Sometimes referred to as inbound marketing, word of mouth marketing is an advertising technique that helps improve customer retention, drive traffic to your business, and reduce the cost of customer acquisition. The average person tends to trust a positive review from a satisfied customer more than they trust traditional marketing through paid advertisement. But how do you make use of this type of marketing for your business? We’re going over everything you need to know about word of mouth advertising, including our top eight tips to build your own word of mouth marketing campaign for your small business.
Understanding word of mouth marketing
The term “word of mouth” refers to when a current customer of a brand gives a personal recommendation based on their positive experience. This could include a friend telling you about an amazing product they just bought, or it could be a social media post from someone you follow on Instagram. Either way, their unbiased word of mouth recommendation comes across as more genuine and trustworthy than a company’s paid advertisements, because they have no motive for giving a positive review.
The difference between regular word of mouth and a targeted word of mouth marketing strategy is that the former is an unplanned interaction with a previous customer, whereas the latter is an intentional form of promotion that actively encourages and incentivizes customers to spread the word about a brand.
Types of word of mouth marketing strategies
There are several different ways you can encourage people to share their customer experience with your business in order to build brand recognition and a positive reputation among consumers. In general, any kind of word of mouth strategy is going to fall into two categories: organic or amplified.
Organic word of mouth
When word of mouth occurs naturally when consumers share their experience with a business in order to warn or inform potential customers about a company’s products, services, or customer service. With organic word of mouth, the consumer has no personal gain. It is unplanned and occurs naturally in conversation. In this case, a happy customer becomes an advocate for the brand. They are passionate about a product or service and want to share their experience with others.
Amplified word of mouth
Unlike organic word of mouth marketing, amplified word of mouth is a strategy marketers use to launch a new campaign, reward happy customers to share positive reviews or photos, or through paid partnerships with social media influencers. Businesses could also create a customer referral program that offers a reward to existing customers when they refer a new customer. An example of amplified word of mouth marketing is how Sephora celebrates their loyal customers with a free birthday gift.
Why is word of mouth marketing important for your business?
It’s probably becoming clear to you that word of mouth advertising is a great way to get people talking about your business. But is it really worth it to invest your hard earned money into amplified word of mouth strategies, or should you sit back and hope that your customers are satisfied enough to tell their friends about you? Here are just a few examples of potential ways your small business could benefit from a targeted word of mouth marketing campaign.
- Establish brand loyalty and improve your return on customer acquisition by introducing incentives for repeat customers.
- Grow a community of engaged customers who care about your business and want to spread the word.
- Gain a positive reputation in the eyes of consumers in your niche by providing amazing customer service and products or services that people will rave about.
- Increase your sales without having to rely on paid advertising.
- Create a buzz of interest surrounding your business and encourage purchases from new customers so they don’t feel like they’re missing out.
- Impress potential investors by demonstrating your high customer loyalty, which suggests long-term success for your business.
With these benefits and nothing to lose, it’s easy to see why word of mouth marketing is such an integral technique for encouraging consumers in their purchasing decisions.
Word of mouth advertising statistics
Consumer review surveys have shown that customers are 71 per cent more likely to purchase when referred by social media, but if you’re still not entirely convinced on the importance of introducing word of mouth marketing strategies to your business, we’ve gathered up more compelling statistics that might just get you on board.
- 93 per cent of consumers use the internet to find local businesses.
- 87 per cent read online reviews before purchasing from a local business.
- Less than 50 per cent of consumers would use a business with an online rating that is lower than four stars.
- 72 per cent of US consumers have written an online review for a business.
Hopefully, these statistics will have shown you the immense impact that word of mouth marketing and positive (or negative) reviews can have on the future of your business.
How to build word of mouth marketing
Now that you know everything there is to know about what word of mouth marketing is, the different types of word of mouth marketing, and why it is so important to apply to your business, we’ll take you through some of our top eight techniques for introducing word of mouth advertising to your business right now.
1. Influencer marketing
You may have noticed that in recent years, more and more people have been making a living as a social media influencer. Influencers earn money by partnering with companies who pay them to review and promote their products and services on a particular social media platform. The benefit to working with an established influencer in your niche is that they tend to come with a built-in audience who are ready and eager to purchase products and services they recommend.
Do your research and connect with influencers whose audience is similar to your ideal clients. That way, you’ll be confident your investment will result in your business being seen by the people who need it most. When you reach out to an influencer who you’re interested in hiring, you’ll need to offer payment in addition to providing them with your products or services for free. Next, based on the number of social media posts agreed upon, they will create content using your products and share their experience in order to encourage their followers to make a purchase.
In this situation, it’s a great idea to supply your influencer with a personalized coupon code they can share with their audience. Not only will this incentivize their audience to make a purchase, since they’ll be getting a deal, you can also track the success of each influencer partnership to see which ones were successful and which ones didn’t measure up to expectations.
2. User-generated content
People love to get noticed on social media, so establishing a reputation for sharing user-generated content is a great way to get fresh eyes on your business. Create a branded hashtag campaign and encourage your customers to use it when they share posts with your products in them. Lots of people will tag the brand of the clothes they wear or the makers of the art on their walls. Repost these to your business Instagram story or feed, and they become free social proof that shows real people buying and loving what you do. This creates a buzz and makes other people want to get in on the trend.
3. Contests and giveaways
If you want to attract potential customers online, contests and giveaways are extremely successful methods for getting people to share your business or write a review. Depending on what your goal is, you could request that your customers submit photos of them with your product and have people vote on the best picture. Then the chosen winner receives a free product or a gift card to use at your business.
Giveaways tend to bring in new followers and increase your reach, especially if one of the entry requirements is to share the post in their story or feed. While it may seem like only one winner benefits from a contest or giveaway, use the opportunity to follow up with everyone who entered and offer them a coupon code to encourage them to make a purchase in your shop.
4. Incentivize product reviews
As the consumer review statistics proved, so many people rely on customer reviews when they are considering making a purchase. By enabling people to leave a review on each of your individual products, you’ll be providing customers with a place to share their experience and help potential buyers decide if it’s worthwhile to purchase from your business. Set up an automation that sends out a request for a review to every one of your customers a few days after they receive their purchase. Offer a coupon code upon completion of the review, or have the review count as one entry into a raffle or giveaway.
5. Referral or affiliate program
Another great way to get your existing customers to refer new people to your business is to offer them perks like a percentage off their next purchase or a gift card. A customer will recommend your business to someone and provide them with a unique code. Then, if someone uses the code to make a purchase, both will receive some sort of monetary benefit. Alternatively, an affiliate program means your referring customers receive a percentage of the amount their friends spend. So, the higher their final bill is, the more an affiliate will make. Even if your referral or affiliate program doesn’t immediately lead to new customers, it’s still a great way to give people a reason to get the word out there about your business.
6. Be active on social media
People like to buy from companies that have an active social media presence. Respond to tweets and comments that mention you and make sure that you don’t leave a negative review unanswered. Responding to criticism with grace is an important business quality. Even when the feedback isn’t encouraging, look at it as an opportunity to improve your reputation with the customer, as well as anyone else reading the comments.
7. Run a campaign that gets people talking
It’s always a good idea to do something with your business that makes you stand out from the competition. Try running an unusual or experiential advertising campaign that will get people talking about you. Apple’s “Shot on iPhone” social media campaign not only included advertisements but also encouraged user-generated content on social media platforms. Casper created a bedtime playlist and shared it with users on social media, as well as Spotify.
8. Offer freebies to loyal customers
Consumers love to feel important, so little details like sending them a free gift on their birthday or throwing in some free samples reinforce their connection with your brand. Freebies usually don’t end up costing your business much money in the long run, and they encourage repeat customers and word of mouth marketing, making it worthwhile in the end.
Now that you know all about using word of mouth marketing for your business, choose your favourite word of mouth marketing idea and get people talking about you!
This article offers general information only, is current as of the date of publication, and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.