Why is Word-of-Mouth Marketing so Important?

Green old fashioned telephone. Header image for blog post: why word of mouth marketing is important.
Green old fashioned telephone. Header image for blog post: why word of mouth marketing is important.

Have you heard the term "teleconferenced peer influence groups"? If not, you’re not alone. You probably know it by its more common moniker: “word-of-mouth marketing” (WOMM).

The term “Teleconferenced peer influence groups” was originally coined by psychologist George Silverman in the 1970s, after using focus groups to discuss different pharmaceutical products.

His observations indicate the basic tenets behind how word of mouth works: "One or two physicians who were having good experiences with a drug would sway an entire group of skeptics. They would even sway a dissatisfied group of ex-prescribers who had had negative experiences!” (Source: thefreelibrary)

Now, 50 years later, this approach has grown into a widely used marketing tactic - with the data to prove it: 74% of consumers identify word of mouth as a critical part of their purchasing decision. And a whopping 92% of consumers say they trust recommendations from friends.

So what's the word on word-of-mouth marketing? Read on to find out.

Table of Contents

What is Word-of-Mouth Marketing?

Word of mouth (WOM) is one of the oldest and most effective forms of marketing. And, it has evolved relatively seamlessly into the digital landscape. At its core, it can be defined as:

A marketing method that relies on casual social interactions to promote a product.

Word-of-mouth marketing involves businesses finding ways to encourage individuals to share recommendations, news, and accolades about their brand, products, and services.

 For example, when was the last time you had an interaction with a brand, positive or negative, and then told someone else about it? Think about a time when the food and service at a new restaurant you tried were so good and unique, you had to tell your friend to go try. Or, maybe it's a software tool that has greatly improved your team’s workflow, so you left a review on G2 or recommend it to a peer. 

All of these consumer interactions build trust and increase the front-of-mind real estate presence for your business in the ever-crowded ether of messaging bombardment people receive these days. (Of course, it should be noted that WOM can also hurt you based on the sentiment of the discussion).

Why is Word-of-Mouth Marketing Important?

Word-of-mouth marketing is about a face-to-face interaction (or avatar to avatar as the case may be in today's digital age) that is built on pre-founded trust. It's a cost-effective way to spread the word about your company and products among online and in-person communities.

If it's not already top of mind for your marketing, it should be! Word-of-mouth marketing is cost-effective, builds brand loyalty, and reveals new ways you can reach potential customers.

Types of Word-of-Mouth Marketing

Referrals from word of mouth can come from several sources, but for marketing purposes, the most important channels to know about include:

  • Peer-to-peer
  • Face-to-face
  • User-generated content
  • Social media conversations

1. Peer-to-Peer

  • A friend says to a friend “I just had the best meal at a restaurant downtown. I think you’d love it!”

This is arguably the most basic form of word-of-mouth marketing. When you get a recommendation from a peer that you respect and trust, you’re far more likely to check out the recommended product, restaurant, etc., yourself. For marketers, this type of interaction is tough to really measure accurately or influence directly. 

Tip: To improve your reporting, ask new customers how they found out about you. If they say “I heard about you from my friend” you can ask them to expand on what specifically their friend liked. These learnings will help you invest time and energy confidently into brand-building marketing and acquisition efforts.

2. Face-to-face marketing 

  • A sales rep is set up at a kiosk in the grocery store and offers you a sample of their new line of cheeses. Mmm cheese….

Face-to-face marketing is usually set up as a more “professional” relationship between the recommender and recommendee. It has a more clear sales factor, but it’s still a 1:1 tactic. 

Why is Face-to-Face marketing effective?

Think of a software product demonstration to a new prospective client, or free samples at a grocery store. In both cases, you may not purchase that day, but you’ve had a face-to-face interaction with someone who is passionate about what they’re selling. They had the opportunity to tell you about their brand, and offer a business card. So they’ve had that extra touchpoint to remain memorable when it comes time to make your purchase decision. 

Face-to-face marketing tips: Let your personality shine, and incorporate brand values into your selling story. Today's consumers gravitate heavily towards authenticity and shared values (such as eco-friendliness and inclusivity). Highlighting these during your product pitch will help you stay top of mind.

3. UGC (User-generated content)

  • You go to the restaurant your friend suggested and liked it so much you hit the Big 3 of UGC: posted a picture of your meal to Facebook, added a video to your Instagram Story (tagging the restaurant), and wrote a 5-star review on Yelp.

UGC (User-generated content) is what marketers like to refer to as “low hanging fruit” - once it’s created that is. And, brands can use this content in their own content marketing strategy to (1) show off an unbiased testimonial and to (2) build an even stronger relationship with the customer who posted. Much like peer to peer recommendations, this content can reach a larger audience that the poster may or may not know directly. 

If you can figure out how to cultivate user-generated content, you’ve unlocked one of the quickest and cheapest ways to grow your online presence.

Tip: Respond to both positive and negative online reviews. Be honest, appreciative, and genuine, and more people will want to publicly share their experiences!

4. Social Media

There are components of social media in all of the above marketing options, but it’s so important it deserves its own call-out. Social posts on any platform that mention your brand are powerful instances of social proof.

To put some numbers to the value of WOM on social media: over half of purchases inspired by social media sharing occur within 1 week of sharing or favoriting, and 80% of purchases resulting from social media shares occur within 3 weeks of sharing. [Source: VisionCritical]

It’s important to think of social media in a broad context here: consider everything, from the major channels like Twitter, LinkedIn, and Instagram to the new and exciting like TikTok, to forum-based platforms like Trip Advisor.

Tip: Engage when you're tagged! Consumers love when brands respond so encourage your social media manager to like, share, and comment when posts tag you or use an official brand hashtag.

What are Some Word-of-Mouth Marketing Strategies?

  • Create a Conversation
  • Use Influencers & Brand Ambassadors
  • Encourage UGC
  • Social Media Listening

WOMM is ultimately quite ubiquitous, which is what makes it so incredibly valuable - but it’s also what makes it incredibly difficult to control.

How do you measure success? How do you implement a strategy for improving and increasing your face to face recommendations? How do you swiftly find and address negative reviews or comments and protect your carefully crafted reputation? Let's explore how to implement these tactics into your marketing strategy.

1. Create a Conversation

Group of female friends having a chat. Word of mouth helps build your brand through real peer to peer conversations.

Word-of-mouth marketing is about real people sharing their thoughts about your brand and products, thereby indirectly encouraging more sales and recommendations for you - like a ripple effect. 

But how do you keep the conversation going? Chatter matters so you need to help generate that buzz!  

Find out where conversations are happening

This comes from understanding your audience. Where do they hang out? Jump in on forum discussions around related topics to your industry, products, and services. Facebook groups are another great place to start.

Be sure to adhere strictly to any forum guidelines in place (which often include no advertising). Otherwise, your words will be swiftly removed by moderators.

Appeal to Your Audience

You can’t market unless you understand who you are talking to, right? And in today’s ever more complicated world, the psychosomatics of your customer base go far behind the demographics data.

Tip: Gather the data from previous campaigns, email sends, and social interaction to analyze what type of content your audience reacts positively to, such as discounts, contests, or polls.

Maintain your online reputation

If you start seeing a lot of negative word-of-mouth buzz, you’ll want to address it swiftly and professionally. Don’t let it fester. Not only does this go a long way toward solving the issue, but it also leaves a very positive impression for current and potential customers. 

So, rather than recording their frustrating conversation trying to cancel their internet service and posting it for millions of people to share in their misery, you instead have someone posting “I just had a surprisingly pleasant customer service experience with XYZ. I’d highly recommend them!” If someone was thinking of switching, this could be what helps convince them.

Having a comprehensive crisis communication strategy is essential for any marketing team. But especially important when you’re prioritizing your WOMM efforts. To get help monitoring and responding to these types of situations, request a crisis comms demo

2. Encourage UGC

The Drum found that 75% of people feel user-generated content makes a brand more authentic.

So how can businesses encourage people to create content? Here are some tips:

  • Create a brand hashtag to invite participation
  • Jump on a trending topic and apply it to your brand
  • Run a contest - you can always offer incentives here too
  • Ask for feedback so you can hear straight from customers what they want 

Share Reviews & Case Stories

Customer reviews are a great tactic and should absolutely be part of your word-of-mouth marketing strategy. 

70% of people trust consumer reviews online according to HubSpot. That’s actually huge if you think about it. Thousands of strangers are trusting what thousands of other strangers say about a product online.

Accolades can be featured on your website, social platforms, in campaigns, or 3rd party sites. They can be written statements, quotes, video interviews, or a comprehensive story in a blog article.

Here’s an example of a quote from a Meltwater customer that we may choose to share on our homepage or in other key customer journey locations because we think it accurately represents our solution and who we are: 

Meltwater customer quote. Using positive customer stories is a great word-of-mouth marketing practice.

If you haven’t invested in 3rd party review platforms, here are some popular ones to get started:

  • G2
  • Yelp
  • GlassDoor
  • Reviews.io

Do note that you need to ask permission to re-share anything. 

3. Utilize Influencers and Brand Ambassadors

An influencer or brand ambassador is an individual with a significant following who works with brands to promote products and services. As of 2021, the three biggest social platforms for influencer marketing are Instagram, Facebook, and YouTube. (Source: Business Insider)

Influencers are powerful in that they are another trusted source for consumers, but unlike a 1:1 connection, they are speaking as a “friend” to a much larger audience. And the best part is, the ROI is far more trackable if you’re working with them in an official partnership capacity.

Tip: Bigger isn’t necessarily better when it comes to follower count. Ask prospective influencer partners about their engagement metrics to get a sense of how active their audience is.

Example: If you are vegan and struggling to find everyday recipes or are seeking a community where you can connect with other like-minded vegans, you may follow someone like Michelle Cehn a micro-influencer and founder of World of Vegan.

Screenshot of an Instagram Post

Influencer marketing is deserving of its own blog post altogether, and we just happen to have one, but here are some of the main points to consider:

There are roughly 4 different levels: 

  • Nano: 500-1K followers 
  • Micro: 1K-100K followers
  • Macro: 100K - 1M followers 
  • Power / Celebrity: 1M +

Questions to keep in mind:

  • Do they fit our brand image?
  • Have they worked with your competition?
  • Who is their audience?
  • Does this make sense for our budget? 

4. Social Media Listening

Lastly, take a step back and really listen. 

Look at how people are talking about your industry and pay particular attention to their pain points. This will help you both drive social conversations and implement solutions based on what people are talking about in your space. 

This will also help you track the type of content your audience enjoys (photos, videos, Instagram Stories, etc.,). These all provide clues to help you maximize return on building an engaged following that will continue to spread the word to their friends.  

Gain valuable audience insights with Meltwaters social listening tools. Don’t forget the invaluable information you can glean from tracking your competitors as well! Request a demo to learn more.

What are Benefits of a Word-of-Mouth Marketing Strategy?

To wrap it up, let’s review the main benefits of using word of mouth as an integral component of your marketing:

1. Low Cost

Because you’re not paying for true word of mouth, this type of marketing strategy contributes to lower costs, as others are doing most of the work for you. It helps influence sales with little to no advertising spend.

2. Builds Trust, Brand Reputation & Loyalty

Developing trust is not only one of the first steps in a relationship marketing strategy, but it’s also one of the most difficult.

Since word-of-mouth recommendations are coming from a peer that you trust, a familiar face, or online reviews, they are inherently trustworthy — especially in comparison to a brand simply shouting into the void about how great they are.

3. Creates Long-term Value

Gaining consistent, positive buzz around your products through word-of-mouth marketing will help you maintain repeat customers and make it easier to approach influencers for brand advocacy partnerships. 

Referrals like this are invaluable to grow your loyal customer base, ensuring the snowball keeps rolling — as a study from the Wharton School of Business found: customers referred by people they know and trust are between 16% to 24% more loyal to that brand on average.