What is Word-of-Mouth Marketing?

Word-of-mouth marketing (WOMM) is where awareness of a product, service, or brand spreads through natural conversations and personal recommendations, rather than through traditional advertising methods. It’s a powerful form of marketing, based on the idea that people are more likely to trust and act upon personal recommendations from friends, family, or colleagues than they are on advertising messages.

Word-of-mouth marketing can be an effective and cost-efficient way to market a small business. A key aspect of WOMM is that it’s often more credible because it comes from a trusted source, rather than from the business itself. It’s also seen as more personal and relevant since people tend to share information and recommendations that they believe will be useful to the end user.

One of the strengths of word-of-mouth marketing is its self-propagating nature. When people have positive experiences with a small business’s product or service, they are likely to share these experiences with others, creating a ripple effect that can significantly amplify the reach of the brand, product or service.

In today’s digital age, word-of-mouth marketing extends far beyond face-to-face conversations. It includes online reviews, social media posts, blogs, and any other form of digital communication where people can share their experiences and opinions with a wider audience. The key to successful WOMM is to provide exceptional products or services that people want to talk about, and to make it easy for them to share their experience with others.

Commonly asked questions about Word-of-Mouth Marketing

Below are some of the most commonly asked questions about Word-of-Mouth Marketing (WOMM). Click on the question you’d like answered and it will take you to that section of the blog post.

What are the benefits of Word-of-Mouth Marketing?
What are the types of Word-of-Mouth Marketing?
Word-of-Mouth Marketing statistics
What is an example of Word-of-Mouth Marketing?
How to measure Word-of-Mouth Marketing Effectiveness?
How to build Word-of-Mouth?
Is Word-of-Mouth a Marketing Strategy?

Or if you’re ready for more advanced Word-of-Mouth Marketing strategies, skip to the end and get a FREE chapter from my book Evergreen Assets.

What are the benefits of Word-of-Mouth Marketing?

Word-of-mouth marketing has some significant benefits, especially for small businesses. It’s often considered the most powerful source of new customers for many small firms. Here’s why:

😇 Trust Factor: People tend to trust personal recommendations from friends and family more than any other form of advertising. When someone you know, like and trust tells you about a great product or service, you’re more likely to give it a try.

🆓 Cost-Effective: Unlike paid advertising, word-of-mouth marketing doesn’t cost anything. Happy customers do the marketing for you by sharing their positive experiences with others.

🌏 Wider Reach: In today’s connected world, a recommendation can go beyond just friends and family. With social media, a positive review or experience can very quickly be shared with a much wider audience.

👍 Increased Credibility: When a business is frequently recommended by word-of-mouth, it builds credibility and a good reputation in the community. This can be invaluable, especially for new or small businesses trying to establish themselves in a clearly-defined niche.

 ⚠ WARNING: ⚠

It’s important to note that relying solely on word-of-mouth can be a bit like leaving your fate to chance. It’s crucial to be proactive in influencing customer experiences and encouraging Word-of-Mouth, rather than just hoping it happens. Otherwise, it’s like “if I build it, they will come” thinking – that may have worked for Kevin Costner in Fields of Dreams, but it can be risky in real life if people don’t even know that your business exists​​.

Types of Word-of-Mouth Marketing:

There are many different types of word-of-mouth marketing strategies. Here are a few:

👄 Organic Word-of-Mouth: This happens naturally when people become raving fans of your product(s) or services and impulsively mention them to friends, family, and colleagues. It’s the classic, spontaneous recommendation.

👄 Encouraged Word-of-Mouth: This is when you, as a business, encourage your satisfied customers to spread the word. This could be through referral programs, incentives for sharing on social media, or simply by asking for reviews and testimonials. Ask, and ye shall receive!

👄 Experiential Word-of-Mouth: Triggered after a customer experiences your product or service for the first time. If the experience is deliberately designed to be incredibly positive, memorable, and far exceed expectations, they are likely to share this with others.

👄 Influencer Word-of-Mouth: Involves using influential people, who may have a considerable following on social media or hold sway with a particular community, to spread the word about your product or service. These influencers can – pardon the pun – influence the opinions of their followers in your favour.

👄 Social Media Word-of-Mouth: Word-of-Mouth naturally lends itself to social media platforms. When people share their experiences, reviews, or recommendations online, it reaches a wider audience and can have a significant impact. Just be aware that this impact applies to both positive and negative word-of-mouth!

👄 Responsive Word-of-Mouth: This occurs when a business actively responds to customer feedback, reviews, or complaints, especially in a public domain like social media or review sites. How a business handles these interactions can add fuel to the fire, influence public perception and generate further Word-of-Mouth. 

Each type of WOMM can be effective in its own way, and often the best strategies combine several of these types to maximise impact. The key is to provide exceptional value and extraordinary customer experiences that people naturally want to talk about. When it comes to WOMM for small businesses, being remarkable is often the best marketing strategy.

Word-of-Mouth Marketing Statistics

💲 WOMM leads to sales: 74% of consumers identify word-of-mouth as a key influence in their purchasing decisions​​. 64% of marketing executives consider word-of-mouth to be the most effective form of marketing​​. 91% of B2B buyers are influenced by word-of-mouth when making their buying decisions​​.

🤬 Beware of Negative Word-of-Mouth: Negative word-of-mouth reviews spread faster and have a higher impact than positive feedback. It’s estimated that 96% of unhappy customers don’t complain directly to the company yet share their negative experience with up to 15 people​​.

👄 Word-of-Mouth Marketing happens a LOT: Consumers casually discuss specific brands an estimated 90 times per week​​.

🗣 WOMM is the primary marketing tool on Social Media: 71% of people are more likely to purchase when referred by social media​​. 76% of people who had a “friendly interaction” with a brand on X (formally Twitter) said they were likely to recommend that brand​.

🧑 WOMM is a personal recommendation: 84% of consumers reported always or sometimes taking action based on personal recommendations​​. Brands that create an emotional connection receive three times more word-of-mouth than those that don’t​​.

These statistics demonstrate the powerful influence of word-of-mouth marketing. For small business owners in the UK, understanding and harnessing this form of marketing can be a great way of building trust, enhancing your reputation, and (most importantly) driving sales.

What is an example of Word-of-Mouth Marketing?

Example #1 – The Big Knit Campaign
Innocent, a UK-based smoothie company, is known for its creative marketing strategies. One of their most successful campaigns has been “The Big Knit,” which cleverly combines social cause marketing with a unique word-of-mouth approach.

Launched in 2003, The Big Knit campaign placed tiny knitted hats on Innocent smoothie bottles. For each be-hatted smoothie sold, Innocent donated a portion of the proceeds to Age UK, a charity supporting older people. The hats were knitted by volunteers, including Innocent customers, elderly individuals, and knitting enthusiasts.

The campaign’s novelty factor was a significant catalyst for word-of-mouth marketing. The sight of smoothie bottles wearing miniature hats was not only eye-catching but also sparked conversation. Customers shared their experiences and photos of the uniquely adorned bottles on social media, effectively amplifying the campaign’s reach.

Involving the community in the hat-making process was key. By encouraging people to knit their own hats for the campaign, Innocent created a sense of ownership and participation among its customer base. This personal involvement led to people naturally talking about the brand and the campaign in their communities and online.

The Big Knit campaign became a recurring annual event due to its popularity. It not only raised significant funds for Age UK but also significantly boosted Innocent’s brand visibility and reputation. The campaign’s success demonstrates how creativity, combined with social responsibility, can lead to a highly successful word-of-mouth marketing strategy. By engaging customers directly in a charitable cause, Innocent created a strong emotional connection with its brand, leading to increased sales and positive brand association.

This case exemplifies how a small, quirky idea can turn into a powerful marketing tool, especially when it aligns with the company’s values and resonates with its customer base.

Example #2 – More Tea, Vicar?

A case study by The Marketing Society compared the expansion plans of two branches of the same high-street retailer.

One branch owner simply submitted his planning application to the local Town Council, and immediately generated negative word-of-mouth marketing, facing hostility and resistance from the community and local press. His lack of engagement with the community led to long delays and a negative perception of the expansion from the outset.

By contrast, the other branch owner began his expansion plans by reaching out to the local vicar. He explained his plans to move into the area, and desire to become part of the community. He asked the vicar to introduce him to the local estate agents, and enquired as to which schools he might send his children to.

Within a week, the manager had been personally introduced to the key “influencers” within the community, was able to personally explain his plans, counter any objections, and reassure the pillars of the community as to his intentions. When his planning application was submitted to the council, it was unanimously supported.

The key takeaway from this case study is the importance of understanding local community dynamics and identifying influential individuals. By engaging these influencers and the community effectively, the retailer could generate positive word-of-mouth, aiding the successful expansion of their branch network. This example illustrates the power of word-of-mouth marketing in effectively promoting a brand and fostering positive community relations​​.

How to Measure Word-of-Mouth Marketing Effectiveness

Word-of-Mouth Marketing can be very effective – but it’s notoriously hard to measure that effectiveness. Here are 6 ways to measure the effectiveness of WOMM:

👎👍 Net Promoter Score (NPS): This measures how likely customers are to recommend your business to others, on a scale of 1-10. It’s a straightforward way to gauge customer satisfaction and the potential for word of mouth.

🤷‍♂️🤷‍♀️ Customer Retention Rate: Tracking whether customers stay with you over time can indicate the effectiveness of word-of-mouth, as satisfied customers are more likely to recommend your business and continue using your services or products.

🗣📋 Social Media Monitoring: By tracking mentions, shares, and general buzz about your brand on social media, you can measure how much people are talking about your business. Beware that you don’t fall into the trap of measuring vanity metrics over those that lead to quantifiable leads and sales. You can’t pay the bills with likes and comments alone!

🤝❤ Referral Programs: If you have a refer-a-friend program, tracking its usage can provide insights into how often your customers are recommending your business. It’ll also help you identify your very own “influencers”.

💲🏁 Sales and Conversion Tracking: An increase in sales or conversions that correlates with WOMM initiatives can be a strong indicator of their effectiveness.

➰✔ Customer Feedback and Surveys: Direct feedback from customers can give you qualitative data about why they chose your business and if they heard about you from someone else.

Incorporating these measurement strategies can provide a comprehensive view of how well your WOMM efforts are performing and where there might be room for improvement. 

How to Build Word-of-Mouth

Jonah Berger, Marketing Professor at the Wharton School at the University of Pennsylvania, and author of Contagious: How to Build Word of Mouth in the Digital Age, says there are six reasons why people share ideas, stories, businesses referrals via word-of-mouth:

1. Social Currency. People share things that make them look good.

2. Triggers. Top of mind is tip of tongue.

3. Emotion. People share things that arouse strong feelings in them.

4. Public. People naturally imitate what they see others doing.

5. Practical Value. People like to share useful information that can help others.

6. Stories. Information can be embedded into stories because people find them easy to remember and easy to share.

In my book Evergreen Assets – Do the Work Once, Reap the Rewards Again and Again (and Again!), I will show you how to create “Viral Assets” in your small business, incorporating all six elements, giving you the greatest chance possible of turning one customer into more than one – through word-of-mouth marketing.

I’ll show you how to “give your customers what they want” so consistently that they know their friends will get what they want too, thus ensuring they look good in the process or recommending you.

You’ll be able to seamlessly weave these Viral Assets into your business’s ecosystem so well that the WOMM triggers appear completely natural and unforced – making it easy for your current clients to tell their friends.

I’ll encourage you to play a relationships game, not a numbers game – generating high levels of positive emotion.

You’ll create huge amounts of practical value, so people know they can rely on you to help others, in the same way you helped them.

And finally, I’ll show you how to wrap everything up in story form, through case studies, testimonials and reviews, and embed those stories throughout your entire Evergreen Assets marketing ecosystem.

Make sure Word-of-Mouth isn’t your ONLY Marketing Channel – get a FREE chapter of Evergreen Assets, my ⭐⭐⭐⭐⭐, best selling book on building a content marketing ecosystem – enabling you to do the work once, and reap the rewards again and again.

Is Word-of-Mouth a Marketing Strategy?

Word-of-Mouth can be a valuable element in a broader marketing approach. However, relying on WOMM alone is dangerous as a comprehensive marketing strategy. Here’s why:

🎮 Lack of Control: Unlike structured marketing campaigns, word-of-mouth is largely organic and beyond your direct control. You can influence it by providing excellent products and services, but you can’t dictate what is said, how it’s spread, or how fast it grows. This lack of control can be risky for small businesses, especially new ones that need to establish a market presence quickly.

🎲 Unpredictability: Word-of-mouth can be unpredictable. It can work incredibly well for some businesses, but for others, it might not generate the necessary momentum. Relying solely on WOMM can be a gamble, especially if the business is in a competitive market where active marketing strategies are essential.

📢 Limited Reach: While it’s true that a recommendation from a friend or family member can be highly persuasive, word-of-mouth has a limited reach compared to other marketing strategies such as digital marketing, which can target a large and diverse audience across different regions and demographics.

📏 Measurement Challenges: It’s difficult to measure the exact effectiveness of word of mouth. Unlike digital marketing campaigns where you can track metrics like clicks, impressions, and conversions, assessing the impact of word-of-mouth can be imprecise, making it difficult to adjust strategies or gauge ROI.

⏳ Time Factor: Word-of-mouth often takes time to build momentum. For businesses looking for quick results or needing to meet short-term goals, relying solely on word-of-mouth might not be practical.

I coach hundreds of small business owners, and always shudder when a new client proudly announces that word-of-mouth is their biggest marketing channel. The reason I cringe is because I know that what they really mean by “word-of-mouth is my biggest marketing channel” is that it’s their only marketing channel.

In my experience, people who rely entirely on word-of-mouth alone, do nothing to influence how many new customers they get. They’re completely in the hands of fate – they think they’re Kevin Costner in Field of Dreams, believing “if I build it, they will come” – well, not if they don’t even know you exist, they won’t!

You may have the best product or service in the world. It could be the perfect match for your dream client. But if they don’t know you exist, you’ll never get the chance to work together. As we’ve explored above, WOMM is a highly-effective, predominantly free-of-charge source of a swathe of new customers. 

But WOMM alone is not a controllable marketing channel.

If “word of mouth” is your biggest source of new customers, then you’re in trouble. Why? Because you’re not in control of the flow of new customers – so how can you plan staffing levels, investment in new technology, and control the growth of the business, when you have no control over how many people come through your door?

Word-of-Mouth can be an important part of a marketing strategy, especially in building long-term customer loyalty and trust. However, it’s generally far more effective when used in conjunction with other marketing tactics as part of a Marketing ecosystem.

Make sure Word-of-Mouth isn’t your ONLY marketing channel, with the help of a FREE chapter from my book Evergreen Assets.

Evergreen Assets is a “swipe and deploy” marketing ecosystem, focused on creating permanent, evergreen marketing assets.

This approach allows you to “do the work once and reap the rewards again and again.” By implementing Evergreen Assets, you can build a robust system of multiple marketing pillars that do not solely rely on word-of-mouth. This strategy enables you to work less while earning more, as you’re leveraging long-lasting marketing assets that continuously deliver value​​.

Click below to get a FREE chapter of Evergreen Assets – or indeed, any of my books.