Word of Mouth Marketing

Word of Mouth Marketing is when a product or service is promoted organically by a satisfied customer, eg recommending a restaurant to a friend or leaving a positive review on a website for other potential customers to read.

Word of mouth is an effective marketing strategy, said to be the primary factor behind 20-50% of purchasing decisions. Customers trust Word Of Mouth promotions because it is perceived as an honest reaction from a non-biased third party.

No, Word of Mouth Marketing can also apply to a brand’s general reputation among consumers. When positive reviews from consumers accumulate, a brand will become a go-to choice rather than a person-to-person interaction.

Referral marketing is a subset of Word Of Mouth marketing. Based on the same principle, referral marketing offers an extra incentive for customers by giving them rewards in exchange for referring other customers. This encourages customers to share their positive experiences while also boosting customer retention by offering promotional gifts like timed discounts.

Referral rewards can be designed for individual customers, such as gift coupons or loyalty points, but they have also become an important factor in the age of social media influencers. Now when an influencer recommends a product to their audience, they often use a link with a personalized UTM (Universal Transverse Mercator) that tracks the origin of web traffic.

Now brands can directly track which influencers are creating the most sales conversions and reward them accordingly. Brands create a digital wallet using which influencers are often rewarded per customer they attract or a small percentage of the total purchase by their customers. Around 49% of customers have made a purchase based upon an influencer's recommendation, making influencer referral rewards a cornerstone of Word Of Mouth Marketing.

Word of Mouth is generated in the post-purchase phase of the purchase process. Word Of Mouth marketing is based on authentic responses from customers after their experience with the product or service.

The simple answer is three elements: a great product, great customer service and compelling presentation. It’s a big ask but only getting two out of the three elements right can create a chance for a customer to get a bad impression.

However, having one aspect perform particularly well will actually help the other two elements too. Say a customer had a bad experience with one of your products but your customer service work hard to make things right. A 2022 study from Forrester found that 41% of consumers would return to a brand that concedes to making a mistake and apologizes for it. Word of Mouth is driven by authenticity.

In addition to being a more trusted form of marketing, word of mouth can also be incredibly cost-effective — so much so that nearly all businesses could see an increase in revenue if they were able to increase word of mouth significantly.

The good news is that you don't need to spend big bucks on fancy incentives in order to get word of mouth working for you. You need to incentivize the right customers at the right time with personalized promotions.

To find out about different strategies you can use to personalize your promotions, check our "Essential Guide to Personalizing Promotions."