Word-of-Mouth: The Best Form of Advertising
Key Takeaways
- Word-of-mouth marketing should not be relied upon as the sole method of advertising for a business, as it requires building a significant pool of people who trust you enough to refer you to others. This can take substantial time, energy, and effort.
- Passive word-of-mouth, where businesses rely on others to talk about them without any deliberate action, is not an effective form of advertising. However, active, intentional, and deliberate word-of-mouth marketing can greatly benefit a business.
- Word-of-mouth prospects are usually further along in the buying process and are predisposed to like and trust you, based on the level of trust they have for the person who referred them to you. This makes word-of-mouth marketing effective, but it requires work and should be used in conjunction with other forms of advertising.
Last week, I talked about talked about the “myth” that good service will cause people to refer you to others. The misguided notion that happy customers drives word-of-mouth is summed up in this ClickZ article:
Word of mouth relies on exceeded expectations. Manage your customers’ expectations. You’ll be rewarded with their loyalty and the power of their word.
The problem with this philosophy is that “exceeding expectations” is a function of customer service; whereas “word-of-mouth” is a function of marketing. Everything the article mentioned are important things to do, but to say that “word-of-mouth relies on exceeded expectations” is to confuse the purpose of customer service with that of sales and marketing.
Ivan Misner, author of 16 books on word-of-mouth marketing says that “… if you expect happy customers to talk about you a lot, think again.”
If you’ve ever sold advertising, a common objection you’ll hear as to why some businesses don’t advertise is “all my business comes from word-of-mouth,” followed closely by, “everyone in town knows me.” If any company could rely solely on word-of-mouth and claim “everyone knows me,” it would be McDonalds, America’s most popular fast-food restaurant. Yet they spend an estimated $2 billion annually on advertising. Why do you suppose that is?
Word of mouth doesn’t replace great advertising, it just helps great advertising perform better. — Dave Balter, author of The Word of Mouth Manual, Volume II
Likewise, when people claim that they never have to prospect for business because it all comes from word-of-mouth, I can guarantee one of two things:
- They didn’t start out that way
- They are the exception, not the rule
They Didn’t Start out that Way
I once spoke to a local attorney about how he gets clients. He explained to me that there are three types of attorneys:
- The Well-Established: Firms everyone knows because they’ve been around for years and no longer need to advertise and market as aggressively
- The Up and Coming: Those who’ve been around long enough to begin to develop a good reputation and gain some prominence
- The Newbies: Those fresh out of law school looking to get a foothold
Being in Category Number Two meant he needed to advertise in both the Yellow Page and online so that, one day, he’d become so well-known and move up to the next category. He understood that in a highly-competitive field like law (or web design), building sufficient word-of-mouth to sustain him was going to take time, energy, and effort.
It’s possible to generate enough marketing gravity to eliminate the need for prospecting. But those who enjoy this level of success have spent months and years building their reputation, credibility, and client base. Even so, most continue to prospect. That’s why McDonalds continues to advertise.
They are the Exception, not the Rule
Your chances of being struck by lightening, attacked by a shark, or mauled by a cow are greater than winning the lottery; yet millions of people buy a ticket each week, hoping to beat the odds.
You’ll always hear about someone winning the lottery for the fourth time or who built a wildly successful business entirely through word-of-mouth. You’ve probably also heard stories of people who died in a car accident because they couldn’t get their seat belt unfastened. Yet, statistically, your chances of surviving a crash are 70 percent greater if you’re wearing one.
I don’t know about you, but I’m not betting my livelihood or my life on being the exception.
Word-of-Mouth Marketing takes Work
The problem with depending on word-of-mouth when you’re first starting out is that it requires a significant pool of people who know and trust you enough to refer you to their business associates. People are reluctant to do so if they don’t know first-hand what it’s like to work with you. You may be Uncle Fred’s favorite niece, but does he really know how professionally you’ll handle yourself if he recommends you to his best client?
In case I haven’t overstated my point, when I say word-of-mouth is the worst form of advertising, I’m referring to passive word-of-mouth. Just like cold-calling done wrong, passively relying on others to talk about you is not “the best” form of anything. But active, intentional, and deliberate word-of-mouth marketing can be a boon for your business. Here’s why:
- Word-of-mouth prospects are further along in the buying process because are already looking for information about your product or service. In other words, they have a need are are “ready to buy.”
- Word-of-Mouth prospects are predisposed to like and trust you, based on the level of trust they have for the person who referred them to you. In all likelihood, you’re the only firm they’re considering.
- Unlike cold-calling and other hunter prospecting methods, at a certain point, gravity takes over and a certain amount of leads will flow into your sales funnel with minimal effort on your part.
Word-of-mouth does just “happen,” however. It takes as much work—if not more—than cold-calling. But take heart; there’s a lot you can do to make it happen—beyond giving away free samples, that is.
Next week: How to Make Word-of-Mouth Marketing Work.
Frequently Asked Questions about Word-of-Mouth Advertising
Why is word-of-mouth advertising considered the best form of advertising?
Word-of-mouth advertising is often considered the best form of advertising because it is highly trusted and credible. People tend to trust recommendations from friends, family, and colleagues more than any other form of advertising. This is because these recommendations are based on personal experiences and are therefore perceived as more reliable and unbiased. Moreover, word-of-mouth advertising is cost-effective as it doesn’t require a significant financial investment like traditional advertising methods.
How can businesses encourage word-of-mouth advertising?
Businesses can encourage word-of-mouth advertising by providing excellent customer service, creating high-quality products or services, and building strong relationships with their customers. Offering incentives such as discounts or freebies for referrals can also motivate customers to spread the word about a business. Additionally, businesses can leverage social media platforms to facilitate and amplify word-of-mouth advertising.
What is the role of social media in word-of-mouth advertising?
Social media plays a crucial role in word-of-mouth advertising. It provides a platform for customers to share their experiences and opinions about a product or service with a wide audience. Businesses can use social media to engage with their customers, respond to their queries, and address their concerns, thereby fostering a positive image that encourages more word-of-mouth advertising.
How does word-of-mouth advertising compare to traditional advertising methods?
Unlike traditional advertising methods that involve one-way communication from the business to the consumer, word-of-mouth advertising involves two-way communication between consumers. This makes it more interactive and personal. Moreover, while traditional advertising methods can be expensive and may not always reach the intended audience, word-of-mouth advertising is cost-effective and has a higher likelihood of reaching the right audience.
Can word-of-mouth advertising be negative?
Yes, word-of-mouth advertising can be negative if a customer has a bad experience with a product or service. Negative word-of-mouth can harm a business’s reputation and deter potential customers. Therefore, it’s crucial for businesses to ensure customer satisfaction and address any issues promptly to prevent negative word-of-mouth.
How can businesses measure the effectiveness of word-of-mouth advertising?
Businesses can measure the effectiveness of word-of-mouth advertising through various methods such as customer surveys, online reviews, and social media monitoring. These methods can provide insights into customer perceptions and the extent to which word-of-mouth advertising is influencing purchasing decisions.
What is the impact of word-of-mouth advertising on sales?
Word-of-mouth advertising can significantly impact sales. Positive word-of-mouth can increase brand awareness, improve brand image, and drive more customers to a business, thereby boosting sales. On the other hand, negative word-of-mouth can lead to a decrease in sales.
Can word-of-mouth advertising be controlled?
While businesses cannot fully control word-of-mouth advertising, they can influence it by ensuring customer satisfaction, providing excellent customer service, and maintaining high-quality products or services. Businesses can also monitor word-of-mouth advertising through social media and online reviews to address any negative comments promptly.
How can businesses leverage word-of-mouth advertising in their marketing strategy?
Businesses can leverage word-of-mouth advertising in their marketing strategy by encouraging satisfied customers to share their positive experiences with others. This can be done through referral programs, social media engagement, and customer testimonials. Businesses can also collaborate with influencers who can help amplify their message and reach a larger audience.
What are some examples of successful word-of-mouth advertising campaigns?
Some examples of successful word-of-mouth advertising campaigns include Dropbox’s referral program, which offered extra storage space for referrals, and Uber’s free ride program for new user referrals. These campaigns were successful because they provided value to both the referrer and the referee, encouraging more people to participate and spread the word about the business.
Former owner and partner of web firm Jenesis Technologies, John is currently Director of Digital Strategy at Haines Local Search, a company providing local search marketing solutions to SMBs, including print and Internet Yellow Pages, web design, and local SEO. When not working or spending time with his family, John offers great sales and marketing advice on his blog, Small Business Marketing Sucks. When not working or spending time with his family, John offers great sales and marketing advice on his blog, Small Business Marketing Sucks.
