Article

What is word-of-mouth marketing & how can brands take full advantage of it?

May 2022

Andreea Mandeal

Head of Marketing

Only 4% of people say they trust marketers or advertisers. Before you’ve even rolled out your new social media campaign or content marketing strategy, you’re already up against a ton of resistance. Rather than looking to marketing or advertising to dictate their buying decisions, 92% of consumers trust suggestions from friends and family.

Over and over, research highlights that word of mouth marketing can deliver a powerful and significant competitive edge that few other marketing approaches can match. But despite these impressive statistics, not many brands take full advantage of it.

In this article, I explore word of mouth marketing in more detail and why you should move it to the top of your marketing agenda.

What is word of mouth marketing? 

Word of mouth (WOM) marketing, also called word of mouth advertising or earned advertising, refers to a brand’s ability to influence and encourage consumer discussion and advocacy of their products or services.

When it comes to word of mouth marketing, there are two distinct definitions you need to know:

1. Organic word of mouth – Organic WOM happens naturally when people become advocates of a brand or product after a positive experience. People naturally feel inspired to share their enthusiasm with others. This is the most common and influential form of WOM — accounting for 50-80% of word of mouth activity. An example of this form of WOM includes people recommending a great restaurant to friends.

2. Amplified word of mouth – Amplified WOM occurs when campaigns are created to encourage or accelerate WOM in new or existing communities.In other words, marketers take a more active approach in driving brand advocacy — such as through brand partnerships that reach new audiences or referral marketing programs.

Take note — these two categories have an inherent overlap. A great WOM marketing strategy will increase your organic WOM. In addition, if you already have a strong reputation, your WOM marketing campaigns will be more successful.

Two effective ways of leveraging WOM

66% of consumers  trust online reviews, while almost all people trust recommendations from their friends and family. Recommendations can cut through choice-paralysis and effectively nudge consumers towards making a purchase.

According to WOMMA, WOM is the driving force behind 13% of all brand sales. What is more, it is also more effective than paid ads — resulting in five times the number of sales.  Referred people tend to spend more and stay longer with the brand.

It became increasingly easy for customers to share their opinions and recommendations with the world. Their reach has also been amplified with the advent of social media. Your customers reach beyond their loved ones or their close networks and have the power to influence the purchase decisions of people they’ve never met. Consequently, WOM is becoming more and more relevant as it not only helps with your customer acquisition efforts, but can also raise your brand awareness.

The bottom line is that channeling WOM is important for brands as it’s a cheaper, more efficient channel that can help with lowering acquisition costs and generating more brand loyalty.

How to leverage WOM marketing? 

Let’s look at the best ways to put WOM marketing into play.

1. Create something worth sharing 

To really leverage WOM marketing, you should delight your customers and give them reasons to talk about your brand. Every aspect of your product, brand, and marketing strategy can serve as fuel for opening up conversations about your company. Engaging brand stories, 24/7 omnichannel customer service, rewards, and memorable social media ads — these all have WOM potential.

To maintain the edge over your competitors, focus on both innovative and tried-and-tested ways to create a positive reputation for your brand. Take note that 43 out of 53 marketers believe the best way to generate more word of mouth referrals is by providing exceptional service.

In order to influence customer purchase decisions, marketers should address important product or service features in their messaging. For example, a McKinsey study on the mobile-phone category uncovered that phone design was more important than battery life.

While marketers tend to focus on emotional messages in their campaigns, consumers are often more interested in functionality and will talk about it more with family and friends. To find out what matters the most to your customers, run customer surveys and interview regularly and then incorporate these insights in your campaigns. This is essential when running customer-centric campaigns.

Empowering customers is a great way to cultivate brand buzz. Many brands build up pre-product launch excitement by actively involving customers in product development, supported by online communities. For example, Cadbury’s Create-Your-Own Bar campaign inspired people to share innovative chocolate creations online. Cadbury’s ‘Willy Wonka style competition’ gave fans the chance to experiment with over 90,000 flavor combinations, from popping candy to elderflower. More than 10 million people saw the campaign and 164K people engaged with it. Just like the Cadbury’s campaign, fresh, original ideas that involve customers are one of the most effective ways to open up conversations.

Influencer and brand partnerships are one of the most popular ways to put WOM marketing into play. To do this effectively, you need to understand whose opinion your customers value the most and which brands they enjoy. Parks and Recs fans discovered Lagavulin Islay Single Malt Scotch Whiskey when the brand released the ‘Offerman Edition’. To celebrate the new drink, the company launched a 45-minute video of Nick Offerman — in the role of the much-loved Ron Swanson. Since its release, the video has been watched over 4 million times.

2. Run effective referral marketing programs

No matter how much a customer values your brand, most people need a little push to actively recommend you to other people. So, how do you promote brand advocacy?

With referral marketing you enable your customers to recommend you to other people and in exchange they get a reward. While cash is still the most popular incentive, you can also experiment with discounts on your own offers, third-party vouchers, and carbon-offsetting to showcase your green credentials.

Customer referrals are a brand’s cheapest acquisition channel — with companies seeing 80% lower costs on average when compared to traditional advertising. Apart from the lower costs of acquiring new customers, marketers should also consider the quality of the new customers brought in by referrals. Referred customers are less 18% likely to churn and have on average 25% higher CLV than non-referred customers.

But running referral programs is not that easy. Referral programs involve different teams working together to develop a platform which eats up many internal resources. This is extremely costly and takes a long time before you can get started and even longer to see results. This is why more and more companies opt for partnering with tech companies to do it for them. In this way, they can speed up their time to market, get real time insights and focus on optimizing their programs.

With Aklamio’s Customer Incentives Platform brands can incentivize new and existing customers throughout their entire lifecycle and grow their revenues. Your referral program  can get started in as little as two weeks.

Where to go from here

WOM marketing is one of the best ways to reach new customers — without burning through your marketing budget. From exceptional customer service to products with the features customers value most, the WOM buzz always begins with a great CX and products or services. Understand what your customers value the most and find innovative ways to get them talking about your brand.

In conclusion, one of the best ways of ripping the benefits WOM marketing can have on your revenue is through successful referral marketing programs. We developed Aklamio to help brands grow their revenues by putting their customers at the centre of your marketing programs.

Want to find out how Aklamio can help make your referral program a success? Reach out to us here.