Word of mouth

Contents

• What is word-of-mouth marketing
• Origin of the term "word-of-mouth"
• Importance of word-of-mouth in marketing
• How word-of-mouth works
• How to launch word-of-mouth marketing
• How to measure the effectiveness of word-of-mouth
• Pros and cons of word-of-mouth
• Conclusion

What is word-of-mouth marketing

Word-of-mouth marketing is the process by which people recommend products and services they like to their friends and acquaintances. This phenomenon is often used to share contacts of trusted specialists, such as tutors, doctors, or builders. In recent years, marketers have actively begun to use word-of-mouth as a tool to increase sales, recognizing its immense potential.

Origin of the term "word-of-mouth"

The origin of the term "word-of-mouth" is not precisely established, but it is believed to have started being used in the 1920s and 1930s when radio became popular in Russia. Despite this, radios were not ubiquitous, and mainly in villages, people would gather to listen to broadcasts and share news. Interestingly, the term was originally associated with the spread of rumors and gossip, as women, by stereotype, were the main carriers of information. Today, however, word-of-mouth is primarily linked to recommendations about products and services.

Importance of word-of-mouth in marketing

Word-of-mouth marketing represents free advertising created by the customers themselves and is often the most effective form of advertising. According to studies, 90% of people consider recommendations from friends and acquaintances to be a reliable source of information, while only 41% of respondents trust contextual advertising. Moreover, 83% of people become interested in a product if it is mentioned by friends or family members. For businesses, word-of-mouth is an important marketing tool that allows attracting new loyal customers at minimal costs.

How word-of-mouth works

Recommendations about a product can spread in several ways:

1. Organic spread

In this case, recommendations are passed from person to person without any financial incentives. For example, you might recommend a good car wash to a friend, and they pass that information along.

2. Through influencers

Regular users can share recommendations with a limited circle of people, but influencers can reach thousands and even millions of followers. Their opinions spark discussions and active debates in the comments, enhancing the effect of word-of-mouth marketing.

3. Creating talking points

Companies can initiate discussions about their products by offering unusual promotions or gifts, encouraging customers to share their experiences. For example, a clinic might offer a client to post about their services in exchange for a free procedure.

How to launch word-of-mouth marketing

Some entrepreneurs mistakenly believe that word-of-mouth will start working on its own if the product is truly good. However, to encourage customers to share their opinions, the following methods can be used:

• Request feedback: Remind customers about the opportunity to leave positive reviews and offer bonuses for doing so.
• Referral program: Offer customers small bonuses for recommendations to motivate them to share their experiences.
• Branded gifts: Creating merchandise with your company’s logo helps customers share their experiences even without words.
• Create a wow effect: Provide customers with unforgettable experiences they will want to discuss.

How to measure the effectiveness of word-of-mouth

To evaluate the effectiveness of word-of-mouth, you can use a customer survey method to determine their willingness to recommend your company. This metric is called NPS (net promoter score). The question to ask is: “How likely are you to recommend our company to your friends and acquaintances?” Rate the responses on a scale from 0 to 10. Then calculate the percentage of “promoters” and “detractors” and find the difference.

Pros and cons of word-of-mouth

Word-of-mouth has its pros and cons:

• Pros:
  • Effectiveness: customers who come through recommendations have a higher lifetime value (LTV).
  • Cost-effectiveness: word-of-mouth requires lower costs compared to traditional advertising channels.
• Cons:
  • Management difficulty: it is hard to predict how information will spread.
  • Rapid spread of negative information: it is necessary to constantly monitor reviews and respond to criticism.

Conclusion

Word-of-mouth is a powerful tool that allows brands to gain a high degree of trust from their customers. Effectively stimulating word-of-mouth can be achieved through referral programs, interesting promotions, and quality service. It is essential to remember that negative reviews spread faster than positive ones, so it is crucial to actively engage with customers and motivate them to leave positive feedback.