Word of mouth marketing is hardly a new concept. Humans love to talk and people have been passing on information for centuries, sharing gossip, opinion and advice in the markets, after church and over the garden fence.
Small businesses have always relied on word of mouth to drum up business for them, as people ask friends and neighbours for local recommendations and even now they still get much of their new business via existing customers.
Word of mouth is not only more personal than generic advertising, but extremely cost-effective, especially nowadays as technology has made it easier for us to share our thoughts and opinions online. Social media has opened up a fantastic opportunity for businesses and even bloggers who can promote themselves to a potentially huge audience for free.
According to Nielsen’s latest Global Trust in Advertising Report, 92% of consumers trust recommendations from family and friends above all other forms of advertising. If a friend tells you about a bad experience with a certain brand or product, it might deter you from purchasing something from the same brand. Similarly if someone you know raves about a certain restaurant, you might check it out for yourself.
So how powerful is word of mouth marketing?
Unwavering loyalty
Customer loyalty is a key aspect of any company’s strategy, not least because customer retention is far more cost-effective than securing new customers. However, if your customers are loyal enough then they will bring you new business. A happy customer is one of the biggest assets there is – they will advertise them to people they know, for free!
It could be an extremely simple situation. Two people are chatting and one admires the other’s new jeans. Waving aside the compliment they reply “oh they’re just from retailer x and were only £y”. This may be the briefest of encounters, but if that person then visits retailer x and makes a purchase, the retailer has gained another customer who may in turn recommend it to a friend.
The concept of loyalty should ever be overlooked by a business, especially as it can also be used to gain new business and reward existing customers through referral schemes.
Although loyal customers may have willingly recommended the company anyway, an incentive works two ways: it acts as another boost to existing customers’ good opinion of a company and can also drum up new business through word of mouth. According to Andy Cockburn, CEO of Mention Me, incentivised referrals can increase customer acquisition by up to 20% and see up to a 25% higher average order value.
Impartial opinion
Although it’s those closest to us that we trust the most, 79% of consumers trust online reviews just as much as personal recommendations, because they are impartial.
Buying online may be convenient and easy but as we can’t physically touch or examine a product, shoppers want to know what other people who have bought the product think. Is a cheaper version of a branded product good value? Is the seller trustworthy?
While some companies attempt to skew their results by submitting fake positive reviews, Reevoo has discovered that actually this doesn’t help companies, because 68% of consumers are more likely to trust reviews if there are a couple of negative reviews. In fact, 30% of people said that they would be suspicious of brands or products with only positive reviews.
This could also be because negative reviews often provide the most information. Positive reviews often say little more than “I love this product!”, whereas people tend to be quite specific with their remarks in negative ones.
However, as people are more likely to go online to voice concerns and complaints, it can be difficult to form an overall opinion. That said, plenty of people do share positive experiences online as well which can sway someone to buy the product.
Online reviews also give companies another platform where they can respond to customer feedback.
Adrienne LaFrance of The Atlantic writes that reviews can even affect the amount a customer is willing to pay for an item. Based on this research it seems that positive reviews have more impact face-to-face, but negative reviews are more effective online.
The social voice of earned media
Last but by no means least, is social media, the 21st century’s definition of word of mouth marketing. In a world of digital, where more than 70% of adults own a smartphone, a brand needs to be completely switched on at all times.
A brand may think they’re safer without Twitter or Facebook, but that doesn’t stop people from talking about them – it’s better to give them a platform where they can air their grievances or (hopefully) shower you with compliments so you can monitor it.
Social media gives brands the perfect place to reach thousands of potential customers. There’s no guarantee that your posts or campaigns will ‘go viral,’ but if marketed correctly to your existing customers and followers, fans will share it with their friends who may also engage with you and share your update with their followers.
Nestlé is one brand who took advantage of social media for its ‘Chunky Champion’ campaign in 2012, aiming to rejuvenate the brand and appeal to a younger audience. In a prominently social media campaign, Kit Kat fans were invited to help develop the Kit Kat Chunky range by voting for their favourite new flavour from Orange, White Chocolate, Dark Chocolate and Peanut Butter.
The campaign – which not only saw Peanut Butter become a permanent addition to the range, but also saw Facebook fans increase from 200k to 400k – was so successful that it was repeated in 2013 with four new flavours.
It’s so easy to share something on Facebook or Twitter that posts can go viral within minutes… and if this is a negative statement about a brand then it can be catastrophic, especially as 81% of consumers are influenced by their friends’ social media posts.
Reaction and affection
Cost-effective and influential, there’s no doubt that word of mouth marketing is crucial for businesses, especially as 50% of purchase decisions are swayed by word of mouth. Yet you shouldn’t rely on it; making sure that your brand is represented across multiple channels is extremely important. The more engaged you are with your customers, the more likely they are to interact with you and portray your business in a positive light via word of mouth.
It’s also important to react to what your customers are saying – be it positive or negative. Negative reviews can be disappointing, but if you respond well, the customer may be willing to give you a second chance, especially if a problem is resolved quickly. This can turn a negative experience into a positive one and actually increase customer retention rates.
What marketers need to work out and understand is how earned media works with traditional, offline, word of mouth. Together, these can form the backbone of an extremely powerful marketing strategy for any business.
