the word.
In all cases, WOM marketing should not be the only marketing strategy you adopt. The effectiveness of word-of-mouth marketing depends on the other types of marketing you’re doing as well.
- Word-of-mouth marketing can happen in the traditional sense via conversations in person or over the phone or through online interactions like a customer sharing a product on social media or leaving a review on a company website.
- Providing a great product and an excellent customer experience are key parts of word-of-mouth marketing.
- Businesses can take advantage of word-of-mouth marketing opportunities by encouraging customers to engage in conversations about their experience. Common word-of-mouth marketing programs include referral programs, online recommendation programs, and seeding programs.